UBS Sports & Entertainment

Hello I'm Wale Ogunleye, I'm Head of Sports Entertainment at UBS and I'm super excited about my conversation today with this amazing individual. To my right Sherrese Clarke Soares. Sherrese is a visionary two time Founder and CEO of Harborview Equity Partners, a multi strategy global investment firm focused on investment opportunities in the entertainment and media space. Having spent over 20 years across finance, media and entertainment, establishing an asset management firm focused on intellectual property has been a dream in the making. Harborview strives to be the standard for excellence and integrity investing in assets and companies driven by premier intellectual property. So I hope I did a good enough job with that great job. Before we dive in, can you explain why we're in Brick City, Newark, NJ? Well, thank you Wale for that introduction and thank you so much for making the time and coming to a two fare fair zone, right. So I appreciate that it is an extra step to come to the city of Newark, but we're really excited and proud to be here. We're based in Newark and headquartered in Newark for so many reasons, but many among them is that Newark's revitalization, Newark's energy is all around arts and culture. Our office couldn't be better situated. We're right across the street from the Grammy Museum, right across the street from Prudential Center, where we get to see all of our great catalog acts perform for all of us. But more importantly, we're really excited about just being a small part of this great city's history. And many of the things that we look to do in entertainment and media will be rooted here in Newark. So pretty much you're an East Coast woman. This is it, right? This is where your roots are going to be, yes. I did one sacrosanct thing, as in New York across the Hudson and became a New Jersey. You know, as New Yorkers know, that's not. The thing Well, that's why I give you the the East Coast. You're still the East Coast of your heart, but we love it. You know, I I grew up here in, you know, in the metropolitan area. I'm very proud to be a New Yorker. Very proud to now call the city of Newark home. So you started this business two years ago and already you've bought music catalogs in different genres, different eras. You've done an amazing job from, you can start spanning from hip hop to Latin music. What goes into the qualities, or what are the qualities that you look for when you're looking to buy music catalogs? Yeah, absolutely. Well, listen, as we're going to do any analysis as we would one, we have to talk about who we serve, right? And we are by no means a nonprofit business, but at the end of the day, who do I serve? My clients are employees and retirees of various cities and counties across the USA. We serve on behalf of foundations and endowments that are doing really important work in their communities. That's who our investors are. And so when we think about that, it's our responsibility to really be thoughtful about how we invest their dollars so that they can do the good work that they want to do, so they can live life in retirement and otherwise with dignity. But important to that is also for us to be sort of really culture protectors. And so as we think about what we want to invest in, how we look at it, we really look at it from that frame. And so it's a combination of a very rigorous financial analysis, but also, who and what are the works. Do we believe that it has an audience? It doesn't have to be my specific audience, but it does have to be an audience that's resonant with someone. And how do we think those things come together to really again, stand for who it is that we want to be to the firm? Who do we want to be to each other? Importantly, who do we want to be to the world? But also importantly, is it doing what we're supposed to do for the people that we serve? And so that's how we kind of think about it. It no, actually it's a great answer and I think from us as UBS, we have many clients within the music space that think about selling their music catalogs. From your view, what are some of those reasons that you see artists wanting to sell some of the music? I get this question all the time, particularly by investors. What's the motivation, right? When you think about what we're buying, we're typically engaging with a creator or an artist, and this is their life's work. And in a lot of instances, that life's work is really precious to them. In the same way that here at Harborview, this is my life's work, right? Like Harborview, May is not my last name, but it's my name on the masthead. It's the town in Jamaica that my father grew up in. And so for me personally, when we're intersecting with an artist who's looking to sell a, the first thing is we're never a pressure cooker. We're never going to tell you you have to sell. We actually don't solicit people actively to pressure them to sell to us. That is a very important part of the equation for us. We do want to have the opportunity to bid to the extent that somebody is looking to create an opportunity for themselves to sell, an opportunity to sell the catalog that they've amassed or otherwise. But it's really important to us to not do that because we understand how precious the works are to their career, to their life, to their legacy. And we want them to know that again our firm has really tried to be situated as the culture protector. So as it relates to why people sell, I mean some people may be looking for creating you and I grew up in, you know, the financial services business. And you know people sometimes look at managing their pool of assets to create different liquidity for different reasons. They can invest in other parts of the market. They can, you know, help to finance other parts of their lives. It could be a way to reinvest themselves. One artist