WEBVTT 00:00:00.000 --> 00:00:02.100 Welcome back to the Deep Dive. Today we are taking 00:00:02.100 --> 00:00:05.879 a stack of sources, articles, legal filings, 00:00:05.879 --> 00:00:08.679 financial breakdowns about a single individual. 00:00:08.919 --> 00:00:10.919 Yeah. And we're going to try to answer a question 00:00:10.919 --> 00:00:13.740 that honestly, it just baffles me. What's that? 00:00:14.000 --> 00:00:16.140 How does a man get fired from a corporate job 00:00:16.140 --> 00:00:19.679 at age 32 with no money, forced to borrow 10 00:00:19.679 --> 00:00:22.100 grand from his mother just to pay rent? Right. 00:00:22.219 --> 00:00:25.179 And end up reshaping the entire skyline of New 00:00:25.179 --> 00:00:29.390 York City and owning an NFL franchise? It sounds 00:00:29.390 --> 00:00:31.570 like fiction. I mean, if you pitch this as a 00:00:31.570 --> 00:00:33.429 screenplay, they tell you the second act is just 00:00:33.429 --> 00:00:36.049 too unrealistic. Right. But we are talking about 00:00:36.049 --> 00:00:38.530 Stephen M. Ross. Stephen M. Ross. Yeah. The man, 00:00:38.590 --> 00:00:41.689 the myth, the mega developer. The man behind 00:00:41.689 --> 00:00:45.350 related companies, Hudson Yards, the Miami Dolphins. 00:00:45.369 --> 00:00:47.219 But I want to be real. clear right off the bat. 00:00:47.320 --> 00:00:49.939 This isn't just a biography. We aren't here to 00:00:49.939 --> 00:00:52.840 just list the buildings he bought or his net 00:00:52.840 --> 00:00:54.759 worth. Right. If we just list his assets, we 00:00:54.759 --> 00:00:57.520 completely missed the point. We're here to understand 00:00:57.520 --> 00:01:01.479 the anatomy of a mega developer. The anatomy. 00:01:01.560 --> 00:01:04.180 I like that. We need to look at how tax law, 00:01:04.340 --> 00:01:06.920 real estate, and professional sports ownership 00:01:06.920 --> 00:01:09.819 intersect. Because when you peel back the layers 00:01:09.819 --> 00:01:12.599 on Ross, you realize... These aren't separate 00:01:12.599 --> 00:01:16.900 businesses. No. They are all pieces of one massive 00:01:16.900 --> 00:01:19.439 self -sustaining ecosystem. That's what jumped 00:01:19.439 --> 00:01:21.840 out at me in all the research. He's not just 00:01:21.840 --> 00:01:24.040 a guy who likes football and also happens to 00:01:24.040 --> 00:01:27.319 like skyscrapers. There is a very specific machinery 00:01:27.319 --> 00:01:30.099 underneath it all. It's all about leverage. It's 00:01:30.099 --> 00:01:32.359 about incentives. And it's about understanding 00:01:32.359 --> 00:01:35.040 the rules better than anyone else in the room. 00:01:35.299 --> 00:01:39.379 Specifically. The boring rules. The tax code. 00:01:39.500 --> 00:01:41.359 The tax code. That's the secret. We're going 00:01:41.359 --> 00:01:43.280 to get deep into the weeds on that because I 00:01:43.280 --> 00:01:45.659 think that's the secret sauce here. We have a 00:01:45.659 --> 00:01:48.120 lot to cover. A ton. We've got the origin story 00:01:48.120 --> 00:01:50.840 in Detroit, the aha moment with affordable housing, 00:01:50.980 --> 00:01:53.640 the massive gamble of Hudson Yards. The whole 00:01:53.640 --> 00:01:57.000 Miami Dolphins saga. And of course, the controversies, 00:01:57.000 --> 00:01:59.640 which are significant. Oh, yeah. But let's start 00:01:59.640 --> 00:02:02.159 at the beginning. Because before he was a billionaire, 00:02:02.299 --> 00:02:05.859 he was just a kid in Detroit. Born in 1940. A 00:02:05.859 --> 00:02:08.759 Jewish family in Detroit. He goes to Mumford 00:02:08.759 --> 00:02:11.740 High School. And I think, to understand Ross, 00:02:11.840 --> 00:02:14.020 you really have to look at his education. Okay. 00:02:14.180 --> 00:02:17.240 It's not the typical path for a developer. Not 00:02:17.240 --> 00:02:19.580 at all. I was looking at this timeline. It's 00:02:19.580 --> 00:02:22.319 pretty exhaustive. He starts at the University 00:02:22.319 --> 00:02:24.939 of Florida. Right. Then transfers to the University 00:02:24.939 --> 00:02:27.120 of Michigan, which, you know, becomes this huge 00:02:27.120 --> 00:02:30.099 part of his life later on. Gets a BBA in 1962. 00:02:30.659 --> 00:02:33.039 Standard stuff so far. Then he goes to Wayne 00:02:33.039 --> 00:02:36.620 State for a law degree. But then, and this is 00:02:36.620 --> 00:02:39.159 the part where I really paused, he goes to NYU. 00:02:39.500 --> 00:02:43.039 For a master of laws in taxation and LLM. Taxation. 00:02:43.099 --> 00:02:45.620 Okay, help me out here. Usually when we talk 00:02:45.620 --> 00:02:47.240 about real estate tycoons, we're talking about 00:02:47.240 --> 00:02:49.360 these guys with big personalities, sales guys, 00:02:49.460 --> 00:02:51.360 maybe architects. Guys who can sell a vision. 00:02:51.539 --> 00:02:53.939 Exactly. A master's degree in taxation sounds, 00:02:54.120 --> 00:02:56.419 well, it sounds dry. It is dry. It's incredibly 00:02:56.419 --> 00:02:59.719 dry. But that is the superpower. See, most people 00:02:59.719 --> 00:03:02.099 look at a building and see bricks, glass, maybe 00:03:02.099 --> 00:03:04.400 a nice lobby. They see rental income. Right. 00:03:04.500 --> 00:03:06.800 They see the physical thing. Ross looks at a 00:03:06.800 --> 00:03:10.020 building and sees a depreciation schedule. He 00:03:10.020 --> 00:03:13.039 sees tax credits. He sees a vehicle for sheltering 00:03:13.039 --> 00:03:15.879 income. So he's seeing the matrix code behind 00:03:15.879 --> 00:03:18.039 the building. He's seeing the matrix code. That's 00:03:18.039 --> 00:03:20.539 it. He's looking at the invisible financial structure 00:03:20.539 --> 00:03:23.550 that makes the physical structure possible. And 00:03:23.550 --> 00:03:26.289 that specific degree, that specialized knowledge 00:03:26.289 --> 00:03:29.969 of the tax code is the tool that eventually builds 00:03:29.969 --> 00:03:32.610 the entire empire. But it didn't happen immediately. 00:03:33.050 --> 00:03:35.889 Oh, no. Not even close. Right. Because first, 00:03:36.050 --> 00:03:39.590 he has to fail. And he fails hard. He moves to 00:03:39.590 --> 00:03:41.250 New York, works at Bear Stearns in corporate 00:03:41.250 --> 00:03:44.349 finance. This is the late 60s, early 70s. It's 00:03:44.349 --> 00:03:46.550 a prestigious job. I mean, Bear Stearns, but 00:03:46.550 --> 00:03:50.030 Ross. While all the reports suggest he wasn't 00:03:50.030 --> 00:03:51.750 great at taking orders. Doesn't play well with 00:03:51.750 --> 00:03:54.629 others. He had a certain arrogance or maybe just 00:03:54.629 --> 00:03:56.750 a conviction that he knew better. So in 1972, 00:03:56.830 --> 00:03:58.909 he gets into a big conflict with a superior. 