Why Josh Kushner is Buying Into the Lakers

It's the biggest sports sale ever in history for $12.5 billion. From New York, I'm Ellie Austin, and this is Fortune Daily. So let's start with a $2 billion signal about China's priorities. The tech company Alibaba is selling its gaming business in a deal worth roughly that figure. On the surface, this move could read like a company deciding to get out of a tough, competitive entertainment business. But as Fortune's Maya Osmondukov reports, the biggest signal is about where money is going next. Because as China pushes harder into AI, into chips, cloud infrastructure, and advanced manufacturing, gaming is taking a backseat to In China, the government and its corporate giants are increasingly signaling which kinds of tech they want to win and which ones they're willing to leave behind. And gaming appears to be falling in that latter category. In more local policy news, New York City just tried something radical for parents, a free night off. Over the weekend, Mayor Zoran Mamdani's Parents Night Out pilot offered four hours of free supervised childcare for kids aged 6 to 13 at city rec centers. About 500 families registered and roughly 265 ended up using the program. But the point wasn't just about babysitting. In New York, a babysitter can cost around $30 an hour plus tip, of course. So a night can and does quickly become a luxury for parents if they want to go out, have dinner. The mayor is pitching the program as a small example of a bigger idea, which is that if the it has to help make family life affordable. It's a tiny pilot for now, but it marks an important shift in New York City moving to make childcare part of the basic city infrastructure rather than something unwieldy and unaffordable that parents just have to figure out on their own. In today's story, we're talking about Josh Kushner's Thrive Capital and his recent deal to buy the Lakers with Bob Iger. News editor Katerina Giorno will tell us about Thrive, the venture capital firm, and Kushner's latest acquisitions. After that, reporter Sasha Rogelberg dives into another financing arm in sports, which is private equity, because firms seem to be taking enormous interest in the youth sports world. And finally, AI reporter Emily Fellini shares her fascinating reporting on OpenAI's internal problem-solving team. Let us know what you think about all of this in the comments and please like and subscribe to the show. More Fortune Daily ahead. Thank you for coming to talk to us about this big business of sports story. So Josh Kushner and Bob Iger have just bought the Lakers. Tell us what you know about how this deal came to be. Yeah, it's the biggest sports sale ever in history for $12.5 billion. So that's up $2.5 billion since Mark first bought it. Mark Walter. Mark Walter. Yeah. 14 months ago. That's a 25% annual return and annualized is 21%. Biggest deal in sports franchise history. Why has Walter sold the Lakers so quickly? That's still up for debate. Good question. There is a government investigation into him, but we can't say for certain that that's why he sold. But he said that his 14 months of ownership have been amazing and he's happy to have had the chance to own it. He sends thanks to Bob Iger, to Josh Kushner and to the Buss family as well. And he's made $2.5 billion. Just for holding it for 14 months. Pretty nice. So last month, Josh Kushner's Thrive Eternal, which is an arm of Thrive Capital focused on permanent capital and into funneling into sport, announced that it was going to take a stake in FIFA. That deal has now collapsed. Two weeks later, we hear that Thrive is buying the Lakers. Are those two events interlinked in any way? I mean, this is all part of like Kushner's big plan to really make Thrive Eternal into a major sports capital arm in the first place. He started off right after making Thrive Capital in 2010. He founded it when he was 24. And after buying early stakes in like OpenAI, Instagram, Spotify, all these things, he's a sports guy. And so he wanted to make this purely as like a venture firm for sports. FIFA didn't pan out. I mean, there's currently a boycott against the current president, but there's also a question as to what was going to happen with in the first place, of which it was Thrive Capital, Thrive Eternal. This is his first major stake in a major sports firm and not just stake. He's the owner of it. And tell us a bit about the relationship between Kushner and Bob Iger. Because in some ways, I know they've done business together before, but in some ways they feel like a bit of an unlikely pair. They're like, they're like besties at this point. If I were to speak for themselves, if they want to tell me otherwise, let me find out. But in 2020, 2022, after Bob Iger left Disney the first time, he went to work for Josh Kushner at Thrive. And he worked at, Josh was his boss, basically, while he was there. And then now when he went back to go replace Bob Chapik at Disney, he went back for those two short years. And now he's back as a partner in an advisory role with Josh at Thrive. So Kushner has stakes in other teams that predate this. He's got a minority stake in the Miami Heat that I believe he has to unwind to allow this Lakers deal to go through. What do you think the chances are of this Lakers deal coming to fruition? Or is there a FIFA situation on the horizon where it may all fall apart? All done deal so far. I mean, like at any given point, Mark Walter could back out and be like, listen, maybe not. But I mean, $2.5 billion for 14 months of fraud. I mean, What does it mean that Bob Iger and Kushner as characters are going to take over the team? This is a fantastic question that's playing out in the sports world and entertainment world. Bob comes from Disney, obviously. He's the reason why Disney invented or has acquired, let's say, Pixar and has invented all of these massive franchises that we know today. And the Lakers, on the other hand, are known as the showtime of the NBA team. They're known as entertainment. Tell us what that means, showtime, for