Operation Warp Speed Chief Adviser Dr. Moncef Slaoui has submitted his resignation at the request of the incoming Biden team, under a plan that would see him stay in the role for a month to help with the transition, according to two people familiar with the situation.
Slaoui’s role leading vaccine development for the unprecedented government effort is expected to be diminished after Jan. 20, said the people, who declined to be named because the plan isn’t yet public. It would end by Feb. 12.
It’s not clear who will take scientific lead for the Biden team focused on Covid vaccines after that, or if someone will be appointed into that role. There are already two vaccines authorized in the U.S., with three more in late-stage clinical trials. Jeff Zients is Biden’s coordinator of the Covid-19 response, while Bechara Choucair will be Covid-19 vaccine coordinator, focused on speeding vaccine delivery.
Slaoui’s current contract includes 30 days’ notice before termination, and the Biden team has not asked Slaoui to stay on past that, one of the people said.
Former GlaxoSmithKline pharmaceutical executive Moncef Slaoui, who will serve as chief adviser on the effort to find a vaccine for the coronavirus disease (COVID-19) pandemic, speaks as President Donald Trump listens during a coronavirus disease response event in the Rose Garden at the White House in Washington.
Kevin Lamarque | Reuters
Slaoui had previously said he planned to step down after two vaccines and two therapies for Covid-19 reached the market, which happened last month with the clearance of Moderna’s vaccine. Last week he said he “decided to extend that in order to ensure that the operation continues to perform the way it has performed through the transition of administration.” He noted, though, that “we’re getting close to the point where my value add is more limited.”
Though the initial vaccine rollout has been criticized, the speed of their development, which Slaoui oversaw, exceeded expectations: two vaccines have been authorized in the U.S. with 95% efficacy in preventing disease, from Pfizer and Moderna. Pivotal results from Johnson & Johnson on its vaccine, the first offering the potential for just one dose, are expected within weeks. It was the fastest vaccine development in history.
Slaoui was criticized when he took the job for his ties to the pharmaceutical industry; he resigned from the board of Moderna around the same time his role was announced. He sold his shares in the company and said he donated their increase in value during the few days he held them while at the Operation Warp Speed helm.
He declined, though, to sell his shares in GlaxoSmithKline, where he spent 30 years and oversaw vaccine development, calling the stock his retirement.
He was criticized in particular by Sen. Elizabeth Warren, and responded to her in September in a video message, saying he’s a registered Democrat, but “didn’t hesitate” to take the role “because this pandemic is bigger than any one of us.”
Slaoui was paid $1,000 for his work overseeing Operation Warp Speed, which he said he planned to donate to scientific research.
California lifts statewide Covid stay-at-home order, allowing restaurants to reopen
A person wearing a protective mask arranges a table outside a restaurant in San Francisco, California, July 14, 2020.
David Paul Morris | Bloomberg | Getty Images
California will lift its stay-at-home order across the state on Monday, paving the way for restaurants and personal care services to reopen with modified operations for the first time in weeks, according to a statement from the state’s health department.
The stay-at-home order, which Gov. Gavin Newsom first announced on Dec. 3, split the state into five regions and was based on an area’s available intensive care unit capacity. Three of those regions — San Joaquin Valley, Bay Area and Southern California — were still under the order before it was lifted Monday.
Under the order, restaurants were allowed to offer take-out and delivery services only, and personal care businesses like hair salons and barbershops were ordered to close. Retailers were allowed to remain open with limited capacity. The state is expected to move back to its county-by-county tiered system, which will allow businesses to reopen depending on the level of Covid-19 spread in their area.
Nearly every county will start off in the most widespread, restrictive reopening tier, meaning that many businesses, including restaurants and gyms, will be allowed to reopen for outdoor services only, according to the California Department of Public Health. Retailers will be allowed to reopen their businesses at a quarter of their capacity under the most widespread tier.
State health officials now project that ICU capacity, the percentage beds in use, in every region will drop below 85% in four weeks after running at or close to max capacity for weeks. That allows Newsom to lift the stay-at-home order across California. The Sacramento region already exited the order on Jan. 12 and the Northern California region never entered the order, the state’s health department said.
“California is slowly starting to emerge from the most dangerous surge of this pandemic yet, which is the light at the end of the tunnel we’ve been hoping for,” California Health and Human Services Secretary Dr. Mark Ghaly said in a statement.