00:04:00.030 --> 00:04:02.129 And it's not just, you know, a slap on the wrist. 00:04:02.210 --> 00:04:04.590 No. He gets fired. I want to just pause on this 00:04:04.590 --> 00:04:06.210 moment because it's so easy to gloss over in 00:04:06.210 --> 00:04:10.050 retrospect. It's 1972. You are 32 years old. 00:04:10.189 --> 00:04:12.129 Yeah. You have a law degree, a master's degree. 00:04:12.210 --> 00:04:14.150 You're in the most competitive city on earth 00:04:14.150 --> 00:04:16.879 and you just got canned. Utterly terrifying. 00:04:17.019 --> 00:04:19.000 That is a terrifying position to be in. It is. 00:04:19.079 --> 00:04:21.120 And he wasn't sitting on some pile of cash. The 00:04:21.120 --> 00:04:23.459 sources all say he literally didn't have the 00:04:23.459 --> 00:04:26.139 liquidity to maintain his lifestyle. He had to 00:04:26.139 --> 00:04:29.120 go to his mother. His mom. And borrow $10 ,000. 00:04:29.360 --> 00:04:31.879 Which, accounting for inflation, is about $67 00:04:31.879 --> 00:04:34.839 ,000 today. So it's a keep the lights on loan. 00:04:35.139 --> 00:04:37.620 It's not seed capital for an empire. No, it's 00:04:37.620 --> 00:04:40.300 survival money. It's please don't get evicted 00:04:40.300 --> 00:04:43.660 from my apartment money. And this is the pivot 00:04:43.660 --> 00:04:45.980 point. This is where most people would polish 00:04:45.980 --> 00:04:49.139 the resume, maybe shave the mustache and go interview 00:04:49.139 --> 00:04:51.240 at another bank. Right. Get back on the horse. 00:04:51.480 --> 00:04:54.519 Ross decides he is done answering to people. 00:04:54.660 --> 00:04:57.180 He decides to leverage the one thing he has that 00:04:57.180 --> 00:05:00.360 others don't. The tax degree. That deep technical 00:05:00.360 --> 00:05:03.040 knowledge of tax law. And this brings us to the 00:05:03.040 --> 00:05:05.819 first big chapter of his success, affordable 00:05:05.819 --> 00:05:09.100 housing. But not, he wasn't building it, right? 00:05:09.180 --> 00:05:11.379 He was structuring it. Correct. He wasn't the 00:05:11.379 --> 00:05:13.439 guy with the hard hat. Not yet. I need you to 00:05:13.439 --> 00:05:15.759 explain this to me like I'm five years old. Or 00:05:15.759 --> 00:05:19.139 maybe. Maybe like I'm a dentist in 1972 with 00:05:19.139 --> 00:05:21.920 some extra cash. What exactly was Ross selling? 00:05:22.319 --> 00:05:24.540 Because he wasn't pouring concrete yet. Okay. 00:05:24.620 --> 00:05:27.300 Okay. Let's role play. You're a wealthy dentist 00:05:27.300 --> 00:05:31.060 or a partner at a law firm in 1972. You're making, 00:05:31.100 --> 00:05:34.160 say, $100 ,000 a year, which is a lot of money 00:05:34.160 --> 00:05:36.500 back then. A huge amount. But the top marginal 00:05:36.500 --> 00:05:40.100 tax rate in the 70s was incredibly high. Over 00:05:40.100 --> 00:05:42.680 50 percent, sometimes up to 70 percent. So the 00:05:42.680 --> 00:05:44.720 government is just taking this huge chunk of 00:05:44.720 --> 00:05:46.500 my money. I'm looking for a way to keep it. You're 00:05:46.500 --> 00:05:49.660 desperate to keep it. Exactly. So enter Stephen 00:05:49.660 --> 00:05:52.319 Ross. He comes to you and says, I have an investment 00:05:52.319 --> 00:05:54.399 opportunity in government subsidized affordable 00:05:54.399 --> 00:05:57.100 housing. OK, that doesn't sound very sexy. Affordable 00:05:57.100 --> 00:05:59.000 housing? No, it doesn't sound like a big moneymaker. 00:05:59.199 --> 00:06:01.980 Rents are capped. But Ross explains the tax side 00:06:01.980 --> 00:06:04.639 of it. The federal government wants this housing 00:06:04.639 --> 00:06:08.160 built, so they offer massive incentives. Specifically. 00:06:08.829 --> 00:06:11.750 they allow you to accelerate depreciation. Depreciation. 00:06:11.750 --> 00:06:14.389 Okay, so on paper, the building is losing value. 00:06:14.649 --> 00:06:18.009 On paper, yes. Even if it's appreciating in the 00:06:18.009 --> 00:06:21.370 real world. So Ross structures a deal where you, 00:06:21.430 --> 00:06:24.689 the dentist, put in, say, $10 ,000 cash. Okay, 00:06:24.790 --> 00:06:27.769 I'm in for $10 ,000. But because of how the tax 00:06:27.769 --> 00:06:30.310 laws worked in, that investment allows you to 00:06:30.310 --> 00:06:33.329 claim a loss on your taxes that is much, much 00:06:33.329 --> 00:06:35.670 larger than your actual cash investment. So it's 00:06:35.670 --> 00:06:37.829 a paper loss. It's a paper loss. Let's say you 00:06:37.829 --> 00:06:40.689 can claim a $40 ,000 loss on paper. You take 00:06:40.689 --> 00:06:43.230 that $40 ,000 loss, you apply it against your 00:06:43.230 --> 00:06:46.769 dentist income, and suddenly that $20 ,000 you 00:06:46.769 --> 00:06:49.769 were going to pay to the IRS, it's gone. You 00:06:49.769 --> 00:06:52.029 owe them nothing. Wait, so I give Ross $10 ,000 00:06:52.029 --> 00:06:55.189 and I save $20 ,000 in taxes? Yes. I've just 00:06:55.189 --> 00:06:57.050 made money instantly by signing a piece of paper. 00:06:57.129 --> 00:06:59.910 Precisely. You made a 100 % return on your money 00:06:59.910 --> 00:07:02.370 via the tax code, regardless of whether the building 00:07:02.370 --> 00:07:05.410 ever collects a single dime in rent. Wow. Ross 00:07:05.410 --> 00:07:07.290 wasn't selling apartments. He was selling tax 00:07:07.290 --> 00:07:10.810 shelters. He was syndicating these deals, pooling 00:07:10.810 --> 00:07:12.850 money from all these wealthy investors who needed 00:07:12.850 --> 00:07:15.529 to hide income, and then using that money to 00:07:15.529 --> 00:07:17.730 back the actual affordable housing developers. 00:07:18.250 --> 00:07:20.569 That is, well it's genius. It's completely genius. 00:07:20.750 --> 00:07:23.550 And it explains why that tax degree was so important. 