For more than two decades, whenever Gerry Cardinale looked in on the moves of Fenway Sports Group, he kept catching a reflection of his own business vision.
Now a member of its innermost circle, Cardinale features large in the growing presence of FSG in the wide world of global sports conglomerates.
Once his RedBird Capital Partners’ $750 million check cleared last March, Cardinale became the third-largest shareholder in FSG, the parent company of the Red Sox, Liverpool Football Club, and NESN.
Two big FSG moves quickly followed: A $900 million purchase of the NHL’s Pittsburgh’s Penguins, and a significant investment in LeBron James’ SpringHill Entertainment company.
Consider Cardinale’s first year at FSG as a warm-up act for what’s next.
“Everything’s in play, I would say,” said Cardinale.
Adding an NBA franchise is “a real top priority,” with a cricket team, another soccer team — MLS, NWSL, or from another continent — WNBA and, maybe one day, an NFL team also appearing on the wish-list.
“I would be very disappointed if I don’t significantly increase the amount of capital that we’ve invested in Fenway to date for more opportunities,” said Cardinale, whose RedBird firm owns stakes in multiple sports, entertainment, live event, media, and data analytics companies, including the XFL football league. “I hope and I think we’re going to have that opportunity to do so. That’s what buying into that platform should be all about.”
FSG is valued at nearly $10 billion by Forbes, which ranks third among the sports company titans list.
For FSG to grow to the size its leadership sees as possible may require more than private capital like RedBird’s can realistically provide.
Cardinale believes FSG, as well as other sports conglomerates and teams, may yet become a public company. That’s a path he and Billy Beane attempted with their RedBall SPAC (special purpose acquisition company, an alternative to the IPO route) in the summer of 2020 before Cardinale purchased a seat at the private table of FSG.
Cardinale cut his teeth in the sports business by helping then-Yankees owner George Steinbrenner launch the YES Network in 2001. Cardinale still holds a seat on the YES board of directors, but stepped down from his board position at Yankees Global Enterprises, parent company of the Yankees, after he bought into FSG.
How Cardinale wound up entering the sports and entertainment field and then became ensconced in the FSG family is a tale of serendipity as much as it is his aligned strategic outlook with FSG’s founding duo of principal owner John Henry — also owner of Boston Globe Media Partners — and chairman Tom Werner, as well as president Michael Gordon.
Raised in the Main Line suburbs outside of Philadelphia, Cardinale followed four years at Harvard with a Rhodes scholarship to Oxford where he did his masters in politics and political philosophy. He was an avid rower at all three stops.
Cardinale had options upon graduating from Oxford. He was holding a place at both Oxford to pursue a Ph.D. thesis and Harvard Law School, and was offered a job by the Goldman Sachs investment banking firm in London. He opted for a one-year position at a Tokyo think tank before entering the Goldman Sachs fold, where he helped open the firm’s Hong Kong and Singapore offices before heading to New York in 1997.
Cardinale’s stint in Asia proved formative. In the course of his encounters with wealthy families and business founders, he discovered a passion for introducing what he calls “partnership” capital to entrepreneurs and founders.
At Goldman Sachs in New York, Cardinale said he was “the weirdo, the guy that when something came into Goldman Sachs and no one knew what to do with it, it usually got kicked over to me.”
The 34-year-old weirdo got paired with the blustery dynamo Steinbrenner, who sought Goldman’s help to launch the YES TV network in collaboration with the then-New Jersey Nets.
“Gerry is a legendary deal maker, with unmatched relationships across the sports and media landscape. Our recent investments into SpringHill and the Penguins would not have happened without him,” said Red Sox president and FSG partner Sam Kennedy. “He’s assembled an extraordinary team of people at RedBird who have brought new vision, energy, and investment experience to FSG as we explore new opportunities for growth.”
YES’s success helped convince Cardinale that “disintermediating” — one go-to phrase in Cardinale’s rapid-fire mix of plain-speak and business jargon — the revenue streams of a single sports franchise or sports conglomerate is vital. Broadly speaking, disintermediating means cutting out the middle person to vertically integrate, whenever possible.