“Seven weeks ago, our hospitals and front-line medical workers were stretched to their limits, but Californians heard the urgent message to stay home when possible and our surge after the December holidays did not overwhelm the health care system to the degree we had feared,” Ghaly said.
California is reporting roughly 25,256 new Covid-19 cases a day on average, a more than 35% decline compared with a week ago, according to a CNBC analysis of data compiled by Johns Hopkins University.
There are now 18,638 people hospitalized with Covid-19, a recent dip across the state but still more than double the number of patients on Dec. 1, according to data from the COVID Tracking Project, which is run by journalists at The Atlantic.
Just because the state has lifted the order, however, doesn’t mean that every county has to allow the businesses to return. Under California’s reopening plan, local jurisdictions are allowed to implement tougher restrictions if necessary.
San Francisco Mayor London Breed, who at times has implemented tougher restrictions on San Francisco County, said on Monday that the area will allow most of the businesses to reopen under the tiered reopening plan beginning Thursday. Restaurants can offer outdoor dining with limits on customers per table, hotels will be allowed to accept reservations from tourists again and personal care services can resume for indoor and outdoor services.
An order that limits non-essential businesses and gatherings from 10 p.m. to 5 a.m. will remain in effect, even though the state order will expire, according to a statement from the mayor’s office.
NBA plans for private equity investments in teams
NBA Commissioner Adam Silver addresses the media prior to the game of the Miami Heat against the Los Angeles Lakers in Game one of the 2020 NBA Finals as part of the NBA Restart 2020 on September 30, 2020 at AdventHealth Arena at ESPN Wide World of Sports Complex in Orlando, Florida.
Garrett Ellwood | National Basketball Association | Getty Images
It’s the phrase National Basketball Association commissioner Adam Silver used in 2019 to help frame the attraction of becoming a sports owner. And Silver suggested the NBA could incentivize those looking to join its club, even on a minority level.
The NBA’s plan to lure private equity money is in motion, and it’s betting on the allure of owning limited partnerships in its clubs will pay off.
With valuations in clubs rising to astronomical levels, the NBA joined the private equity chase when owners approved a plan to allow investment firms to own stakes in teams. NBA executive J.B. Lockhart is one the individuals who oversees this strategy and the league picked Dyal Capital as its partner.
They way it works: The NBA rounds up stakes in clubs and sells them to private equity firms like Dyal, who can then technically sell the limited partnerships (LPs) to private investors. Last May, Barron’s reported Dyal was seeking to raise $2 billion to purchase the LPs.
Some in the private equity space praise the NBA’s move, and even attempt to connect it to a more global play down the line.
By turning to private equity, the NBA solicits more capital for its league, can strike quicker deals to assist with liquidity and finance its future endeavors.
Also, NBA valuations are skyrocketing. The average price of a club is now over $2 billion, and its last two franchises (Brooklyn and Utah) sold for an average of $2.45 billion when considering Nets owner Joseph Tsai paid $1 billion for the Barclays Center in Brooklyn in a separate deal.
Hence, the league needed to expend its investor base as even minority stakes are getting expensive.
“This provides the NBA, its member teams, its entire infrastructure with financial optionality,” said Chris Lencheski, the chairman of private equity consulting company Phoenicia and adjunct professor at Columbia University.
Allowing private equity investments will also help minority owners looking to sell and exit ownership groups. On the majority side, owners who want to recover from Covid-19 losses by can sell shares and benefit, too.
Lencheski, who also serves as CEO of Granite Bridge Partners’ Winning Streak Sports, sees the NBA’s global “economic moat” as a draw for investors as there’s unlikely to be any viable competition for high-level professional basketball. Plus the league is backed by global licensing, merchandise, sponsorship and approximately $2.5 billion in annual media rights income, which runs through the 2024-25 season.
But the move is not risk-free.
Addressing the NBA’s ratings slide at the 2019 Sports Business Journal Dealmakers conference, Silver described cable television model as “broken” and added league’s young viewers “are tuning out traditional cable.”
So should its media rights drop in price as cable subscribers continue to cut the cord, valuations could drop and investors can lose money on LPs. One sports banker pointed to 2009 when valuations dropped due to a bad economy as proof the NBA isn’t immune to a decline due to economic turmoil, either.
And few foreseen the abrupt stop to its estimated 40% in revenue due to the pandemic.
But it could have help from the public’s allure.
