Who’s The Boss?
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Welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. I've had a long week. I'm feeling a little bit throaty this morning, but that's okay. We'll get through this. I'm here with Elizabeth Spires, who's perky and happy. Hello. I'm here with Emily Peck, who's not because she's been writing about social security all week.

Hi. We will talk about that. We will talk about the whole philosophical construct of what does it even mean to be in charge of something. We also, quite excitingly, have Dan Primack of Axios coming on to explain what just happened with the Boston Celtics, who are now, for the time being, the most valuable sports team in the world, at least the most valuable one to be sold. We have a slate plus on wine and...

A fun show, so stay tuned. It's all coming up on Slate. This podcast is brought to you by Progressive Insurance. You chose to hit play on this podcast today. Smart choice. Make another smart choice with AutoQuote Explorer to compare rates for multiple car insurance companies all at once. Try it at Progressive.com. Progressive Casualty Insurance Company and affiliates. Not available in all states or situations. Prices vary based on how you buy.

So, Emily, you are diving into this beat of what the fuck is going on with Social Security. Yeah.

It's true. It's true. So let me ask you a question that I believe you've probably been asking dozens of sources around America. What the fuck is going on with Social Security?

So right now, checks are still going out. Retirees are still getting their money. So just want to say that at the outset. I don't want to freak anyone out, but people should be pretty freaked out. Doge has come for Social Security. The agency just this past week announced this pretty major change. I feel like not enough people are paying attention to this. They're making it harder for people to apply for benefits or to get benefits.

or make any changes to their account. Ostensibly, the reason is to fight fraud. Fraud is a problem for Social Security, but not that big of a problem. We did some math here. You had a source telling you that there was a presentation inside the Social Security Administration where they said that if you add up all of the different types of fraud, not just the sort of identity fraud, but everything,

it comes to about $100 million a year. And we compared that to the size of the checks that go out every year, which is roughly $1.6 trillion per year. And because orders of magnitude are difficult, just to be very clear about this is

less than one one hundredth of one percent it is 0.006 percent of what goes out this is you know less than one basis point it's 0.6 basis points yes and that as a sort of friction cost or like fraud cost or something like that

is the kind of percentage that anyone in the private sector would be crowing about how incredibly efficient and fraud-free they are. Right. Yeah, people were talking to me like, you have to make a choice if you own a business or your social security, like how much fraud or waste are you going to accept in order to efficiently run your business? And this is well within that band. I mean, you want to do what you can to prevent it, but not at the expense of the business. And that is what's happening now. So these changes...

seem like not a big deal. Lee Dudek, who is like the mid-level bureaucrat that they've installed at the top of social security for right now and just seems to be doing the administration's bidding. You know, he was like, we're trying to move into the modern era.

The retirement wave is over. He said this in a press conference. The retirement wave is over, which I don't believe is true. Gen Xers know how to use the internet. So we're moving on. And it's like, you can't just move on, bro. Like everyone I've spoken to inside the agency is like, there are...

massive numbers of people, older Americans, but also disabled people, poor people, those in rural areas for whom using the internet is not so easy. They can't just use ID.me. For some people, ID.me doesn't actually work. I don't know if this is still accurate, but a year or two ago, there was problems for people with color. They're having problems with photo matching on ID.me. So all those people who

The internet doesn't work for them. Used to be able to call and get a hold of a person. It would take a really long time. Wait times are really long and not convenient already. And the person could walk them through, verify their identity by asking them questions, et cetera, et cetera. Now the agency is just getting rid of that. They're saying, if you want to,

verify your identity, you have to do it on the internet, or you have to do it in person. At the same time, at the same time they're saying do it in person, they're closing offices and cutting staff. This is not about fraud at all. In fact, it's sort of going backwards to a Republican playbook that's been around for

decades. And it's what policymakers call an administrative burden. It's a way to get people off of benefits and reduce benefits without actually having to go through the process of policymaking. Yeah. Let me ask you, Emily, directly about that. Like,

you've talked to a bunch of people who understand how social security works and understands. I mean, statistically speaking, it is inevitable that if you make any change this big, there will be some effect on the number of people who managed to claim benefits and that number will go down. And per Elizabeth, you know, maybe that's the point.

But I guess my question is, is that number going to move the needle either? Like, you know, if saving a hundred million dollars in fraud is like a fraction of a basis point, does the amount of money they save on not having to pay benefits to the most needy disabled people who can't get to their local social security office because it's been closed, is that a fraction of the basis point as well? Or is that actually a meaningful savings at some point? That's a great question. No one I've spoken to really knows what

what the end game is here. Everyone has their suspicions. You know, some people are like, for a long time, going back to the 80s, right? The Reagan era, they've wanted to

privatize social security, dismantle social security, frame social security as something that's not meant to be a retirement fund. I mean, there's been efforts on the conservative side to sort of dismantle this thing for a really, really long time. The idea that this is about just saving money just doesn't track with the very long history here. At the same time, a

And ostensibly, that's, I guess, the goal of the doge. I don't know. I think you are onto something with your question. You know what I'll say? It's not about like fewer people will apply for benefits and not get benefits. A lot of people think it's like it's about breaking Social Security. So then you can come in and do radical changes to fix it and change the way it works.

change how good it is, privatize it, whatever. Once you break something and you have to fix it, you can really reform it quite quickly. Do you think this is a cunning plan? Is this something that we could have read in Project 2025 if we read Project 2025? Is this like a big strategic vision to try and take aim at the single largest part of the

American budget? Or is this just Elon coming in with a chainsaw and taking his chainsaw to anything he can take his chainsaw to and not really having a clue what he's doing? I mean, it was in Project 2025. So it's part of what probably the Trumpists would have done anyway. But Elon has kind of made it clear that he doesn't really understand why Americans need Medicare and Social Security and things like that.