people who might not be familiar. So there's Jerry Buss, who was the original owner of the Lakers back in the 60s and 70s. He invented Showtime Lakers, and that meant really bringing entertainment to the courtside arena. He's the reason why cheerleaders are now at the halftime show. He invented Paula Abdul, essentially found her and gave her carte blanche to do a cheerleading choreography. He brought really entertainment style to sports because originally sports were just seen as another thing to go see. This is now entertainment. And he's the reason why we had the Showtime Lakers. We have Magic Johnson as a showtime magic, basically. You have a massive million-dollar and billion-dollar industry delivering entertainment to a sports world, which is usually seen—I mean, now it's intertwined, so we don't know the difference. But before, it was seen as two very different things, sports or sports, entertainment values, something that would never have been seen. And that's what—or you can argue, and I would be very much so correct in arguing this one—is what made it into a billion, if not trillion-dollar industry in the first place, sports in general. Interesting. So really set the standard for the explosion of the business of sport that we've seen. So where is Iger going to take this, or could he take this franchise next, given his history of someone who kind of takes much-loved stories and put them out into the world across new platforms? Of course. I mean, this is the big question, right? It's like, we are seeing a move of a major player like LeBron from the Lakers to, again, like, the Sixers. But we do have Luka Doncic, who is now going to be the star player. You have a lot of, like, these brand names that are full of action-packed star power who are in the Lakers. And at the same time, you have someone with, like, the brains of Bob Iger, who's well-known for making stories and delivering the story of a team or of a character. And you have Josh, who knows how to, like, go into something and really invest and make it bigger than it has to be. Or, I mean, Lakers are already a huge team, but make it even grander. We are going to see possibly, like, more of this Showtime Lakers, possibly more of this, hey, like, we are the entertainment sports team. We are the people that people want to congregate to. And already, it's a massive driver when it comes down to ticket sales. We are probably going to see a lot more ticket sales going to the Lakers, going to L.A. specifically. How have the fans responded to this announcement? So far, so good. I mean, a lot of people have questions about Mark and why he's selling as we went over. A lot of people are questioning, like, whether what he said last year was sincere in the first place. He was saying that he's a lifelong fan. And he, again, sent his thanks to the Buss family for the selling of the stake. He was originally a minority owner at around 27 percent a few years ago. And then he then acquired the majority stake. And now you have other people piping in. So Magic Johnson, for example, again, probably one of the biggest faces of the Lakers. He sends his wishes to both Walter and also thinks, again, that Iger and Kushner will be doing great. On the other hand of it, you have Kushner and Iger who sent out a joint statement saying they are like one of the biggest fans of the Lakers and they've been lifelong NBA fans. So they're looking forward to really seeing this team go through. Josh Kushner, obviously brother of Jared Kushner, who is the son-in-law of President Trump. And as far as we know, those two brothers have very different political leanings. Josh has traditionally been a Democratic donor and supporter. What do you think Thanksgiving is like in that house? Can you imagine that? Just like one guy talking about the March for Our Lives donations and then the other one saying, like, my father-in-law is the president. What does this story teach us about Josh Kushner's investment thesis? And I'm asking in case we have people listening who are themselves investors and thinking about where they should put money next. I mean, like Josh is well known for getting in early on things. He has that kind of magic hunch about things. So again, I'm going to go back to like Spotify and OpenAI. That's like what he did with Thrive. And he was just like a child when he basically did The Child at 24 when he did it. Now with the Lakers and now when he's trying to go through the initial first round funding, that happens to be his entire approach to both permanent capital and let's say previously at Thrive Capital. And really you can start to question either he wants to go into a maintained, established brand like the Lakers, like FIFA, for example, if that deal went through, or more so like getting early about his hunch. He knows what's going to be big, what's going to be huge. He's got a really good gut. He does. Yeah, absolutely. He knew that Spotify was going to be a major music kind of industry or game changer. And he got in early. He got in early on OpenAI. So he has that kind of hunch of like knowing what can actually change the landscape of a certain industry as opposed to doing what the average typical like VC firm would do, which is just brain play kind of thing. He does it more so he picks and chooses. He knows which one he thinks with his backing also can use his kind of funding, can use his connections to become grander than it is. So it's more of a two-way beneficial street as well. Kat, where can we find more of your intricate reporting? Of course, go on fortune.com. Next up, more sports, the business of sports with Sasha Rogelberg. Okay, Sasha, thank you for coming back to join us again. So this is such an interesting story, private equity funneling into youth sports. How did you come to report on this? Right. So basically toward the end of the Men's World Cup this year, U.S. soccer star Landon Donovan, who competed three times in the FIFA World Cup, he's a Hall of Famer. He said, I wouldn't have been able to participate in club sports today. I had a single mom