that we've purchased from, it gave her agency. It gave her agency to not have to take a huge record deal right now before she, you know, to decide something else. So having that cash flow, giving you the ability to make empowered choices that are not solely driven by financial needs at a particular moment in time, are some of the reasons why artists go to individually sell their catalogs. I'm excited to have this conversation with you because your vantage point and your expertise on all these different industries within finance and music have you well prepared to see some of the pitfalls that even some of our clients are trying to figure out. How do they react after these liquidity events, these big sudden wealth moments? Do you feel that artists are prepared for some of these big transactions that happen after working with you? Yeah, I mean I think listen, many of the artists and sellers that we engage with are song, whether they're songwriters or you know, or artists themselves have very sophisticated teams, right, Whether it's lawyers, business managers, wealth advisors, they have very sophisticated teams and I think they are positioned to make informed decisions. I do think platforms like the sports and entertainment platform at UBS allows people to get engaged on financial planning, long duration of financial planning, right. I can imagine that one of the reasons that the sports and entertainment franchise exists at places like UBS is to really be be able to pour into professionals who have these large events happen to give them the ability to be thinking about long range planning and thinking about maximizing value in broader financial markets. So I do think that they are sophisticated teams that are coming to the market and they are represented by really sophisticated parties. And you know I think a lot of people, you know we are not what's the right word, paternalistic with respect to artists. We believe that they're informed. They may not be informed specifically about the ups and downs of what the feds going to do today or tomorrow and that's not their job in the same way that it's not my job to go in the studio and figure out like is that the right mixer or should I hit it one more time on this kind of hook. That's not my job, but I don't think that they are uninformed or uneducated or unsophisticated. And we approach the conversations with them as sophisticated counterparts who had great legacy careers in their lane and are looking for partners around the liquidity of them. Just so you're telling me there won't be an album coming out from you soon? No, no, you haven't been doing that. It's not my ministry.  No. But you know what it is though your business savvy sense and then having real relationships you you take a strategy of a going forward basis which a lot of firms don't do you you think about the long, the long haul explain that strategy of working with clients on on on capital. Intellectual capital has not even been created yet. Yeah, I mean, listen, this is one of the like exciting parts about Harborview. So you know as you stated we are an investment firm focused specifically on the entertainment and media space, which that means for many artists they are not a monolith, right. Like if you talk to many creators actually they're multi  hyphenate creators all the time. We started with acquiring music catalogs, it's sort of where our legacy began, but it is not where our legacy will end. So what that means is that we sort of do things in between. We've looked at catalogs where we have partnered with people to create new works as well as buying legacy works. And then we've also invested in media businesses. We've recently made an investment in Macromedia, which is a film and television business as well as a representation business. And we're looking all the time to create synergies for our multi hyphenates that are in our portfolio, whether they are assets that we just own as it relates to just owning the master recordings or the publishing recordings or relationships that we're building with creators. And we again can bring that multi hyphenate part of their life to to life. If you will, another resource we have at our firm, our Women's segment has a major slogan that says "Owning your Worth." And from the athlete entertainer side I looked at, I actually wanted to steal that slogan because I felt like it really resonates with our clients and making sure they know their value. From an artist standpoint. Why is that super important in this industry? Yeah, I mean I think it's 100% important for any transaction you would go in. I mean you wouldn't go and sell your house unless you kind of had a sense for what the market is and what it's worth. You wouldn't, and what you will take, because you know as I say to people all the time, it's a negotiation between a buyer and a seller. And so, you know, a seller is an alternative to a bid to, you know what I mean? Like they could decide to just keep it. Like that is a decision. And so having fully informed views as to what you owe, what you think it's worth, what you're willing to transact that given your set of opportunities at a point in time is critical. You should do that work and you should spend the time doing it. But I do sympathize with, again, if your day-to-day is writing beautiful music and influencing culture, you may not have the natural resources at your fingertips as to how to go about doing that. And so we've done that for people here. We've helped them to sort that out. We have worked with wealth advisors to help people kind of get a real good sense of what things are worth. But I think it's critical to having a sense for you know what you need, what you care about. Etcetera. You know, we talked about about a little bit. I think offline we talked about roller coasters and talked about Coney Island. We're just