And, you know, maybe it's coming from the viewpoint of someone who doesn't, you know, isn't touched by any of those things and is in a circle of people who don't need those things either. But both of those programs are super popular, even with hardcore Trumpists. And so what they have to do is just sort of degrade people's trust in those systems. And if you break them, you close a bunch of regional offices, you make it harder to

navigate, you are slowly kind of destroying the brand of social security and the extent to which people feel like they can rely on it and trust in it.

Someone pointed me to this week, this like 40-year-old document from the Cato Institute about the long-term strategy to fix or change or reform Social Security. And one of the parts of the plan is to change the way people think of it, think of Social Security from something that you pay into and then when you retire, you get the money back. Like that was long the way it was framed and that's, you know, people like that, right? It's like, it's not like a welfare benefit. It's something you contribute to.

and you get at the end and then

The document sort of, it's like we have to change that thinking. This isn't what it is. It's actually cost the government a lot more than people pay into it. It's actually really unclear if young people will be able to get social security when they grow old and retire. Like we have to destabilize the view of social security amongst the young so that it's easier to fix it, quotes, when they get older. So I mean, a long-term strategy in play. That said, I don't know.

No one knows really what Elon Musk, if he has some sort of long-term strategy here or like what the strategy is. So I've lived in America for 28 years now. And for that entire period, I've been paying into social security. And for that entire period, I've

There have been opinion polls, you know, asking the youngs, do you expect to receive social security when you're retired? And for that entire period, the youngster said, no, I don't. For decades,

People haven't really believed that social security is something they will get when they retire. And I don't know why they haven't believed that, but maybe it's because of successful messaging by Kato types. But for that entire period, like nothing has really changed importantly in terms of what people get when they retire.

And so my base case has always been that the future will be like the past. And therefore, when I retire, I will get social security because that's what's always happened in the past. And as you say, because it's such a politically popular program, it would be what the conventional wisdom has always been that it would be political suicide to kill it and or actually impossible to kill it because you'd need Congress to do that. And no congressman who was remotely sane would ever do that. But now maybe...

the Trumpists have managed to

find a way to start degrading it to a point at which everyone's like, oh yeah, I guess we're just not going to get the soft rule. I don't know. I don't buy it. I still, I'm sticking with my priors on this one. There are a couple of things at play here because the philosophy that basically Republicans have, which is that they do want to reduce spending on social security because they want to do that across the board for all benefits. And then there are people around Elon Musk who are more neo-reactionaries who don't believe that we should have a safety net at all.

And so they're happy to destroy all of that. And some of them are kind of eugenics curious. And so they don't really care about particularly supporting people who are retirement age and older or people who are disabled or people who might need those benefits.

And I think when you smash those two groups together, they're probably going to cooperate a little bit if they think that you can damage the program in any way. Okay, let me just push you on that, Elizabeth, a minute, because we're going to talk a little bit more about, you know, the power of the executive branch later in the show, but just sort of foreshadowing that a little bit.

When you say, like, put aside the people and the eugenics people and the Elon Musk people and the Silicon Valley people, just concentrate on House Republicans, the electeds who have a lot of people in their constituencies who are voting for them and who are on Social Security and Medicaid and who really need that money.

When you say that the Republicans want to cut social security, are you talking about those people that they want to stand up in Congress and vote for a bill that will send their constituents less money?

They do philosophically, and they already do that. There are a lot of red states that have rejected Medicare and Medicaid expansions that harm their constituents. You know, I don't think it really matters to them because they're looking at a kind of macro philosophy about whether or not we should be offering those benefits. But whether they'll act is really a matter of how pissed off their constituents get. And right now, there are a few House Republicans who've been run out of their town halls because

by their own conservative constituents because they're not happy with what's happening. They didn't elect Elon Musk. They're confused about things. And I think when you actually start to see disruptions to social security because of this,

That's when maybe the shit hits the fan for elected Republicans, but they're going to wait till that happens to do anything. Someone said to me, because I mean, you remember when George W. Bush tried to privatize social security back when he was president, everyone freaked out. All I remember is a presidential debate with Al Gore talking about a lockbox and no one understood what he was talking about. Who can say what that meant? But, um,

Aw, Al Gore. Yeah, but ever since then, it was like, you can't do this. You can't do this. And everyone said to me this week, like, if they succeed in doing this with Social Security, then like anything is possible in America, because this is like the one thing the government does that most people really, really like. Just judging by my inbox...

And the number of emails I'm getting from older Americans that are just at hotmail.com. It's not the usual like hate and trolling. It's just like, we are reading your coverage and we are very interested in this. Or like, can you help me get my check? Can I just ask you very quickly, how many of these emails come in purple comic sans?