00:07:24.040 --> 00:07:26.660 Everything. A regular developer wouldn't know 00:07:26.660 --> 00:07:28.779 how to structure the partnership to maximize 00:07:28.779 --> 00:07:31.600 those write -offs. No way. He monetized the boring 00:07:31.600 --> 00:07:34.259 stuff. He realized that the government was effectively 00:07:34.259 --> 00:07:36.720 handing out free money to encourage this kind 00:07:36.720 --> 00:07:39.759 of housing. But you needed a translator to access 00:07:39.759 --> 00:07:41.920 it. And he was the translator. He was the Rosetta 00:07:41.920 --> 00:07:44.379 Stone for tax shelters. Yeah. In his first year, 00:07:44.540 --> 00:07:47.800 1972, the same year he was fired and broke, he 00:07:47.800 --> 00:07:51.980 made $150 ,000. That is a massive amount of money 00:07:51.980 --> 00:07:55.379 for 1972. That's top 1 % income, like immediately. 00:07:55.720 --> 00:07:58.259 Immediately. And that is the birth of related 00:07:58.259 --> 00:08:00.439 companies. Which was originally called Related 00:08:00.439 --> 00:08:02.639 Housing Company. Exactly. It was built entirely 00:08:02.639 --> 00:08:06.579 on this specific niche. Subsidized, low to moderate 00:08:06.579 --> 00:08:09.399 income housing. For years, he became one of the 00:08:09.399 --> 00:08:11.480 biggest affordable housing developers in the 00:08:11.480 --> 00:08:13.379 country. It's just fascinating because today 00:08:13.379 --> 00:08:16.399 the brand related means the exact opposite. The 00:08:16.399 --> 00:08:19.000 total opposite. It means $10 million condos, 00:08:19.040 --> 00:08:23.379 Equinox gyms, Hudson Yards luxury. It's the definition 00:08:23.379 --> 00:08:26.579 of elite. How does he bridge that gap? How do 00:08:26.579 --> 00:08:29.860 you go from Section 8 housing to selling penthouses 00:08:29.860 --> 00:08:33.039 to oligarchs? It's two things, capital and confidence. 00:08:33.139 --> 00:08:35.120 The affordable housing business is great because 00:08:35.120 --> 00:08:37.360 it's really low risk. The government guarantees 00:08:37.360 --> 00:08:40.340 the rent. Built in safety net. Right. And it 00:08:40.340 --> 00:08:42.480 generates steady cash flow. So it built his balance 00:08:42.480 --> 00:08:46.159 sheet. By the 1980s, he has enough of his own 00:08:46.159 --> 00:08:48.360 money to start taking bigger and bigger risks. 00:08:48.559 --> 00:08:50.200 And he starts moving into Manhattan. He starts 00:08:50.200 --> 00:08:52.080 moving into Manhattan. He starts hiring star 00:08:52.080 --> 00:08:54.080 architects, you know, famous architects like 00:08:54.080 --> 00:08:56.679 Robert A .M. Stern. He wants his buildings to 00:08:56.679 --> 00:08:59.820 be landmarks. He moves from need to want. That's 00:08:59.820 --> 00:09:01.500 a great way to put it. Affordable housing is 00:09:01.500 --> 00:09:04.620 a need product. Luxury real estate is a want 00:09:04.620 --> 00:09:07.659 product. An aspirational product. Totally. And 00:09:07.659 --> 00:09:10.259 Ross realized that if you wanted to leave a mark 00:09:10.259 --> 00:09:12.740 on the skyline, and make billions instead of 00:09:12.740 --> 00:09:15.340 millions. He had to capture that want market. 00:09:15.559 --> 00:09:17.820 Which leads us to the behemoth. I mean, the portfolio 00:09:17.820 --> 00:09:21.679 today is valued at over $60 billion. It's staggering. 00:09:21.980 --> 00:09:25.460 They are everywhere. London, Abu Dhabi, LA, Chicago. 00:09:26.379 --> 00:09:28.700 But the crown jewel, the thing that I think will 00:09:28.700 --> 00:09:31.779 define his obituary one day, is Hudson Yards. 00:09:32.340 --> 00:09:34.580 The city within a city. I walked through there 00:09:34.580 --> 00:09:37.659 recently. It is just, it's overwhelming. It feels 00:09:37.659 --> 00:09:39.360 like a different planet compared to the rest 00:09:39.360 --> 00:09:41.740 of Hell's Kitchen. It does. But the backstory 00:09:41.740 --> 00:09:45.379 of just building it is insane. It is the largest 00:09:45.379 --> 00:09:48.200 private real estate development in the history 00:09:48.200 --> 00:09:51.559 of the United States. Largest? Ever. 28 acres 00:09:51.559 --> 00:09:54.440 on the west side of Manhattan. But here is the 00:09:54.440 --> 00:09:56.480 kicker. And this is what blows people's minds. 00:09:57.539 --> 00:09:59.559 There was no land there. What do you mean there 00:09:59.559 --> 00:10:01.460 was no land? I've stood on it. What you were 00:10:01.460 --> 00:10:04.340 standing on was man -made. It was an active Long 00:10:04.340 --> 00:10:07.440 Island Railroad train yard. Dozens of tracks 00:10:07.440 --> 00:10:11.460 with trains running 2047. To build Hudson Yards, 00:10:11.500 --> 00:10:13.379 Ross had to build a massive platform over the 00:10:13.379 --> 00:10:15.500 trains. Wait, wait, wait. So the skyscrapers, 00:10:15.500 --> 00:10:18.220 the vessel, the mall, it's all sitting on a giant 00:10:18.220 --> 00:10:20.820 table. Essentially, yes. Yeah. A ridiculously 00:10:20.820 --> 00:10:23.240 complex and expensive table. They had to drill 00:10:23.240 --> 00:10:25.799 these huge support pillars called caissons down 00:10:25.799 --> 00:10:28.159 into the bedrock between the train tracks. While 00:10:28.159 --> 00:10:29.960 the trains were running. While the trains were 00:10:29.960 --> 00:10:31.799 running. Right. Without hitting the trains or 00:10:31.799 --> 00:10:33.799 the high voltage lines. And then they had to 00:10:33.799 --> 00:10:36.539 build a massive concrete and steel deck on top 00:10:36.539 --> 00:10:38.620 of those pillars. And then they could start building 00:10:38.620 --> 00:10:40.659 the hundred story buildings on top of that deck. 00:10:40.799 --> 00:10:43.379 The engineering risk alone is staggering. It's 00:10:43.379 --> 00:10:45.899 mind boggling. And what about the cost? Just 00:10:45.899 --> 00:10:49.620 the platform. Just to create. The fake ground 00:10:49.620 --> 00:10:53.120 cost? Roughly a billion dollars per acre. A billion 00:10:53.120 --> 00:10:55.620 dollars an acre? A billion. Just to get to ground 00:10:55.620 --> 00:10:58.139 zero, before you even lay a single brick for 00:10:58.139 --> 00:11:00.419 a lobby, that sounds like financial suicide. 00:11:01.299 --> 00:11:03.779 Why would anyone ever do that? Because if you 00:11:03.779 --> 00:11:06.200 pull it off, you own an entire neighborhood in 00:11:06.200 --> 00:11:09.679 Manhattan. Think about it. Usually developers 00:11:09.679 --> 00:11:12.440 fight over one lot, one corner. A single building. 