talking about our East Coast love and we're not too far from Great Adventures. I know we're not too far from that. And the economy can sometimes feel like a roller coaster. What is the economy now for music assets like? Where are we at in this current state? So I think it depends on who you are as an investor, right? We are residents, we are not tourists in this space and that is intentional, right? And so what that means is I get to take a very long duration view around IP and IP rights, rising rates are a thing. Cost of money impacts every risk asset class. There is no risk asset class that is immune from what it costs to acquire it. But that being said, I think for us as long duration investors, we can you know take a point of view around the long duration of the asset and we've done that from time to time. We obviously again are subject to all the things that all investors are subject to. And again we're doing this work on behalf of who we serve. So it's a needle that we thread, but it's one that we know how to thread. I think as it relates to you know, sentiment, it just depends on where you are. Look, it looks good, but I do cover up these grays I'm a grown woman I've been around the market for. A bit no. You look real good. You look real good. I've Seen a few cycles which which what that means is they're just that, they're cycles. And so you know, understanding that cycles will come and cycles will go. How you position your investment portfolio for that cycle, whether as an investor like ourselves or as a seller or or someone looking for capital investment in their businesses is something that people you know continuously need to be cognizant of. But just remember that it's a cycle and you know are you doing this for the next three years? If the next three years is your time horizon, then perhaps you should hit the bid today. You know, if the next 10 years is your time horizon, i.e. you're prepared to hold something for 10 years or you're, you know, whether you're selling or buying, then you can take your time, be thoughtful and be patient around what it is that you're looking to do. Is there anything that you're more interested in this current climate from a catalog standpoint or something that you're maybe not interested in? Like what, In certain climates, do things change certain catalogs of genres that you're interested in? In one of the beautiful things about investing in entertainment and media at large and it's even more exacerbated in music is how non correlated it is. Music is actually very non correlated. It's super pervasive. I tell people all the time you don't even recognize it. But you've listened to music five times today. Whether you've actively selected it on your Spotify app or you've passively gone to Target and they've been playing, you know, some sugary pop on the loudspeaker or you've gone to the gym and worked out and they played playing motivational music, stepped in your car and you turned on, you know whatever the satellite radio that you listen to or your local radio dot. So music is so pervasive that because it's non correlated, we take a long view on all the genres. One of the things that's really that we're really passionate about is hyper-local music. Diasporic music is kind of like what I like to call it, things that are that originate from communities and cultures that may not necessarily be mass culture. And we see those things breaking records every single day. Eslaban Armado and Dell Records just had a #1 globally. It's the first Mexican regional song to be global. And so that's really amazing. And so having a view around again the long generation, how pervasive and how non correlated this asset class is, but not ignoring anybody, you know because again this comes back to again, who are we? I grew up listening to Byron Lee and the Dragonaires,  on the weekends like that was what we cleaned our house to. Most people have no idea what that is, but that's OK. It. Speaks to my individual experience. And my individual experience is not solo, right? Like it's my experience multiplied by millions and billions of people around the world and so you know having a point of view again a long term vision even in this current climate, we love all of it. You know we're not when we we're not saying this is off limits in a high rising environment. This isn't we are long duration buyer. How do you do that? Because I'm a 90s baby like in music like this is when hip-hop was, and it's hard for me to kind of like get out of that mode how do you like? Let, let's play favorites for a minute because I'm a 90s baby. The parties gonna be hot when the 90s song comes on. Right. Exactly. Exactly, exactly, exactly. Every time we shut it all the way down. Like, no, but I'm not going to be the old person that says, like, the young music is not great. I don't know. I mean, trying to love. Who doesn't love an Ice Spice, I think she's got, Amazing. Little too mature for my little girl. Mine too. Love it, love it as a listener. I'm not going to be that person. Because you know, that's the story of music, right? Like there was a point where jazz was rebel music, right? For certain generations, or rock was rebel music, Or hip hop was another thing, right? And now hip hop's 50 years old. And so that's just the normal turns of time. We just got to. We just got to accept it. God, I'm trying. I'm trying just. Got to go with it. With it I'm trying. I'm such I'm so old school. I've become my parents with with my music the way they have been with theirs. It's crazy but it's good. Look, music is amazing and I love this, this conversation for me because you wear so many hats that I can just bounce back and forth from a client side. From a financial side. It's amazing to have this conversation with you and I'm glad we're having this. Let's jump back into the financial side from an equity side