A lot. Also, everyone in the subject line, their name is always all caps for some reason. Well, 90% of Americans over 65 get Social Security. Right. And there's polling that says like 35% of people think that Social Security is going to be a major part of their retirement. 48% think it's going to be a minor part. And whatever the balance is, thinks that it's not going to be a part of their retirement at all.

So that's still a pretty high number on both counts. And even if you think it's a minor part of your retirement, if you've paid into it for all these years, you expect to get it. And if you don't get it, you're going to be furious. Well, I think one of the strategies was like, send everyone a lump sum check. Be like, we're not going to do this anymore, but here's what you paid in. And we can't afford to do that. I don't think so. There is a whole sort of philosophical question about the degree to which

social security payments are government obligations. And if you don't make social security payments, then that's like a default, you know, a government default. That's definitely an argument that Janet Yellen used to make every time there was a debt ceiling face off. But someone should ask Scott Bessant about that. See what he says. Just so the stakes are clear, without social security benefits for people over 65, 37% of adults would live in poverty. Right now it's about 10%.

But also, just to be clear, all of these cuts that are being made to Social Security right now are being made to the really startlingly small bureaucracy that supports it rather than to benefits themselves. Correct. No one has touched the benefits themselves. Right. But if you cut all the infrastructure that exists to give out the benefits, then what are the benefits? That's how administrative burden works. It sort of masquerades as efficiency, but what it does is it just...

disincentivizes people and makes it impossible for them to receive benefits. And I think that's the whole breaking it part that's really more crucial, I think, to what these guys want to do than the actual savings on any level. Well, the last thing I'll say, the whole thing with this administration is they want to cut the red tape, right? They want to make it easier for businesses to operate. They want to get rid of regulations for businesses. But at the same time, they want to increase the red tape

For poor people. For people. Yes, especially poor people. Like, that's what this is. These changes are more regulation, more red tape, more hurdles for just regular people. And also, more likelihood of fraud.

Yes. Oh, yeah. They're counterproductive changes too because most of the fraud, a slight majority of the fraud happens on the internet and they're not really changing anything about that. They're making it easier. Yeah. A huge change is when you switch your bank account information online for direct deposit, you used to have to wait 30 days for the change to go through. They would send you a letter in the mail and say, did you mean to change your direct deposit information? And then if someone was trying to steal your account and you get the letter, you're like, oh no. And then you could call. But now-

There's no 30-day hold. It just happens right away. There's going to be more fraud. That was an anti-fraud measure. It's bizarre. It's not about fraud. Slate Money is sponsored this week by LinkedIn Talent Solutions. As a small business owner, you don't have the luxury of clocking out early. Your business is on your mind 24-7. So when you're hiring, you need a partner that grinds just as hard as you do.

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Shopify.com slash money. All right, let's move on to a philosophical question that I'm going to quote Matt Levine because we love Matt Levine in this. In this house, we love Matt Levine. And I'm going to pull up an old Matt Levine column from May 2018.

where he begins by saying, who controls the company? It's managers, it's chief executive officer, it's board of directors, it's shareholders.

The night watchman controls the company, sort of. I wrote last week. This is to me. He wrote last week. If he can change the locks overnight and not let managers and directors and shareholders in the door the next morning. This is something that Matt writes about a lot. And it's something that I think about quite a lot. And Matt often finds weird.

interesting examples of this in the private sector. And now, fascinatingly, we are seeing this whole question being recapitulated in the public sector. And so, by the way, Elizabeth, I really liked how you talked about the Elon Musk. And I think we're only going to talk about him as the Elon Musk from now on.

Basically, the Elon Musk has managed to find a way to control things that by law and by right, the Elon Musk does not have any control over. And one pretty good example from this week was the Institute of Peace, which is a nonprofit in Washington, D.C., where the directors are appointed by the president, but it has its own funding and its own security force and all of this kind of stuff.

And yet somehow, even in the face of all that, the Elon Musk managed to, you know, flip the security force. One of them had a spare key even after their badges were deactivated and they, you know,

came into the building and they went straight to the gun safe, which also, by the way, the Institute of Peace has a gun safe, which is kind of wild. And then they started, you know, pulling down the signage from this institute. And there was a real sort of facts on the ground takeover of this institute. This wasn't a kind of like, I'm going to fire the person in charge of it and replace them with someone who is going to dismantle it. It was just like, we're going to

send men with guns in the front door and just by sheer physical tearing things down, we are going to take it over. And it felt, you know, a little bit like the news reports that you'd get from, um,

Syria or something, saying like, the rebels have taken over this town. It's just like, there's a physical taking over of stuff that's happening here. And that was really quite startling to me. And it seems to me that one of the things that we're learning in these early weeks of the Trump administration is that they have discovered that there are all manner of ways to take over entities and organizations that

don't really exist inside the law and don't really exist inside statute but as long as you're happy like not caring about that kind of stuff you can do it anyway

What's crazy is I don't think anybody really planned for a scenario where the entire mechanism of disruption would be just letting a total outsider come in and screw with the chain of command or the chain of authority. And that's essentially what Trump has allowed Elon to do. And one of the more horrifying parts of that story is that the Institute had a security contractor called Intercon who