00:11:12.700 --> 00:11:15.700 Right. Ross manufactured 28 acres of prime real 00:11:15.700 --> 00:11:18.450 estate out of thin air. But to make it pay off, 00:11:18.509 --> 00:11:21.730 he needed tenants and not just any tenants. He 00:11:21.730 --> 00:11:23.730 needed companies that could pay top tier premium 00:11:23.730 --> 00:11:26.350 rents to cover those astronomical construction 00:11:26.350 --> 00:11:29.210 costs. And this brings us to this placemaking 00:11:29.210 --> 00:11:32.409 concept. I read this story about Coach, the handbag 00:11:32.409 --> 00:11:34.549 company, and I think it perfectly illustrates 00:11:34.549 --> 00:11:38.470 how Ross operates. The Coach story is the textbook 00:11:38.470 --> 00:11:42.240 example of Ross's dealmaking style. It really 00:11:42.240 --> 00:11:45.159 is. He needed an anchor tenant. The first domino. 00:11:45.220 --> 00:11:47.639 Exactly. Without a big name, no one else comes. 00:11:48.200 --> 00:11:50.600 So he wanted Coach to move their global headquarters 00:11:50.600 --> 00:11:53.700 to Hudson Yards. Coach was, you know, skeptical. 00:11:54.059 --> 00:11:56.259 Of course. Why would they move to a noisy construction 00:11:56.259 --> 00:11:59.200 zone over a rail yard? It's far west. It's totally 00:11:59.200 --> 00:12:01.500 unproven. Right. So Ross didn't just offer them 00:12:01.500 --> 00:12:03.639 a good lease. He offered to alter the physical 00:12:03.639 --> 00:12:05.740 reality of the building for them. What does that 00:12:05.740 --> 00:12:08.399 mean? Coach wanted a specific kind of internal 00:12:08.399 --> 00:12:10.919 flow for their creative teams, this very open, 00:12:11.000 --> 00:12:14.100 collaborative feel. So Ross redesigned the tower 00:12:14.100 --> 00:12:17.419 to include a massive multi -story atrium right 00:12:17.419 --> 00:12:19.059 in the middle of the building. In the middle? 00:12:19.240 --> 00:12:22.379 Yes, specifically for them. He carved out what 00:12:22.379 --> 00:12:24.820 would have been tens of thousands of square feet 00:12:24.820 --> 00:12:27.860 of valuable, rentable office space. So he sacrificed 00:12:27.860 --> 00:12:30.679 rent money just to create a vibe for one tenant. 00:12:31.039 --> 00:12:35.220 Yes. He sacrificed rentable space to create a 00:12:35.220 --> 00:12:39.399 wow factor that closed the deal. And once Coach 00:12:39.399 --> 00:12:42.149 signed on the dotted line... The entire narrative 00:12:42.149 --> 00:12:45.629 changed. Suddenly, Hudson Yards wasn't a risky 00:12:45.629 --> 00:12:48.190 rail yard project. It was the new home of American 00:12:48.190 --> 00:12:50.889 luxury fashion. And then everyone else follows. 00:12:51.049 --> 00:12:54.029 Then L 'Oreal came. Then SAP came. Then the private 00:12:54.029 --> 00:12:56.909 equity giant KKR came. It's the domino effect. 00:12:57.129 --> 00:12:58.830 And this is where we see the difference between 00:12:58.830 --> 00:13:01.309 just being a landlord and being a placemaker. 00:13:01.629 --> 00:13:04.210 It's a huge difference. A landlord rents you 00:13:04.210 --> 00:13:06.870 four walls and a floor. A placemaker curates 00:13:06.870 --> 00:13:09.230 an entire environment. Ross didn't just build 00:13:09.230 --> 00:13:12.570 offices. He built The Shed, a world -class cultural 00:13:12.570 --> 00:13:15.490 center. He built The Vessel, that giant honeycomb 00:13:15.490 --> 00:13:17.669 staircase sculpture that everyone takes pictures 00:13:17.669 --> 00:13:19.610 of. He put in restaurants from Thomas Keller 00:13:19.610 --> 00:13:22.070 and Jose Andres, high -end destination dining. 00:13:22.210 --> 00:13:24.590 And he put in Equinox. Right. And this is crucial. 00:13:24.809 --> 00:13:27.389 This is the ecosystem part. Related Companies 00:13:27.389 --> 00:13:30.330 is a major investor in Equinox Fitness and SoulCycle. 00:13:30.559 --> 00:13:32.519 So he builds the condo you live in. He builds 00:13:32.519 --> 00:13:35.019 the office you work in. And he owns the gym where 00:13:35.019 --> 00:13:37.200 you work out downstairs. And the restaurant where 00:13:37.200 --> 00:13:40.700 you have dinner. He captures every single slice 00:13:40.700 --> 00:13:44.240 of your day. It's the vertical integration of 00:13:44.240 --> 00:13:46.200 the human lifestyle. It's almost like living 00:13:46.200 --> 00:13:48.299 on a cruise ship that never leaves the dock. 00:13:48.480 --> 00:13:51.159 You never have to leave the Stephen Ross ecosystem. 00:13:51.519 --> 00:13:53.240 That is the goal. You control the environment. 00:13:53.340 --> 00:13:55.559 You control the spend. Now, speaking of control. 00:13:56.169 --> 00:13:57.789 We have to pivot. We have to go to the other 00:13:57.789 --> 00:14:00.769 massive pillar of his life. Okay. We've covered 00:14:00.769 --> 00:14:03.409 the tax attorney and the builder. Now we have 00:14:03.409 --> 00:14:06.830 to talk about the sports tycoon. The Miami Dolphins. 00:14:06.850 --> 00:14:08.509 This feels like a totally different world, but 00:14:08.509 --> 00:14:10.690 you argued earlier that it's the same muscle 00:14:10.690 --> 00:14:13.470 group. How does that work? It's all about asset 00:14:13.470 --> 00:14:17.789 appreciation and leverage. So Russ buys 95 % 00:14:17.789 --> 00:14:20.450 of the Dolphins in the stadium for about $1 .1 00:14:20.450 --> 00:14:24.399 billion around 2008, 2009. Okay. And people thought, 00:14:24.559 --> 00:14:27.580 OK, another rich guy buys a toy. But Ross didn't 00:14:27.580 --> 00:14:30.100 treat it like a toy. He treated it like a distressed 00:14:30.100 --> 00:14:32.100 real estate asset. And the stadium was aging, 00:14:32.220 --> 00:14:35.320 right? It wasn't a great venue. It was a concrete 00:14:35.320 --> 00:14:37.720 bowl. It had been beaten up by the Florida sun. 00:14:37.899 --> 00:14:39.960 It wasn't generating the kind of revenue it could. 00:14:40.600 --> 00:14:43.320 Now, usually, this is the part of the story where 00:14:43.320 --> 00:14:45.559 the billionaire owner goes to the city council. 00:14:45.799 --> 00:14:48.019 With his handout. With his handout. It says, 00:14:48.409 --> 00:14:51.669 Build me a brand new shiny stadium. Or I'm moving 00:14:51.669 --> 00:14:54.909 the team to Los Angeles or San Antonio or wherever. 00:14:55.169 --> 00:14:56.929 We see it constantly. It's happening in Buffalo, 00:14:57.210 --> 00:14:59.850 Tennessee, Vegas. It's the standard playbook. 00:15:00.009 --> 00:15:02.450 It is the playbook. And Ross tried it. In 2013, 00:15:02.649 --> 00:15:04.929 he went to the state of Florida and asked for 00:15:04.929 --> 00:15:08.169 public money. About $3 million a year for 30 00:15:08.169 --> 00:15:09.870 years for renovations. Yeah, and they said no. 00:15:10.070 --> 00:15:13.200 The Florida legislature shut him down. Flatly. 