In sports, disintermediation translates into sports teams being their own media rights-holders and broadcasting their own localized content (think NESN), moving into live event management (think Fenway Sports Management putting on concerts, football games, and other events at Fenway Park) and real estate (think FSG building a concert venue and launching its business-residential development project near Fenway Park).
While Cardinale, Steinbrenner, and the Nets were putting the finishing touches on YES, it just so happened to coincide with Henry and Werner approaching Goldman Sachs in 2001 for financial assistance in their bid to buy the Red Sox.
“I was very intrigued by what they were doing,” said Cardinale. “I said [to Henry and Werner], ‘I would love the money to go in and own just NESN, so I can put the money in and help you fund the whole thing, but I want to just own NESN,’ because in my mind, I was intrigued by what I’m naturally intrigued by today. Fast forward 20 years, which was the opportunities to move forward the RSN [regional sports network] model.”
Henry and Werner declined Cardinale’s NESN spin-off offer. Seven years later, in 2008, Cardinale almost got ahead of an FSG move, making two attempts to buy Liverpool of England’s Premier League.
Two years later, FSG did.
Cardinale’s partnership with Beane featured its own FSG twist.
When the SPAC gambit failed to generate interest within FSG, Cardinale’s interest in FSG did not wane. He knew virtually everyone within or just outside its hierarchy. He had done business at YES with Paul Wachter, financial adviser to Werner, James, and his business partner Maverick Carter.
Talks and visits to Boston continued, and the deal closed in March 2021, with Wachter, James, and Carter also joining the FSG ownership group when Cardinale did.
“I’ve been watching them now for 20 years, which is so funny, right? We’ve been circling each other on the same assets,” said Cardinale. “Here I am 20 years later, where we all went together with them. It cost me a hell of a lot more, but I still have the conviction around it.”
Cardinale’s 10-plus percent stake in FSG trails Henry and Werner, and moves him one spot ahead of Gordon. He said he relishes the collaborative environment at the upper reaches of FSG’s hierarchy, where Henry has “the golden vote.”
“Obviously, the governance changed with us at the table — I mean, at a minimum, we have to be fiduciaries for our capital,” said Cardinale. “We now have a real seat at the table and an ability to influence decisions. But we know this investment thesis wasn’t us coming in and doing anything other than playing a supporting role, and I’m absolutely OK with that. It’s rare. I haven’t done that a lot, but I would definitely do it in this case, because these guys are world class and it’s a privilege to be in the same room with them.”
A month before his FSG investment, RedBird bought a minority stake in the Los Angeles-based Wasserman sports marketing and talent management company. Forbes ranked Wasserman’s sports agency two years ago as the second-largest, holding $5.7 billion in contracts and garnering $331 million in commissions. Among its stable of baseball players are Red Sox’ outfielder Kiké Hernández, Yankees outfielder Giancarlo Stanton, and Tigers infielder Javier Báez.
Cardinale sees no conflict in his stakes in both FSG and Wasserman.
“There’s adjacency issues that you need to sort of work through, which we did, but the reality is, there’s no issue there — if I need to recuse myself in something, it’s fine, it’s not a big deal,” said Cardinale. “Anybody with common sense would tell you that I’m not involved at all in trades, I’m not interested in being an agent.
“I’m not going to sit here and tell Chaim Bloom who to trade for or anything else.”
FSG’s next steps, should they be finalized, can very much be viewed as staking another claim in that new, more global, much larger, and possibly public frontier.
“Everything’s in play I would say but as usual we’re going to have a very strict funnel. The bar has never been higher in terms of what really fits in the [FSG] portfolio,” said Cardinale. “You should think about us looking to add other teams and the businesses around them. You should look at us building businesses within the platform itself, like I’ve done in my career at RedBird and Goldman, and you should look at continuing to evaluate the constructs,” meaning staying private or going public.
Michael Silverman can be reached at firstname.lastname@example.org.