And they used a master key to get into the building and they agreed to do it because Musk threatened all of their federal contracts if they didn't. Yeah. So basically the Institute of Peace kind of had the guy who was running it kind of had this idea that this was going to happen. And he realized that he couldn't trust his own security guards anymore. So he canceled their contract and said, your badges don't work anymore and you're fired. And then, um,

The FBI slash Doge basically went up to these same people and said, let us in the building. And they're like, well, we can't because our badges have been deactivated. But then one of them who had been working there up until two days previously managed to find like a physical spare key that let them in the building. And that's how they got in and that's how they did it all. But this is just totally wild to me. But it is also very interesting because one of the things we saw very early on with Doge was...

was the way that the first place they went was to treasury, right? And they said, like, if we control the payments, then it doesn't matter what happens in the rest of the agencies. Like controlling the payments is the main thing. And if we just stop the payment, if we stop the agencies from making payments to people,

then that's effectively the end of the agency. And that's what we're seeing at like USAID and places like that. A super smart kind of way of understanding like a single pinch point that they could cut off an entire agency just by like managing to get control of the payment sanction. And here they found another pinch point, which is basically the front door. And they're like, if we control the front door and no one can come in, then that's the end of the institution. You're like, wow. I think my brain...

my brain is kind of breaking on this topic Felix because you start out by talking about companies and we've definitely over the years on Slate Money talked about like who's really in charge like at Facebook or something it's Mark Zuckerberg doesn't matter who's on the board like at all it doesn't matter if he

creates a panel to decide what's moral or ethical or like when Rupert Murdoch buys the Wall Street Journal and he promises to have some oversight, blah, blah, blah. Everyone agrees to it, but we all know who's really in charge kind of a thing. But I don't know, it's kind of breaking my brain to think about it in a government context. How I've been thinking about it is just that the president had all this power to do whatever he wanted for a long time, but Trump is the one really testing it out, being like,

well, we control these grants for universities or just taking everything to level 10 or something in terms of wielding the power that's been there the whole time. I half agree with you. I'm not sure the president ever really had that power. I think that the president did not have the power to fire people

FTC commissioners. But like Trump is like, I'm going to do it anyway. And he's sort of arrogating new powers for himself and going up to the courts and Congress and saying, are you going to stop me? And so far, at least most of the time,

By the time anyone tries to stop him, it's kind of too late. He laid the groundwork last time. He nominated his three Supreme Court nominees, so he captured them. And then he basically made it so the Republican Party had to do his bidding or they would get death threats and voted out of office. Also, by the way, in terms of finding sources of power, something else we should definitely talk about, and I don't think we've mentioned on this show up until now, is that Donald Trump is the first...

second term president ever to aggressively fundraise. And he has been fundraising to the tune of hundreds of millions of dollars. And he has this massive war chest. And that's on its face kind of weird for a person who can't run for office again. But he has made it clear that he is going to use this war chest as a cudgel to threaten any political

who dares to oppose anything that he wants to do. And so, you know, yet again, he's managed to find like this whole new thing, which is money.

which is controlled, you know, by the political arm of the white house, you know, and he's just, I'm going to throw money against you if you, if you come at me. And I don't recall that before. I don't think this is some grand strategy on his part though. I think neither Elon nor Trump have ever felt like they, they could be constrained by the law. And so I think for them, they

Their entire thing is just like, well, I'll just behave like the law doesn't exist and I'll do what I want. Because the only way that they can be stopped is if, you know, the Congress and the judiciary restrain them. But now Trump is saying things like he told one aide that he would happily go after the judiciary because he controls the military.

And he can do that if worse comes to worse. And the weird thing about that is that, you know, if you talk to people who are civil military experts, they're constantly having to make a case for

for why civilians should be in control of the military. And the entire argument is that the military without that could start a coup. But in this case, we have the civilian in charge of the military is effectively doing that. And so that's not really a situation that I think anybody anticipated. There is definitely a big difference between Trump two and Trump one. You know, if you just look at something like the CFPB,

You know, in Trump one, he there was a big fight about whether he could legally fire the person who was in charge. And then eventually he did and installed another guy who was in charge, but who kept on running it in somehow in line with the mandate from Congress, because Congress had said, you have to do this and you have to do this and you have to do this. So it kept on going.

doing those things, maybe not quite with the zeal that it had done it under a democratic administration, but the institution, the organization kept on existing. Whereas this time around, Elon's like, we can cut the whole thing. And any, you know, lawyer would advise and say like, no, you can't because there's a congressional mandate to do this and do this. And as you say, they're much, much happier ignoring the congressional mandates these days. And that is,

you know, a constitutional issue. But yeah, if you don't really care about constitutional things, then it turns out that your power within the executive branch, or Trump's power anyway, within the executive branch is really astonishing. We got to talk about the Pirate's Booty guy. Oh, please. Yes. But let's talk about the really important story, which is somewhere on the north coast of Long Island. And our resident Long Island expert, Emily Peck, is here to unpack

Yes. Seacliff, New York? Seacliff, New York, a little town on the North Shore, as you said, sleepy little town with clapboard houses, et cetera, was briefly overtaken by Captain Bootyhead. That's his title. Or he tried, anyway. He kind of appointed himself mayor.