00:15:13.259 --> 00:15:14.960 So typically, this is where the owner throws 00:15:14.960 --> 00:15:17.379 a tantrum. Fine, I'm taking my team and leaving. 00:15:17.639 --> 00:15:19.740 Ross didn't. He did something that absolutely 00:15:19.740 --> 00:15:22.159 shocked the NFL community. What did he do? He 00:15:22.159 --> 00:15:24.320 reached into his own pocket and spent roughly 00:15:24.320 --> 00:15:28.360 $500 million of his own money to completely renovate 00:15:28.360 --> 00:15:31.279 Hard Rock Stadium. Half a billion dollars. Now, 00:15:31.320 --> 00:15:33.519 I have to be skeptical here. Why? Is he just 00:15:33.519 --> 00:15:36.360 a benevolent fan who loves the city of Miami? 00:15:37.029 --> 00:15:40.909 Or is there a cold, hard, calculated reason to 00:15:40.909 --> 00:15:44.009 spend $500 million of your own cash? Oh, it's 00:15:44.009 --> 00:15:46.529 absolutely calculated, 100%. Think about it. 00:15:46.570 --> 00:15:49.049 If you take public money, you have public strings 00:15:49.049 --> 00:15:51.889 attached. The city wants a cut of the parking 00:15:51.889 --> 00:15:54.809 revenue. The county wants a say in what events 00:15:54.809 --> 00:15:57.309 you host. The state wants to know why you're 00:15:57.309 --> 00:15:59.669 charging so much for a beer. But if you pay for 00:15:59.669 --> 00:16:01.850 it yourself. You own the revenue streams, all 00:16:01.850 --> 00:16:04.960 of them. And Ross had a vision that went... way, 00:16:04.960 --> 00:16:07.980 way beyond just football. He looked at that stadium 00:16:07.980 --> 00:16:11.519 and realized that an NFL stadium sits empty 350 00:16:11.519 --> 00:16:14.259 days a year. It's a terribly wasted asset. It's 00:16:14.259 --> 00:16:16.799 a terrible use of real estate. Exactly. So he 00:16:16.799 --> 00:16:18.960 renovated the stadium to make it a global entertainment 00:16:18.960 --> 00:16:21.259 hub. He put a roof over the seats. He upgraded 00:16:21.259 --> 00:16:23.220 all the suites. And he brought in tennis. He 00:16:23.220 --> 00:16:24.679 brought in the Miami Open tennis tournament. 00:16:24.840 --> 00:16:27.500 He poached it from its longtime home in Key Biscayne. 00:16:27.679 --> 00:16:30.379 He built a permanent world -class tennis complex 00:16:30.379 --> 00:16:32.899 on the grounds of the football stadium. And then... 00:16:33.279 --> 00:16:35.639 The big one. Formula One. The Miami Grand Prix. 00:16:35.779 --> 00:16:38.240 This is a masterclass in logistics and, frankly, 00:16:38.320 --> 00:16:41.299 in lobbying. He managed to secure a 10 -year 00:16:41.299 --> 00:16:44.740 exclusive contract with F1. Which is a huge deal. 00:16:44.919 --> 00:16:47.799 Huge. But the problem was, where do you race? 00:16:47.960 --> 00:16:49.980 He couldn't shut down downtown Miami like they 00:16:49.980 --> 00:16:52.740 do in Monaco or Singapore. The local opposition 00:16:52.740 --> 00:16:55.019 was just too strong. So he looked at his own 00:16:55.019 --> 00:16:57.360 parking lot. He looked at the vast expanse of 00:16:57.360 --> 00:16:59.960 land surrounding Hard Rock Stadium. And critics 00:16:59.960 --> 00:17:01.659 laughed at first. They said, you're going to 00:17:01.659 --> 00:17:03.899 race these incredible F1 cars in a parking lot. 00:17:03.980 --> 00:17:07.619 Right. But Ross saw a campus. He built a temporary, 00:17:07.859 --> 00:17:10.160 purpose -built circuit. They call it the Miami 00:17:10.160 --> 00:17:13.039 International Autodrome. that winds all around 00:17:13.039 --> 00:17:15.099 the stadium. I looked into the engineering of 00:17:15.099 --> 00:17:17.279 this. It's not just painting lines on asphalt. 00:17:17.500 --> 00:17:20.420 No. F1 cars create immense G -forces and suction. 00:17:20.720 --> 00:17:23.319 They had to lay specialized, high -grade racing 00:17:23.319 --> 00:17:25.960 asphalt on top of the existing grounds, ensure 00:17:25.960 --> 00:17:28.759 drainage, build FIA -certified safety barriers. 00:17:29.059 --> 00:17:30.779 And then a few weeks later, turn it all back 00:17:30.779 --> 00:17:33.400 into a parking lot for football season. A logistical 00:17:33.400 --> 00:17:37.339 nightmare. A nightmare. But it worked. The event 00:17:37.339 --> 00:17:41.809 is a massive cash cow. VIP tickets cost Thousands 00:17:41.809 --> 00:17:45.089 and thousands of dollars. And because Ross owns 00:17:45.089 --> 00:17:47.849 the stadium and the land and paid for the upgrades 00:17:47.849 --> 00:17:50.130 himself. He captures all of that revenue. He 00:17:50.130 --> 00:17:52.690 captures the lion's share. He turned a football 00:17:52.690 --> 00:17:55.509 field into a 365 -day entertainment district 00:17:55.509 --> 00:17:58.369 that hosts a Super Bowl, a college football championship, 00:17:58.769 --> 00:18:02.069 a tennis major, and a Formula One race. It connects 00:18:02.069 --> 00:18:04.349 right back to Hudson Yards. It's placemaking 00:18:04.349 --> 00:18:06.829 again. He's not selling a race. He's selling 00:18:06.829 --> 00:18:09.390 the Miami Grand Prix experience. With the yachts 00:18:09.390 --> 00:18:11.109 and the fake marina and the celebrity clubs, 00:18:11.210 --> 00:18:13.710 yes. He sells the sizzle, and the state comes 00:18:13.710 --> 00:18:15.990 along for the ride. That's his old model. But 00:18:15.990 --> 00:18:18.210 he's also a bit of a maverick within that exclusive 00:18:18.210 --> 00:18:20.569 NFL owners circle, right? He doesn't always just 00:18:20.569 --> 00:18:23.269 vote with a pack. No, he really doesn't. The 00:18:23.269 --> 00:18:25.170 best example of this is the Raiders vote back 00:18:25.170 --> 00:18:29.529 in 2017. OK. The NFL owners voted 31 to 1 to 00:18:29.529 --> 00:18:31.609 approve the Oakland Raiders moving to Las Vegas. 00:18:31.730 --> 00:18:33.829 And Ross was the one. He was the lone dissenter. 00:18:33.950 --> 00:18:37.569 The only no vote. Why? I mean, Las Vegas is a 00:18:37.569 --> 00:18:40.430 goldmine. Why would a guy who loves money so 00:18:40.430 --> 00:18:44.980 much vote against moving a team to Vegas? His 00:18:44.980 --> 00:18:47.299 public reasoning was that he believed the owners 00:18:47.299 --> 00:18:49.200 hadn't done enough to try to keep the team in 00:18:49.200 --> 00:18:51.940 Oakland. He felt that there was a social contract 00:18:51.940 --> 00:18:54.900 with the fan base. Interesting. He thought that 00:18:54.900 --> 00:18:56.799 moving teams too frequently, and you have to 00:18:56.799 --> 00:18:58.720 remember the Rams and Chargers had just moved 00:18:58.720 --> 00:19:01.859 to L .A., eroded the long -term value of the 00:19:01.859 --> 00:19:04.700 NFL brand itself. He was worried about fan loyalty. 