raising three kids. She was making $34,000 a year and club sports are just so exorbitantly expensive that he wouldn't have been able to play and ostensibly reach the heights that he has been able to reach today. And he's not the only one. And so was he expressing regret that that is no longer the case with youth sports? He had some concerns about youth sports today. Basically, from 2019 to 2025, the cost of youth sports have increased 46%. It means that fewer kids will have opportunities to compete, basically. And so tell me about the role of private equity here. What exactly is it buying in youth sports? So I think before we talk about private equity, we have to talk about kind of like the environment that arose that would enable private equity to enter youth sports. A lot of parents are worried about higher education for their kids. And one way to get into college is through sports scholarships. So as the cost of college increases, basically more sports scholarships have become available and has therefore incentivized youth sports participation. So that's one reason. And then at the same time, after the 2008 financial crisis and further exacerbated by COVID, public funding for rec centers have really decreased. So now there's all of this demand for youth sports, but really kind of fewer opportunities to take advantage of it. But what are the mechanisms for this? What is private equity actually buying? Is it buying the team? Is it buying the facilities? Tell me more. All of the above. So this has swelled really to a $40 billion industry. Private companies see opportunities with leagues, with apparel and equipment companies, with facilities. So all of the above. So Sasha, you mentioned that the cost of youth sports has gone up by around 46% in recent years. What does it cost these days if I'm a parent wanting to enroll my kid in soccer or baseball or whatever it might be? Between travel, apparel and equipment and year-round coaching, it can cost thousands of dollars, sometimes up to $15,000 for one kid for a whole year. And is private equity improving youth sports? What are the benefits of this happening? Private equity would argue that it is creating a supply for this increased demand, as well as state-of-the-art experiences for these kids who want to go pro. But I would imagine it's also creating an accessibility issue here. Yeah. It means for many American families, they can no longer participate in youth sports, or they have to make incredible financial sacrifices. Is the price of kids' sport just going to go up and up and up, or is there going to be a tipping point where something changes? So I think we're starting to see a tipping point now. There are a couple components of private equity's presence in sports that are really concerning to people. One of them is this whole stay-to-play idea. Basically, these private companies that own teams or leagues or facilities, they make deals with certain hotels and require teams to stay at those particular hotels at tournaments, which means that they can jack up the prices of hotels. Other companies or leagues require that athletes play for an entire year, not just a season, which also increases costs. And then you have examples like Black Bear Sports Group, which is the largest owner-operator of hockey rinks in the U.S. And they've essentially banned parents from live-streaming or recording their kids playing hockey and instead require you to subscribe to their own services in order to see your kid shoot a goal. Wow. This is a whole ecosystem that I didn't know existed in the way you were describing. If we have any parents watching, please leave us a comment and let us know if your kids play youth sport and what it costs. Sasha, thanks so much for joining us. Come back and tell us more as you continue reporting. Always a pleasure. Next up, I'm chatting to AI reporter Emily Fellini about OpenAI's internal troubleshooting system. Emily, hello. So I wanted to bring you in to do an OpenAI check-in because, as Emma, there's a lot going on at the company. You published another really interesting story this week about the internal process at a company for dealing with friction. Tell us what that is. Again, talking to former employees, I learned about this process called friction, and it's this internal email address, friction at OpenAI. And when they have a bottleneck, a team is blocking them, a process isn't having the intended result, or even if they have an office-related issue, like they said the IT vending machines being low or there's no parking spots, they can shoot their shot and email this friction at OpenAI, and the leadership team monitors that inbox, and they select the ones that they think need to be solved immediately, that are kind of worthy of fixing and defensible. And the expectation is that those teams will basically fall in line immediately and get it done. And do you have any gauge of how effective this process is? Yeah, it seems to be very effective in the sense that I did talk to somebody who had led a team and was, he said, on the receiving end of about a dozen orders to comply with frictions. And he said it's pretty much just to drop everything, make it work now, and to the point where his team had to build new technology to accommodate the change. There was a reason that they had blocked another team, and they had to re-prioritize their roadmap to work on this, as he called it, a friction. And the friction team will follow up and ask questions and make sure it gets done, which instills confidence in the employees, because they feel like their needs are getting met, they're kind of being addressed, these bureaucratic problems are being slashed and burned. So it's good culturally, but if you have to deal with it, it's not fun. And then there's a monthly Slack announcement to the company, like a big update on everything that was resolved through friction. Okay, I wonder if it would whack up Fortune to be discussed. Emily, thank you so much for joining us. Thank you. That's it for Fortune Daily. I'm Ellie Austin. See you next time.