Emily Flippen, a financial expert, and Matt Argersinger, an investment analyst, delve into the intriguing world of private equity in sports, highlighting NFL franchise valuations and interest in Smartsheet. They discuss the implications of weak job reports and rate cuts, while former NFL linebacker Brandon Copeland shares insights from his book on financial literacy for athletes, dissecting the realities of NFL contracts and the evolving landscape for college athletes with NIL deals. A dynamic chat filled with market trends and personal finance tips awaits!
The NFL's approval of private equity investment in teams signals a strategic shift to maintain soaring franchise valuations amid rising costs.
Brandon Copeland highlights the evolving landscape for college athletes, emphasizing the push for fair compensation reflective of their contributions to university revenues.
Deep dives
Weakening Labor Market Signals
The latest jobs report from the Labor Department revealed that only 142,000 jobs were added in August, significantly below expectations of 161,000. This marks a continued trend of downward revisions in employment figures, with July and June seeing total job cuts revised down by 25,000 and 61,000, respectively. The job openings ratio has also fallen to a low not seen since January 2021, indicating a weakening labor market compared to pre-pandemic levels. Investors are reacting to this news with uncertainty, as a weaker employment outlook could suggest potential rate cuts by the Federal Reserve, which in theory might inject money back into the stock market.
Yield Curve Inversion and Economic Outlook
The discussion highlighted the implications of a yield curve inversion, where long-term Treasury rates fall below short-term rates, suggesting a possible impending recession. This inversion has persisted since 2022, but the recent rise of the ten-year rate beneath the two-year rate adds complexity to the economic narrative. While typically such inversions indicate economic weakening, the persistent high short-term interest rates complicate predictions about future economic stability. Thus, investors face a confusing landscape with conflicting signals from job reports and Treasury yields regarding the economic trajectory.
Private Equity Capital in NFL Ownership
The NFL has approved a proposal to allow private equity investments in team ownership, thus expanding the financial avenues available to franchises. With valuations skyrocketing, particularly for teams like the Dallas Cowboys, which recently became the first sports franchise to surpass $10 billion, this decision indicates a strategic shift among owners. Despite some teams performing poorly on the field, their market value remains high due to local revenue streams and television rights, which are equally shared. This move to incorporate private equity is believed to be essential for sustaining and enhancing team valuations in an increasingly competitive sports market.
Transformations in College Sports Compensation
Recent changes in the college sports landscape highlight the shifts in how student-athletes can earn money, especially following the introduction of name, image, and likeness (NIL) opportunities. Athletes can now secure marketing deals, but there's push for direct compensation from universities reflecting the substantial revenues these institutions generate. Organizations like athletes.org are advocating for college athletes to have representation and negotiate better contracts based on the revenues they help create. This is seen as the beginning of a revolution in collegiate athletics, as new regulations prepare to allow for even broader revenue distribution to athletes.
NFL owners approved private equity firms investing in teams this season, we talk about the soaring franchise valuations and hear a player’s perspective on money.
(00:21) Emily Flippen and Matt Argersinger discuss:
- Weak jobs data, inverted yield curve, and whether the market will cheer a larger rate cut this fall.
- Why private equity is interested in Smartsheet and putting money into NFL franchises this season.
- The latest earnings updates from: Toro, Docusign, and ABM Industries
(20:20) Brandon Copeland played ten years in the NFL – now the linebacker is an ivy league professor, author, and advocate for college athletes. Copeland talks through his book Your Money Playbook, the realities of an NFL contract, and how some college players are finally getting their due.
(34:45) Emily and Matt break down two stocks on their radar: McKesson and AO Smith.
Stocks discussed: SMAR, DOCU, TTC, ABM, MCK, AOS
Host: Dylan Lewis
Guests: Emily Flippen, Matt Argersinger, Brandon Copeland