And everyone said, what? Yes. They had an election for mayor and Captain Bootyhead, whose full name is Robert Ehrlich. And he's called Captain Bootyhead because he is the founder of Pirate's Booty Snacks, which we've all had. They're kind of those salty, styrofoam-y kind of things that you give to kids and pretend they're healthy, but we all know that they're not kind of a thing. So...

They had an election for mayor. He got 62 votes, according to the New York Times story. And then he declared that the election was rigged and that he, in fact, was in charge.

Seacliff isn't buying it, but I think it's just this great illustration of like, we had a president who declared the election rigged. And, you know, now that kind of behavior is a little more sanctioned. Although apparently this Ehrlich character has been pulling off these kinds of shenanigans for a really long time in Seacliff. I mean, I live in a small New York town called New York City.

And I wouldn't put it past my current mayor to try and declare that the election was rigged either. Right. And then take over. But this only 62 votes, I mean, it's really hard to make a case here. It's a town of 5,000. Even Eric Adams can get more than 62 votes. Yeah.

Not a lot more, but he can get more than that. The problem for the Pirate's Booty guy, and I guess this is a problem for America at large, is that if you break all of these institutions, which he would have to do to be mayor, he would have to, it's an incorporated town. And so he has to, there's a process where they have to reincorporate it and declare him mayor, or he has to declare himself mayor. But

But then it's like, well, if you don't really have a town because you've dissolved it, what are you in charge of? Where does your power lie? And the current mayor made that point to him. He has this whole, like, act of Congress that he's pointing to or something saying that I have the right to dissolve the town and recreate a new town. Which does, it does rhyme with, you know, all of the Peter Thiel seasteading stuff. Just create your own town.

I wish they would. Just go live on your seasteading, whatever it is. Is it an island or a platform? I don't know. A platform in the sea. That's why you agree as citizens to have the peaceful transfer of power because you can't just have people fighting to be in charge all the time. It's very disruptive. So you want to live in a society that's not constantly being disruptive where you can do business and people know what the rules are. So you walk away from the old...

feudal setup where people were fighting all the time and like the captain booty heads were like going off all the time. Like it's a society, people. The old fashioned way of doing it in feudal times. Yes, yes. Was based on the state monopoly on violence, right? The idea was that you had a emperor or a king or some like...

number one person in charge who controlled the military and if anyone got uppity he would set the military on them and then they would be you know beheaded and that would be the end of that and this is kind of what we're seeing with the institute of peace right like the government has a statement of non-violence they have the ability to raid the gun safe at the institute of peace and that is what's giving them control and it is kind of futile in its own way

Yeah, they called in the police and the police was like, OK, they believe the Doge people, you know, they showed them some papers or something and they were on their side. All right. I think right now I need a breather and I need to talk about sportsball.

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So this is very exciting. We have the amazing Dan Primack, who does all manner of deals reporting for Axios, and is also a big fan of a Boston sports ball team called the Celtics, or the Celtics, one or the other. Oh my God. What?

Well, which one is it? You're just trolling at this point. The Celtics. Celtics. Okay, good. Anyway, they just became the most valuable sports team ever sold in the history of the planet. Is that right, Dan? That is correct. Or will be. They've agreed to be sold. Yeah.

So you are a fan of this team? I am. Yes, very much so. So you are super invested in this deal and you wrote this absolutely amazing newsletter about it. And we just needed to get you on to explain everything that's going on because it has everything that Dan loves, which is big deals and billions of dollars and the Boston Celtics and private equity. Correct. So it's all coming together. And oh, and there's a guy in the middle called Middleman, which is just amazing. Yeah.

But let's start at the top because I think some of us have been reading headlines about a new rule that allows private equity to buy sports teams. And I think there was just private equity bought like 10% of a team in California, something like that. Baseball team in California.

A baseball team in California. But this is not that. This is not that exactly. So there is private equity money as part of this. Yeah, the NBA was one of the first, if not the first league to allow private equity to buy minority stakes in its teams. A private equity firm can't be the control owner, but they can buy into these teams. It's now true in all the big US professional sports leagues, obviously true in European soccer. The NFL was the last one to do it. They did it recently. In this case, it's a private equity guy.

buying the team, somebody named Bill Chisholm who runs something called STG in Silicon Valley. But he's doing it as an individual and then he's bringing in an actual private equity firm as a minority investor to help finance the deal. And how much is he paying for this team? That,

That is a little source of dispute. So the headline number is $6.1 billion, but the deal is actually broken up into two pieces. If approved by the league, he'd buy the first half of it basically, or like 51% this summer at that $6.1 billion, which already is a record, right? The current sports record is $6 billion for the Washington Commanders last year by a guy named Josh Harris. The

The second piece of the Celtics, though, could sell for up to $7.3 billion, and that would be in early 2028. Is that like an earn-out thing? It depends on how they do? Kind of, but no one's expecting the team's going to make money, so it's complicated. I admittedly don't have all the details, but I keep hearing 7.3 is the number that everybody's talking about.

And Emily's question is, how on earth is something worth $7.3 billion if it doesn't make money? Yeah, I was going to ask, why does it cost so much money? Because there's only one Boston Celtics. You can't get a backup. You can't buy the Sacramento Kings. No one wants the Sacramento Kings, and nor does Bill Chisholm, who grew up on the North Shore of Massachusetts. But can't you buy, like, Chelsea Football Club? Yeah, you could, but that's not the Boston Celtics. I don't think Chelsea has 18 titles, does it? I'm pretty sure it doesn't. No, this is the Boston Celtics.