00:19:05.000 --> 00:19:07.599 He basically said, if we treat these teams like 00:19:07.599 --> 00:19:09.579 interchangeable widgets that we can just move 00:19:09.579 --> 00:19:12.059 around a chessboard, eventually the fans will 00:19:12.059 --> 00:19:15.549 stop caring. That's surprisingly principled, 00:19:15.549 --> 00:19:17.630 or at least it's a very long -term view versus 00:19:17.630 --> 00:19:20.430 a short -term cash grab. It is. He also threw 00:19:20.430 --> 00:19:22.789 some not -so -subtle shade at the Chargers' ownership, 00:19:23.089 --> 00:19:24.789 suggesting they didn't really try hard enough 00:19:24.789 --> 00:19:26.890 to stay in San Diego. It made him a bit of a 00:19:26.890 --> 00:19:29.529 hero to fans who hate seeing their teams relocated. 00:19:29.670 --> 00:19:32.529 However, and this is a massive, massive however, 00:19:32.930 --> 00:19:36.430 we cannot paint Steven Ross as some saint of 00:19:36.430 --> 00:19:38.490 integrity without looking at what's happened 00:19:38.490 --> 00:19:40.380 in the last few years. Oh, we cannot. Because 00:19:40.380 --> 00:19:42.119 for all his talk about doing things the right 00:19:42.119 --> 00:19:44.920 way, he recently got absolutely hammered by the 00:19:44.920 --> 00:19:47.200 NFL for cheating. We have to get into the controversy 00:19:47.200 --> 00:19:49.440 and complexity segment. This is where the story 00:19:49.440 --> 00:19:52.539 gets much, much darker. The Brian Flores lawsuit 00:19:52.539 --> 00:19:54.839 and the tampering investigation. Let's break 00:19:54.839 --> 00:19:56.819 this down because the details really matter here. 00:19:57.039 --> 00:19:58.940 OK, so it all started with Brian Flores, who 00:19:58.940 --> 00:20:01.200 was the head coach of the Dolphins. He was fired 00:20:01.200 --> 00:20:04.519 and he filed this scorching lawsuit against the 00:20:04.519 --> 00:20:08.460 NFL and the Dolphins alleging racial discrimination. 00:20:08.500 --> 00:20:12.170 Right. But. Buried inside that lawsuit was a 00:20:12.170 --> 00:20:14.089 grenade. The tanking allegation. The tanking 00:20:14.089 --> 00:20:16.730 allegation. He claimed that Stephen Ross offered 00:20:16.730 --> 00:20:20.410 him $100 ,000 for every single game he lost during 00:20:20.410 --> 00:20:23.150 the 2019 season. Paying to lose. Which is the 00:20:23.150 --> 00:20:26.549 cardinal sin in all of sports. If you are fixing 00:20:26.549 --> 00:20:29.210 matches. Which is what losing on purpose is. 00:20:29.390 --> 00:20:32.150 You're defrauding the fans and more importantly 00:20:32.150 --> 00:20:35.029 to the NFL, you are defrauding the gambling markets. 00:20:35.210 --> 00:20:37.029 It threatens the entire existence of the league. 00:20:37.230 --> 00:20:39.650 Absolutely. So the NFL launches this huge independent 00:20:39.650 --> 00:20:42.329 investigation. Mary Jo White, former SEC chair, 00:20:42.529 --> 00:20:45.190 leads it. What do they find? It was nuanced. 00:20:45.549 --> 00:20:48.190 The finding was very nuanced. And it's important 00:20:48.190 --> 00:20:51.170 to be precise here. The investigation found no 00:20:51.170 --> 00:20:53.509 evidence that the Dolphins intentionally lost 00:20:53.509 --> 00:20:56.549 games to improve their draft position. So he 00:20:56.549 --> 00:20:58.730 was cleared of the actual tanking. Officially, 00:20:58.730 --> 00:21:01.190 yes. Ross claimed the comment about the $100 00:21:01.190 --> 00:21:05.069 ,000 was a joke made in frustration. And the 00:21:05.069 --> 00:21:06.950 investigators said they couldn't prove it was 00:21:06.950 --> 00:21:09.450 a serious offer. So they cleared him on that. 00:21:09.769 --> 00:21:12.990 However, the investigation found something else. 00:21:13.289 --> 00:21:15.309 Something they weren't even looking for initially. 00:21:15.529 --> 00:21:19.400 Campering. Massive. repeated and unprecedented 00:21:19.400 --> 00:21:22.460 tampering. Explain the difference. Why is tampering 00:21:22.460 --> 00:21:25.940 such a big deal? Tampering is illegally recruiting 00:21:25.940 --> 00:21:28.779 a player or coach who is under contract with 00:21:28.779 --> 00:21:32.579 another team. It's breaking the fundamental gentleman's 00:21:32.579 --> 00:21:34.819 agreement of the league that keeps it from being 00:21:34.819 --> 00:21:36.960 the Wild West. Okay. The investigation found 00:21:36.960 --> 00:21:39.039 that Ross and the Dolphins had impermissible 00:21:39.039 --> 00:21:41.589 communications with Tom Brady. While he was still 00:21:41.589 --> 00:21:43.670 playing for the New England Patriots. A division 00:21:43.670 --> 00:21:45.950 rival. A division rival. And then again later 00:21:45.950 --> 00:21:48.109 when he was under contract with the Tampa Bay 00:21:48.109 --> 00:21:50.750 Buccaneers. And it wasn't just like a text message, 00:21:50.769 --> 00:21:52.930 right? Oh, no. We're talking about a secret meeting 00:21:52.930 --> 00:21:55.390 on Ross's yacht in the marina. They were trying 00:21:55.390 --> 00:21:59.029 to lure Brady to Miami, possibly as a minority 00:21:59.029 --> 00:22:00.589 owner, and then eventually as the quarterback. 00:22:00.849 --> 00:22:03.900 And it wasn't just Brady. No. They also tampered 00:22:03.900 --> 00:22:06.119 with Sean Payton while he was the head coach 00:22:06.119 --> 00:22:08.079 of the New Orleans Saints, trying to get him 00:22:08.079 --> 00:22:10.619 to be their coach. So while he was publicly preaching 00:22:10.619 --> 00:22:13.039 loyalty to the fans in Oakland, he was secretly 00:22:13.039 --> 00:22:15.720 trying to poach the biggest star in football 00:22:15.720 --> 00:22:18.519 history from another team? That is the contradiction. 00:22:19.099 --> 00:22:22.380 And the punishment from the NFL was severe. They 00:22:22.380 --> 00:22:25.180 stripped the Dolphins of their 2023 first round 00:22:25.180 --> 00:22:28.480 draft pick and a 2024 third round pick. For listeners 00:22:28.480 --> 00:22:30.339 who don't follow football that closely, losing 00:22:30.339 --> 00:22:33.039 a first round pick is a disaster. It's a franchise 00:22:33.039 --> 00:22:35.500 crippling penalty. That is a potential future 00:22:35.500 --> 00:22:37.680 superstar you don't get to draft. It sets the 00:22:37.680 --> 00:22:40.539 team back for years. And Ross himself was fined 00:22:40.539 --> 00:22:44.400 $1 .5 million personally and suspended for several 00:22:44.400 --> 00:22:47.119 months. He was removed from all his NFL committees. 