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Oak View Group CEO on UBS Arena: 'You can’t be a global company if you don’t plant a flag in' NYC

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Tom Naratil, UBS Americas president and co-president of Global Wealth Management, and Oak View Group CEO Tim Leiweke discuss the importance of the New York Islanders Arena venue, both as an entertainment and investment hub.

Video Transcript

BRIAN SOZZI: The NHL's New York Islanders have unveiled their long awaited new home, the $1.1 billion UBS Arena. The UBS Arena is part of the $1.5 billion redevelopment of New York's Belmont Park, which is projected to create 10,000 construction jobs and 3,000 permanent jobs. Joining us now is UBS Americas president and co-president of Global Wealth Management, Tom Naratil, and Oak View Group CEO Tim Leiweke, whose firm is a partner on the redevelopment. Good to see you guys. Congrats on getting this one through the finish line. Tom, let me start with you. Why did you guys make this deal?

TOM NARATIL: Well, look, we're here in New York, the financial sports and entertainment capital of the world. We had a chance to put the UBS brand on UBS Arena. And with the premier sports and entertainment venue in the world, New York, metropolitan area, we've got over 10,000 employees and over 500,000 clients. So, perfect place, perfect venue, and great partners like Oak View Group and the New York Islanders.

JULIE HYMAN: And Tim, it's Julie here. Good to see you again. You guys are busy. You have a lot of different projects going on around the country. What can you tell us about this project in particular that maybe makes it different or was particularly appealing to you guys, whether it's location or your partner here? Talk to us a little bit more about that.

TIM LEIWEKE: Well, Julie, we're building seven of these around the world right now. We're spending $5 billion privately as a company. We really are bullish on the future of live entertainment. But you have to be in New York. And most people ran away in the last two years from entrepreneurial spirit and risk. But what we found, one, is for our company, you have to be in the greatest city in the world if you're going to be one of the largest facility management and live entertainment companies.

And, two, we found a partner in UBS that believes in not only the hope and the entrepreneurial spirit that we created by doing all of this privately, but they also understand there's seven million people that live in Long Island and Suffolk County and Connecticut that are closer to the UBS Arena than any other arena in the marketplace.

So despite, again, many people ultimately hiding out during this period of time, it turned out to be an unbelievably great vision and an unbelievably great partnership with UBS. And the last week, as we've opened the building, we have seen an unbelievable response from the community. So we've been sold out every event that we've had. And we've also enjoyed massive per caps. So it's going extremely well. We're a week into it. But you can't be a global company if you don't plant a flag in New York.

BRIAN CHEUNG: Yeah, and Tim, actually, it's Brian Cheung. I wanted to ask as a follow-up, what is the significance of it being in Long Island? Because we know that the Islanders have kind of been ping-ponged around. And we know development, especially for sports, sports stadiums, can be quite political, especially in the New York metro area. What is the significance of having the New York Islanders on the island itself?

TIM LEIWEKE: So, one, 30 years, those fans, great fans, and one of the most historic organizations in professional sports, with those four Stanley Cups back to back. Those fans, for 30 years, have been trying to find a home. They're the only team in the NHL that didn't have a home. So for us, one, opening up Climate Pledge Arena in Seattle with the new Kraken franchise and, two, having a historic franchise like the Islanders as our partner, giving those fans a permanent home, but more importantly for us, you don't get an opportunity to go build an arena in New York every day.

So this partnership with UBS, this partnership with the Islanders, the 30 years worth of waiting for the Islanders fans, and now having people like Harry Styles, who opened our building last night, coming in from a music standpoint, we've had an unbelievable-- it's everything we thought it would be in New York. And only New York can have this kind of impact right off the bat.

BRIAN SOZZI: Tom, of course, we have to talk some markets with you here. It was quite the ugly session on Friday. You're still seeing a lot of nervousness among investors today. What are your clients telling you right now? Are they inclined to stay long this market?

TOM NARATIL: Well, what we're talking to our clients about is the fact that you've had some opportunities that have been created as a result of Friday's moves. In particular, you know, from our point of view, we don't see this variant as knocking off the expansion in terms of global growth. So we're advising clients to take a look in particular at energy and financials, which got knocked back quite a bit on Friday.

For those who are a bit more defensive, they should be thinking about things like health care. And for those who can take on a bit more risk and are a bit more sophisticated, you know, with the VIX trading up where it has been, there's a good opportunity to sell some volatility. We think over the course of the next two weeks, the story is all going to be about the omicron variant. And that's what clients should be taking a look at and taking a look to take advantage of opportunities in the markets.

JULIE HYMAN: And, Tim, of course, one of the groups that sold off the worst on Friday had to do with travel. Also, Live Nation is one example of another stock that sold off. So you said you're bullish on live entertainment. Talk to me about your reaction as you've been seeing these omicron headlines and kind of what the implications are for your business.

TIM LEIWEKE: So if you look at Live Nation over the past two years, they took a bit of a step back on Friday. But overall, that company has been trading around $115 a share, so remarkable growth for that company. We've seen that in the industry. We have a team of doctors and scientists that we talk to every day. And what we're hearing from them is what we're hearing from a lot of other people in the industry, which is this is more contagious, but it is not nearly the kind of illness that we've seen in the past two years.

I can tell you in Seattle with Climate Pledge Arena and now with UBS Arena here, our per caps, our discretionary spending, we're sold out of all of our inventory in Seattle. We're almost sold out of all of our inventory at UBS Arena. If you look at the Street-- and that's what I look at it. If I look at what people are spending, how is our premium sales, are our sponsorship sales robust, all of that's been fantastic. We've sold out every game in Seattle. We've sold out all four Islander games here. We had the highest demand ever last night with Live Nation for pre-registration for Harry Styles. We had the highest merchandise sales that Harry had on the entire tour last night.

People-- there's a pent-up demand to get out. And although everyone understands this isn't going away quickly, we are learning to live with it. We will move on. We will be careful. But we have to go live our lives. And I think that's what you're seeing in the live entertainment industry. A realization is, we're going to get back. It won't be the norm we were used to two years ago. But we've adjusted. Our buildings are much healthier. We're more focused on wellness. People are coming back in, in record numbers. We're going to be fine.

BRIAN CHEUNG: And gentlemen, last question for both of you, were you at the Harry Styles concert yesterday? And what's the experience like inside there?

TIM LEIWEKE: I did not do the conga line dance for the record, but yes, we were at the Harry show. And he said it was one of the best acoustical buildings he's ever played, one of the nicest arenas he's ever played. So having him open our building up for us was a real treat. And having him have a great time and think it was one of the better nights of music he's ever played, fantastic. And by the way, he is one of the world's most popular artists right now. I can't tell you how great a partnership we have with him. And he's our partner on our co-op live arena in Manchester. So we have come full circle with Harry, thank God.

TOM NARATIL: Yeah, Tim covered Harry Styles for me. I covered the Islanders games, had a great time--

TIM LEIWEKE: That's right.

TOM NARATIL: --with Tim there.

TIM LEIWEKE: Yeah. Yep.

BRIAN SOZZI: Well, if you do, do that conga line, send us the video. We'll just circulate it within our private Slack channel. Congrats on the opening, guys. UBS Americas president and co-president of Global Wealth Management, Tom Naratil, and Oak View Group CEO, Tim Leiweke, good to see you. We'll talk to you soon.

TOM NARATIL: Thank you.

TIM LEIWEKE: Thanks. Happy holidays.

BRIAN SOZZI: You, too.