Felix, it's like buying art. Is this a vanity investment? It's like this unique vanity trophy investment. Wait, so that is exactly what I wanted to ask you about, which is I have always thought of sports teams as vanity trophies for billionaires, but private equity is all about ROI and hard focus on numbers. So why on earth would a private equity company be buying in a $6 billion valuation?

All right. So there's a couple of things to suss out here. For starters, most NBA teams do make money and they just do. The Celtics this year are going to make money. The problem for the Celtics is going forward. They're not projected to make money in part because they're going to have the highest payroll in the history of the NBA, which is a problem. And the NBA has changed their payroll rules. So there's new luxury taxes that could get changed. But right now, the Celtics will be underwater on that. And more importantly, the Celtics don't own their own arena. Teams that do own their own arenas generally make money. The Celtics don't, which means

The parking, the concessions, renting it out for somebody to have a concert. They don't get any money from any of that, whereas other clubs do. But most importantly, then, do they have their own TV network? No, they don't. They've got to deal with Comcast Regional. And actually, the money from that has been going down over time. And the local Comcast Regional affiliate is going to be putting them on a premium tier, which lowers the money even more. So they don't have any of those things.

The reason private equity in general, though, wants these is the valuations of these clubs continues to rise. Remember, the Celtics owners who are selling this for six or seven billion dollars paid about 300 million dollars to buy it 20 years ago. That's a hell of a return.

It might not make money year by year, but the valuations keep rising. And if you're a private equity firm and you look, whether it's the NFL or whether it's baseball or whether it's the NBA or the NHL, even generally speaking, the valuations continue to rise. It's really the only asset that seems to rise regardless of what's happening in the macro economy.

And is this just like the greater fool theory that I will be able to sell it to someone who's willing to pay more? And I'm not quite sure why I paid as much as I did, but I'm sure that the valuation will keep on going up. Or is there like a fundamentals based argument there as well?

Both. The fundamentals-based argument is the media rights deals, right? If you look, the NBA recently signed a new media rights deal, which blew away the prior one. That's true for all these leagues, the NFL. And when you look at what's happening with streaming, with Amazon and Netflix, et cetera, trying to get into live events, namely live sports, there's reasons to believe that that's going to continue to

rise. And also there's the globalization piece, right? The NBA is very popular now in China. That wasn't true necessarily 20 years ago. And then on the greater fool thing, I don't know about fool, but again, look at a guy like this guy, Bill Chisholm, who's buying the Celtics. This isn't just like art, which is something you might like grow an appreciation for at some point in your life or see something and say, I want that.

Bill Chisholm has been rooting for the Boston Celtics since he was four or five years old. That's unlike anything else. He watched them on TV. He went to the games. He read the newspaper when that was still a thing about these games. There isn't a second place for this. There isn't a plan B. If you're somebody like him and you want something like the Celtics, you can only buy the Celtics. There is nothing else.

I am nowhere near this kind of private equity expert that you are, but I'm going to just come out and admit I'd never heard of this guy. Like how much of a billionaire is he? How much money does he have? I don't know how many billions he has. So again, he runs something called Symphony Technology Group, which is kind of like a, it's kind of a mid-market tech buyout.

buyout firm in the valley. It's been around for a while. It is successful. It's not the sort of firm that does deals for companies you've necessarily heard of, right? There's a whole world of software and tech companies that almost no one has ever heard of, but yet are very successful and are very important and serve niche industries or even are kind of back ends of things we all use. SDG is pretty successful, but again, it's not like he needs to write a $6 billion checklist.

himself. He's got co-investors. He has this private equity firm helping out. I don't know what piece he will ultimately own or even if he's going to be the largest check, but you don't always have to be the largest check to be the NBA governor or the control owner of these things. So is this going to change in any way the way that the Celtics operate or the fundamentals of the business? That's a huge concern in Boston. If you listen to sports radio yesterday, as I did a little bit, that is what everybody's worried about. You know, there's two worries. One, oh, a

private equity guys are selling it. Private equity guys own it right now. And it's been doing fine. Ooh, so wait, wait, who's selling it? That's interesting. So it was bought originally by a big group of investors. But the three lead investors were a guy named Wick Growspeck, who was a Boston venture capitalist, a guy named Steve Pagliuca, who helped run Bain Capital, the big buyout firm, and then Wick Growspeck's dad, Irv, who was the biggest check. And Irv is an old telecom billionaire, basically. So they're the ones selling it. And when they bought

it, I remember them telling me they didn't want it to lose money, obviously, because no one wants to lose money. But they also weren't in it to have it make money. They simply wanted to kind of maintain a local institution and get to enjoy what goes along with that, which is, you know, sitting courtside and holding court and hopefully winning championships and getting to be the guy out there with the trophies.

So it's private equity guys selling it to another private equity guy. As for the question, what's going to happen going forward? No one exactly knows. Bill Chisholm is saying all the right things, but the reality is it's hard to imagine he would have the stomach for years and years of double digit million dollar or even triple digit million dollar losses.