00:22:47.259 --> 00:22:50.009 It was a total humiliation. It brings up this 00:22:50.009 --> 00:22:52.369 really interesting psychological question for 00:22:52.369 --> 00:22:55.750 me. Here is a guy who built his entire fortune 00:22:55.750 --> 00:22:59.390 on finding legal loopholes, the tax shelters 00:22:59.390 --> 00:23:01.670 we talked about earlier. Right. Reading the rulebook 00:23:01.670 --> 00:23:04.210 better than anyone else. He reads the rulebook 00:23:04.210 --> 00:23:07.190 and finds the gray area. But in the NFL, it seems 00:23:07.190 --> 00:23:09.910 like he just decided to ignore the rulebook completely. 00:23:10.230 --> 00:23:13.130 It's the hubris of the billionaire. I mean, when 00:23:13.130 --> 00:23:16.750 you have spent 40 years literally reshaping the 00:23:16.750 --> 00:23:19.190 skyline of New York City, when you have built 00:23:19.190 --> 00:23:22.609 a city over a rail yard, you start to believe 00:23:22.609 --> 00:23:25.690 the word no is just a suggestion. That the rules 00:23:25.690 --> 00:23:28.269 apply to other people. Exactly. He wanted Tom 00:23:28.269 --> 00:23:30.170 Brady. He didn't want to wait for free agency. 00:23:30.309 --> 00:23:33.710 So he took a shot. And he missed badly. He missed. 00:23:33.809 --> 00:23:36.599 And it cost his team dearly. That tension between 00:23:36.599 --> 00:23:39.119 being a visionary and a rule breaker shows up 00:23:39.119 --> 00:23:41.779 in his politics, too. It absolutely does. Ross 00:23:41.779 --> 00:23:44.500 is the classic checkbook participant in politics. 00:23:44.759 --> 00:23:47.380 He donates to everyone. He plays both sides. 00:23:47.700 --> 00:23:49.980 Totally. He's given a lot of money to Chuck Schumer 00:23:49.980 --> 00:23:53.160 and Andrew Cuomo, powerful Democrats in New York, 00:23:53.220 --> 00:23:55.039 which you have to do if you want to build in 00:23:55.039 --> 00:23:57.859 the city. But he's also a longtime major Republican 00:23:57.859 --> 00:24:01.019 donor. And this blew up in his face in a huge 00:24:01.019 --> 00:24:05.720 way in 2019. The Hamptons fundraiser. Ross hosted 00:24:05.720 --> 00:24:09.099 this very high dollar fundraiser for Donald Trump's 00:24:09.099 --> 00:24:11.559 reelection campaign at his estate out in the 00:24:11.559 --> 00:24:13.799 Hamptons. And the backlash was immediate. But 00:24:13.799 --> 00:24:16.200 it was targeted not at him personally, but at 00:24:16.200 --> 00:24:18.819 his brands. And this is the danger of that lifestyle 00:24:18.819 --> 00:24:21.039 business model we talked about. If you just sold 00:24:21.039 --> 00:24:23.579 concrete and steel, nobody would care. Right. 00:24:23.680 --> 00:24:27.680 But Ross owns SoulCycle and Equinox. And who 00:24:27.680 --> 00:24:30.420 goes to SoulCycle? Generally, younger, urban, 00:24:30.579 --> 00:24:33.440 more liberal -leaning consumers. Exactly. The 00:24:33.440 --> 00:24:35.500 very people who were most virulently opposed 00:24:35.500 --> 00:24:38.180 to the Trump presidency. So you had this massive 00:24:38.180 --> 00:24:40.819 viral campaign to cancel memberships. People 00:24:40.819 --> 00:24:42.559 were posting screenshots of their cancellation 00:24:42.559 --> 00:24:45.259 emails. It was a complete PR nightmare for those 00:24:45.259 --> 00:24:47.799 companies. It forced the CEOs of Equinox and 00:24:47.799 --> 00:24:49.500 SoulCycle to put out these statements, basically 00:24:49.500 --> 00:24:51.460 saying, we have nothing to do with our owners' 00:24:51.539 --> 00:24:53.940 personal politics. No company profits. Go to 00:24:53.940 --> 00:24:56.059 politicians. They had to distance the brand. 00:24:56.430 --> 00:24:59.130 from the man who owns the brand. A very awkward 00:24:59.130 --> 00:25:01.509 position to be in. It's a tricky needle to thread. 00:25:01.769 --> 00:25:04.289 And Ross basically said, look, I've known Trump 00:25:04.289 --> 00:25:06.549 for years. I like his economic policies. Get 00:25:06.549 --> 00:25:09.150 over it. He didn't apologize. No, he didn't. 00:25:09.150 --> 00:25:13.789 He doubled down. In 2021, his super PAC spent. 00:25:14.319 --> 00:25:17.000 a ton of money to oppose progressive Democrats 00:25:17.000 --> 00:25:19.119 who are running for office in New York City. 00:25:19.220 --> 00:25:22.400 So he's not backing down. Not at all. He operates 00:25:22.400 --> 00:25:24.900 on the belief that his money gives him a voice 00:25:24.900 --> 00:25:27.359 and he's going to use it regardless of what the 00:25:27.359 --> 00:25:29.799 SoulCycle writers in Soho think. Which makes 00:25:29.799 --> 00:25:32.799 his philanthropy even more confusing or complex. 00:25:33.119 --> 00:25:35.420 If you look at where he gives his money, it doesn't 00:25:35.420 --> 00:25:37.539 align with the conservative billionaire stereotype 00:25:37.539 --> 00:25:40.759 at all. No, it really doesn't. He is the single 00:25:40.759 --> 00:25:43.279 largest donor in the entire history of the University 00:25:43.279 --> 00:25:45.420 of Michigan. The largest ever. He's given nearly 00:25:45.420 --> 00:25:48.720 half a billion dollars. The number is $478 million. 00:25:49.140 --> 00:25:51.140 The business school is named after him, the Ross 00:25:51.140 --> 00:25:53.119 School of Business. After a $100 million gift. 00:25:53.920 --> 00:25:56.420 But it's not just buildings. Look at an organization 00:25:56.420 --> 00:25:59.579 he founded called RISE. RISE, the Ross Initiative 00:25:59.579 --> 00:26:02.940 in Sports for Equality. He founded this in 2015. 00:26:03.400 --> 00:26:06.240 The mission is specifically to fight racism and 00:26:06.240 --> 00:26:08.420 promote social justice within the sports industry. 00:26:09.250 --> 00:26:11.289 He's put millions and millions of his own dollars 00:26:11.289 --> 00:26:14.029 into this. He partners with the NAACP, with all 00:26:14.029 --> 00:26:15.869 the major leaguers. OK, so let me just get this 00:26:15.869 --> 00:26:18.990 straight. He funds a massive anti -racism initiative. 00:26:19.170 --> 00:26:21.809 Yes. But he's a major supporter of Donald Trump, 00:26:21.910 --> 00:26:24.769 who many people accuse of racist rhetoric. Yes, 00:26:24.769 --> 00:26:27.509 yes. And he gets sued by his own black head coach 00:26:27.509 --> 00:26:29.569 for racial discrimination in hiring practices. 