of it. For our clients that are thinking about selling, what would be your biggest advice for them to as they're thinking about selling their catalogs? Yeah. I mean, I think that they should just be really thoughtful about how they're going to use that liquidity, right. And we are going into recessionary times that could put pressure on things outside of music, but certainly on you know advertising spending is a real thing that everybody's watching very carefully. Are you OK with taking great risk if if there is great risk attached to the value of the assets that you're looking to sell right now, if you're hyper transactional in the next 12 to 18 months, I would be really thoughtful and artful to move quickly and with with decision and determination. If you've got time and patience then you know maybe now is not the time to be kind of acting in the marketplace. Again, the tourists have abated. They've kind of left the city of entertainment and media investing or not left, but they certainly do take a break. And so with that, that creates a little less liquidity in the system which means that pricing views may be different today than they were in 2020 or in 2019 or 2018. And so if you have time then maybe you want to take time. If you don't have time then I think you want to act decisively and quickly because rates are about, I mean who would have thought that the 10 year treasury would be a volatile thing that we'd be talking about like watching that on the screen is like watching the latest tech stock. It's crazy. So like that is not the fact that we're living in that paradigm. If you are in need of near term liquidity and thinking about how you position your portfolio, you should be thinking very thoughtfully about how to be decisive and act quickly and move with speed and intention. If you've got time, then I would wait. I love it. I think we want our clients thinking about all those things. And I think the biggest thing that we talk about at UBS is legacy. And from a lot of our artists, they feel like having their catalogues in their sole possession gives them more autonomy on their legacy. Why would selling or parts of it, whether it be the publishing or some of their rights, Why would that increase their legacy component? Well, it just depends again on what stage of life they're in, right. And so you know, look, let's start with the basics. You can't sell what you don't own. So ensuring that when you have a seat at the table, you have rights to work, whether in, you know, song writing or composition rights or whether you have rights to work on the master royalty side is a critical thing because you can't even come talk to me if you actually don't own it, right. And so I think that is kind of first principles and that's the first principle on your legacy. But the definition of your legacy, like one, especially if you're the writer or the artist, it lives on forever and ever and ever, right. It kind of doesn't matter that you don't own it anymore. The legacy and the imprint of what you've built is something that we'll talk about forever and ever. So one, I think the legacy and the economics of it can be tied, but they can also be divorced. A, you have to own it in order to sell it, to even have a conversation, but then B, you've created the work. It's going to live with your name and you're input forever and ever and ever and so finding right partners who can create the liquidity that you need, but be culture protectors in the way that you want them to be, I think it's important in thinking through making the decision overall. And I'll close with this. Since we're talking about legacy, what do you want your legacy to be? Lord, have mercy. Well, that is a loaded question. You didn't prepare me for this. No. I think our legacy or my legacy will be building a skilled institution focused on the private equity space, giving back in a way really changing the face of private equity and twofold on physically. Like there's just not that many black women that have that have firms shout out to Ursula Burns and to Melody Hobson, fangirl for life, but there's very few of us. And so living and walking in that and so being a beacon of life are other girls and women that look like me is is huge in terms of that legacy. But also changing the way that we think about private equity, right? Like, again, we're in the service business. We're for profit service business. But the only way I make money is by big money for other people who are, again, trying to live their lives with dignity, doing really great work in the community. Who are we? What are we trying to do? Who do we want to be to each other as a firm and people? We want to make sure that we're building an institution that basically creates ambassadorship. That ambassador is again the people we serve, the people who work for our firm, the, the portfolio companies and artists that we spend time with. We want people to be ambassadors for what we do. And so that's a big part of our legacy and we want to have a footprint in communities of color. That's why we're here in Newark. And so we want our imprint to be bigger than our footprint. But that's I think hopefully the legacy and you know some of that will be me, but a lot of that will be the team that we have here that's helping me every single day build on that journey and on our way to growth. So that's I think the legacy question, but you didn't prepare me for that one, no. But you know what, let me let me tell you this though. Everywhere I go and I tell them I'm I'm speaking with you or I'm, we have a relationship somehow. They're super excited about it. They, they're super excited about your future. You're well on your way with your legacy and we appreciate you spending some time with us and diving into all things. So we appreciate that. Thank you so much. Appreciate it. Good to talk to you.