So there's kind of this belief that he would probably keep the team together at least for the first year of ownership so he could hopefully have a championship run and be beloved and then maybe start to change things. One big cautionary tale is what's happening in Dallas right now. Mark Cuban sold it to the Adelson family. They then traded away the best player on the team. It sparked actual protests in Dallas. People aren't going to the games. The team is in terrible shape and the owners are hated immediately.

you buy this to be beloved. If you get hated after buying it, you have done it wrong. And this guy called Wick, is he beloved? Wick's beloved, yeah, in Boston, absolutely. Look, the team's won a couple titles. They've been competitive for most of the time he's owned the team. And he took it over after a pretty long period of time in which the team was actively bad.

Isn't owning a sports team sort of antithetical to what I and other people probably think about private equity? Like you're ruthlessly efficient and you want to make it run and throw off money. And like what you're saying is like, like I'm thinking about Steve Cohen who now owns the Mets and just spends and spends and spends lots of money on the Mets and everybody likes that. And everybody finally likes Steve Cohen, who knew? So yeah, I think that goes back to Felix's question of like,

It's so mind spinning to think of private equity getting into these sports deals. Well, they're different though, right, Emily? Like private equity, you're fiduciary for other investors. Your job, your only job really is to make money. And if that means you have to make cuts or fire people or whatever, okay, it's in the pursuit of making money. You don't buy a sports team for this reason. You wouldn't really buy a sports team if your primary intention was to generate a profit. You buy a sports team because you love it.

Unless you're the private equity minority stake. Correct. And presumably the math works out exactly the same for the minority stake as it does for the majority stake. Not exactly. I don't know all the details of what Sixth Street is doing with the Celtics deal. I know some of the details of what they've done with some other transactions. They actually own smaller pieces of two other NBA clubs already.

These are highly structured deals. Usually this isn't just, oh, we're investing $200 million. Here's a sack of cash with $200 million. There's often preference on this stuff. There's often a bunch of terms that make these deals better for the institutional money than for the individual money. And even Steve Pagliuca, who's one of the selling owners who tried to win this deal and seems a little understandably bitter that he lost. He didn't have any private equity money in it, even though he kind of tried to get some. And he's been kind of using that as a highlight there.

why his bid would have been better. And is this a done deal? Because I was reading your piece this morning and it kind of sounded like there could yet be an upset and someone else could end up buying it. It can always happen. So it's not a done deal. You have an agreement between the sellers and the buyer, but two things. One, the NBA still has to approve it. The owners have to approve it. And that's

not quite a rubber stamp. It's close, but it's not quite a rubber stamp. There's a lot of things you have to prove. But Chisholm, Bill Chisholm, the buyer, he doesn't have all the financing lined up yet. He just doesn't. Now, there are some drag along rights for existing owners or existing minority owners, which they might exercise and come along, even though it's at a very, very high price. There are losing bidders who could come into this deal. And that's probably who he's calling right now and saying, you were in second place, you were in third place.

you know, come along. You're not going to be control owner, but you still want the courtside seats and to be part of this and to get championship rings, come along. You know, we're here for the next 20 years, but he does have to put the rest of that money together. Felix, we're going to go to a game together too. When this all gets together, we're going to go and you're going to cheer. You're not going to understand what's happening, but we'll find an eight-year-old who'll tell you. No, I will because I will have, I will have you sitting next to me and you will explain what it means when this guy throws the ball to that guy. But

But I just want to wrap up by asking, isn't this a little bit weird? All I see in the Axios Media Trends newsletter is these charts of how 98 of the top 100 telecast TV shows every year at NFL. NFL dominates sports. NFL is everything in the be-all and end-all of all popular culture. So how is it that the most valuable team in the world is not an NFL team?

I would say that a lot of NFL owners are paying really close attention to this sale. I think Josh Harris, the guy who bought the Washington Commanders, which was the highest price deal until this one, bought it for $6 billion last year, might now be thinking he got himself a pretty good bargain, although he also doesn't have his stadium exactly. No, I think it probably means that there will be future NFL sales. There'll be more. It is, again, worth noting, though, that the Celtics are unusual even by NBA standards, right? This is the NBA's equivalent of the New York Yankees.

right? Or the NHL's Montreal Canadiens. This is the most storied franchise in terms of just everything. Look, HBO right now is in the midst of an eight-part documentary on the Boston Celtics, the history of the franchise. They don't do that for others. Maybe the Lakers. The Lakers are maybe the only other real equivalent here. Some could maybe argue this is a little bit like Dallas Cowboys in the NFL, right? Like if Dallas went up for sale, it would be an extraordinary price.

But yet, look, the Celtics are unusual. And also they're unusual for the fact that Massachusetts births lots of future billionaires. We just do. There's just a lot of people who either were born here or went to school here and Chisholm did both. And so there's more money to be made from selling to these guys. Is this going to affect the valuation of other teams just as a comparable? It should.

Again, not everything is apples to apples, but yeah, it will. Look, for example, I bet Mark Cuban is bashing his head into the wall right now that he sold the Mavericks for $3.5 billion two years ago. He owns his own real estate, which is part of the sale process there. One thing it could definitely do, and I put this in the column today, it could slow down talk of a new team in either Las Vegas or Seattle for the NBA. There's been a lot of talk about expansion to those markets. But if you're an NBA owner, the reason you do expansion is because you get an expansion fee.