Anthony Davis #3 of the Los Angeles Lakers shoots the ball against the Miami Heat during Game Four of the NBA Finals on October 6, 2020 at AdventHealth Arena in Orlando, Florida.
Nathaniel S. Butler | National Basketball Association | Getty Images
Dyal and investment firm Owl Rock merged with Altimar Acquisition Corporation, a $275 million special purpose acquisition company (SPAC) currently trading on the New York Stock Exchange, allowing the combined firms to go public. The new firm is called Blue Owl, and public investors will soon be able to invest in it under the ticker symbol “OWL” on the NYSE later this year.
And one of its attractions will be its NBA fund.
Dyal did not respond to a CNBC request for comment, but managing partner Michael Rees spoke about the firm’s NBA strategy on a Dec. 23 U.S. Securities and Exchange Commission call announcing the plan to launch Blue Owl.
“We’re proud to be a partner, an exclusive partner, with the NBA, the National Basketball Association, where we’re the only approved buyer of a portfolio of minority equity stakes in the 30 teams in the NBA,” said Rees, according to the call’s transcript. “That business is just being launched, and we’re hoping to have our first closing in the not-too-distant future.”
“We think we can grow certainly a very attractive basketball strategy off of this platform, but also possibly expand to a broader sports business that could have tremendous upside,” added Rees, who will also serve as one of the co-presidents of Blue Owl.
It’s not clear what Blue Owl’s overall sports strategy is, nor how it expects to make a return on NBA LPs. A person close to their planning told CNBC it would purchase stakes in some clubs, not all 30 teams.
When discussing the NBA’s private equity play, a Wall Street CEO said the firms make no money on fiduciary capital until it sells something. The person requested to remain anonymous due to the sensitivity of discussing the matter publicly.
The CEO, who has an extensive history in private equity, also questioned how private firms would make any return on $2 billion. A long-time sports executive, who also requested anonymity, noted NBA teams can redistribute annual profits to new investors.
So, if a private firm is betting on sports teams as a long-term play, it could earn on clubs revenue while holding on to the LPs through dividends. Then, it could sell the LPs at a higher price.
And with the NBA such a global product, billionaires around world looking for an entry point into U.S. sports could be potential consumers of NBA accoutrements.
Paris Saint-Germain’s Qatari president Nasser Al-Khelaifi arrives for a training session at the Luz stadium in Lisbon on August 22, 2020 on the eve of the UEFA Champions League final football match between Paris Saint-Germain and Bayern Munich.
Miguel A. Lopes | AFP | Getty Images
Private firms can purchase the LPs and then sell them on the secondary market. If the NBA goes the private equity route, there will be guidelines in place, but it will lose some control on who the LPs are sold to.
Foreign investors could be a way for firms to make money on the LPs.
There is chatter that points to Middle East investors as future buyers of the minority shares. The NBA prohibits sovereign state investment in its teams, but investors from Abu Dhabi, Dubai and Qatar have been linked to the league before. In 2010, it was rumored investors were interested in purchasing the Detroit Pistons.
Lencheski added the NBA could also use the private equity investment vehicle to examine individuals who could look to buy majority positions in teams at a later date. The sports executive used Tsai’s entry as an example. He paid Russian billionaire Mikhail Prokhorov $1 billion for a 49% stake in the Brooklyn Nets in 2018 before taking full control.
Lencheski pointed to David Tepper’s entry into the National Football League as another example.
“One of the many factors that certainly helped Charlotte’s ownership in the NFL was the minority interest initially in the Pittsburgh Steelers,” he said. “If David Tepper doesn’t see the way the Steelers organization operates, understands what a best-in-class organization looks like when he goes to his NFL colleagues and says, ‘I want to buy a team,’ he has the funds, but more importantly for the NFL, he understands the culture of a winning community-focused sports organization.”
The NBA appears bullish on its product. Live sports still keeps the cable model from shattering. The league continues to produce international superstars to protect its economic moat — $8.3 billion in revenue. And the NBA’s credit is in good standing.
The NBA’s new focus is expanding the list of those seeking ownership accoutrements via private equity.
“You get some of the benefits of being a team owner,” Silver told SBJ, according to SportsPro. “So it’s not just a pure, ‘What’s my return financial investment?’ Not that that’s not important, but try to come closer to some of the same reasons that traditional franchise owners buy into teams.
“Part of it is financial,” Silver said, “but part of it is the amenities, and the cachet, and the desire to be directly involved with these leagues.”