00:26:29.869 --> 00:26:32.630 Yes, that too. It's messy. It's a flat out contradiction. 00:26:32.990 --> 00:26:35.470 Or it's compartmentalization. I think Ross views 00:26:35.470 --> 00:26:38.700 these things as separate silos in his life. In 00:26:38.700 --> 00:26:40.700 his mind, rise is a good thing he's doing for 00:26:40.700 --> 00:26:42.940 the world. The Brian Flores lawsuit is just a 00:26:42.940 --> 00:26:45.099 business dispute. The Trump support is about 00:26:45.099 --> 00:26:47.819 tax policy and economic growth. And he doesn't 00:26:47.819 --> 00:26:49.960 seem to feel the cognitive dissonance that the 00:26:49.960 --> 00:26:52.180 rest of us feel looking at it. Doesn't seem to 00:26:52.180 --> 00:26:55.099 bother him. He also gave $100 million to the 00:26:55.099 --> 00:26:57.779 World Resources Institute to create the WRI Ross 00:26:57.779 --> 00:26:59.980 Center for Sustainable Cities. So he's a green 00:26:59.980 --> 00:27:03.319 crusader. An anti -racism advocate, a Trump supporter, 00:27:03.460 --> 00:27:07.160 and a ruthless real estate tycoon all at the 00:27:07.160 --> 00:27:10.069 same time. He is a city state. That's the best 00:27:10.069 --> 00:27:12.309 way to describe him. That's a compelling, if 00:27:12.309 --> 00:27:14.849 slightly terrifying, way to look at it. He operates 00:27:14.849 --> 00:27:17.940 like a sovereign nation. A nation has a defense 00:27:17.940 --> 00:27:20.880 budget, a foreign aid budget, a trade policy. 00:27:21.319 --> 00:27:24.079 They don't always align perfectly from an ethical 00:27:24.079 --> 00:27:26.420 standpoint, but they all serve the interests 00:27:26.420 --> 00:27:28.900 of the state. And Stephen Ross is the state. 00:27:29.079 --> 00:27:31.779 It's the reality of that level of wealth. You 00:27:31.779 --> 00:27:34.359 stop being a person and you start being an economy. 00:27:34.539 --> 00:27:36.920 That's well said. So we've been talking for a 00:27:36.920 --> 00:27:39.700 while now. We've dissected the tax schemes, the 00:27:39.700 --> 00:27:42.460 engineering marvels, the stadium gambles, the 00:27:42.460 --> 00:27:45.160 scandals. If I'm a listener trying to wrap my 00:27:45.160 --> 00:27:47.400 head around Steve, in him, Ross, what is the 00:27:47.400 --> 00:27:49.799 one thing I should take away from all this? I 00:27:49.799 --> 00:27:51.480 think the biggest lesson is about the leverage 00:27:51.480 --> 00:27:54.240 of technical mastery. Ross didn't win because 00:27:54.240 --> 00:27:56.720 he had the best smile or the firmest handshake. 00:27:56.819 --> 00:27:59.380 It wasn't about personality. No. He won because 00:27:59.380 --> 00:28:02.920 he understood the tax code of 1972 better than 00:28:02.920 --> 00:28:04.619 the other guys at the table. He read the fine 00:28:04.619 --> 00:28:07.930 print. He weaponized the fine print. He realized 00:28:07.930 --> 00:28:10.390 that the government incentives, whether it was 00:28:10.390 --> 00:28:12.809 for affordable housing in the 70s or for the 00:28:12.809 --> 00:28:15.549 massive tax breaks for Hudson Yards in the 2010s, 00:28:15.549 --> 00:28:18.910 were the engine. He didn't fight the current. 00:28:19.049 --> 00:28:21.230 He just found out where the river was flowing 00:28:21.230 --> 00:28:23.990 and built a dam to catch all the money. It's 00:28:23.990 --> 00:28:26.549 a powerful reminder that sometimes the most creative 00:28:26.549 --> 00:28:29.789 tool in business isn't the marketing deck. It's 00:28:29.789 --> 00:28:32.450 the legal brief or the tax code. Absolutely. 00:28:32.509 --> 00:28:35.430 And the second big takeaway is that idea of placemaking. 00:28:36.179 --> 00:28:39.059 Don't just sell a product. Create the ecosystem 00:28:39.059 --> 00:28:41.319 that makes the product necessary. Don't just 00:28:41.319 --> 00:28:44.140 buy a team. Build a world where the team is the 00:28:44.140 --> 00:28:46.599 center of gravity for entertainment, for sports, 00:28:46.619 --> 00:28:48.299 for everything. But I want to leave with one 00:28:48.299 --> 00:28:50.119 final thought on that rule breaker mentality. 00:28:50.740 --> 00:28:52.839 We started this whole conversation with him getting 00:28:52.839 --> 00:28:55.359 fired for clashing with the boss. Right. He then 00:28:55.359 --> 00:28:57.799 spent the next 50 years ensuring he never had 00:28:57.799 --> 00:29:00.339 a boss ever again. He became the ultimate boss. 00:29:00.779 --> 00:29:04.140 But the NFL tampering scandal proves that even 00:29:04.140 --> 00:29:07.119 the ultimate boss hits a wall eventually. The 00:29:07.119 --> 00:29:09.559 rules finally caught up to him. And it makes 00:29:09.559 --> 00:29:13.859 me wonder, is that risk taking? That willingness 00:29:13.859 --> 00:29:17.140 to tamper, to push, to ignore the word no? Is 00:29:17.140 --> 00:29:19.900 that the fatal flaw in his character? Or is it 00:29:19.900 --> 00:29:22.539 the only reason Hudson Yards even exists? Can 00:29:22.539 --> 00:29:25.259 you have the vision to build a city on a platform 00:29:25.259 --> 00:29:27.500 without also having the arrogance to think you're 00:29:27.500 --> 00:29:29.920 above the law? I don't think you can. I think 00:29:29.920 --> 00:29:32.259 they are two sides of the exact same coin. The 00:29:32.259 --> 00:29:34.839 audacity that it takes to look at an open rail 00:29:34.839 --> 00:29:36.700 yard and say, I'm going to build a neighborhood 00:29:36.700 --> 00:29:39.380 there is the same audacity that makes you think 00:29:39.380 --> 00:29:41.240 you can just tap up Tom Brady on your yacht and 00:29:41.240 --> 00:29:43.019 get away with it. You can't buy one without the 00:29:43.019 --> 00:29:45.359 other. A complicated legacy for a complicated 00:29:45.359 --> 00:29:49.200 man. Stephen Ross, the tax attorney who rebuilt 00:29:49.200 --> 00:29:52.640 New York. And gave us a lot to talk about today. 00:29:52.960 --> 00:29:54.740 Thanks for diving in with us. There is so much 00:29:54.740 --> 00:29:57.180 more detail in the show notes. We've got links 00:29:57.180 --> 00:29:59.339 to the Mary Jo White report, breakdowns of the 00:29:59.339 --> 00:30:01.460 tax structures, the whole history of Hudson Yards. 00:30:01.480 --> 00:30:03.000 Go check those out if you really want to geek 00:30:03.000 --> 00:30:04.859 out on the numbers. Definitely worth a read. 00:30:04.980 --> 00:30:07.940 We'll see you on the next Deep Dive. See you 00:30:07.940 --> 00:30:08.039 then.