When a new club comes, that new owner says, I'm going to pay a billion dollars to be able to launch a team in Vegas. And then that gets parceled out to all the other owners. That's why you do it. In this case, other owners have just seen the value of their clubs probably increase and maybe increase substantially. They could sell a 5% or a 6% piece and bring in that cash. Because they have scarcity, right? There's only a certain number of teams and there's no, like you can't get relegated once you're in league or always in the league. Yeah.

Yes, correct. No matter how poorly you are running, no matter how many games you lose. Dan Primack, thanks so much for coming on the show at exactly zero notice. That was amazing. Thanks for having me. Slate Money is sponsored this week by 1Password.

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That's 1password.com slash money. Let's have a numbers round, shall we? Emily, do you have a number? Yes, I have a number. One. I think I just did one. Yeah, this is good. You do this a lot, the one number. Yeah, it's a good number. Yeah, it's simple. It's easy to understand. After I broke my brain dividing 1.6 trillion by 100 million and then... Anyway...

One is the number. $1 billion. Is how much money? Is it $1 billion or is it one? It's the number of billions of dollars. It's the number of billions of dollars, which is one. I like it. Yeah. $1 billion. Is this not simple? $1 billion. $1 billion.

That is how much Apple loses every year on Apple TV Plus, which is really nothing to Apple because apparently they make $100 billion in just profits alone, or they did last year. So Peter Kafka, I read a nice little blog, I would call it, on Business Insider asking, why is Apple doing this? Why are they

signing up to lose a billion dollars a year every year on this thing that doesn't make money and they absolutely don't need to do it. But then as I was logging on this morning, I saw like a tweet. I saw like a tweet. I saw, oh, I guess it is like a tweet. It was a post on X and it was Ben Stiller, who is the creator, producer of Severance, which is a very popular show on Apple right now. It's like their most popular show. And he said something like,

Viewers want a season three. And then Tim Cook replied to him and said, season three available upon request. And of course, great marketing makes Tim Cook look like a fun guy.

And I think that's what it is. It's a billion dollar marketing spend on Apple's part to make them seem like cool and sophisticated and, you know, like they care about things and they make enough money where they could like do that. That's my theory. Yeah, I think I think that's absolutely right. Apple was always in the Steve Jobs era. It didn't need to worry about being cool because it was always the cool kids. But now absent severance and other cool things like what's cool about Apple anymore?

It's boring. It's enterprise-y. Elizabeth, what's your number? My number is 71, and that's percent. And that's the percentage of fund managers polled by Bank of America who expect stagflation in the next year. And I bring this up because I suggested that it might happen in December, and everyone yelled at me and said that was stupid. So now either 71% of fund managers and me, we're all stupid, or this is actually a distinct possibility. And

And Elizabeth, that's global, right? That's not America. Yeah, that's global. My number is 105.

I'm just closing the loop here on a podcast that I did with Ben Horowitz a while back where I won a bottle of wine from him, a bottle of fortified wine. And he came good on his bet obligations and he sent me a hundred year old bottle of Madeira or actually 105 year old bottle of Madeira as required by the terms of the bet. And that's what I drank last night. I had a really beautiful 105 year old bottle of Boile.

sent to me by Ben Horowitz, along with a bunch of other lovely old wines. I think we had 530 bottle years of age between us that we consumed, and it was all delicious. And so I just wanted to shout out and say, Ben, thank you very much. Your wine was delicious. What would you have had to give Ben if you'd lost? The same thing. If I had lost the bet, I would have had to give him a hundred-year-old bottle of Madeira. I don't know if he would have enjoyed it as much, probably because mine would have been cheaper.

In any case, that's it for us this week. I have to thank Dan Primack again for coming on at no notice. Thank you, Dan. Thank you, Shana Roth. And...

Jessamyn Molly for producing. Thanks all of you guys for emailing us on SlateMoney at Slate.com. And if you are into this whole ongoing and escalating constitutional crisis situation, Slate has more podcasts for you. The Political Gab Fest is all over it, as is the one that I can never pronounce. It's either Amicus or Amicus or Amicus. Amicus. Amicus. Amicus. It's an amazing podcast.

So go check out Amicus, which is all over this. And we will be back next week with more sleep.

And then there's this rapid montage of newspaper stories. About campaign aides and White House officials getting convicted of crimes. About audio tapes coming out that prove Nixon's involvement in the cover-up. The last story we see is: Nixon resigns. It takes a little over a minute in the movie. In real life, it took about two years. Five men were arrested early Saturday while trying to install eavesdropping equipment. It's known as the Watergate incident. What was it like to experience those two years in real time?

What were people thinking and feeling as the break-in at Democratic Party headquarters went from a weird little caper to a constitutional crisis that brought down the president? The downfall of Richard Nixon was stranger, wilder, and more exciting than you can imagine. Over the course of eight episodes, this show is going to capture what it was like to live through the greatest political scandal of the 20th century. With today's headlines once again full of corruption, collusion, and dirty tricks, it's time for another look at the gate that started it all. Subscribe to Slow Burn now, wherever you get your podcasts.