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Tepper’s $2 Billion Hedge Fund Payday Marred by NFL Meltdown


 

(Bloomberg) — David Tepper went all-in on two trades last year.

One quietly helped make him about $2 billion. The other has gone south in a very public way. 

At Appaloosa Management, his $17 billion hedge fund, Tepper loaded up on tech stocks just as the artificial intelligence boom was picking up steam. That, along with other bets, powered a roughly 20% return for the firm, pushing his fortune to $19.4 billion, according the Bloomberg Billionaires Index.

It’s been a different story in the National Football League. Outside the world of finance, Tepper, 66, is best known as the owner of the Carolina Panthers, who are wrapping up their sixth straight losing season. Tepper, in quintessential Tepper fashion, went big, mortgaging the team’s future to get University of Alabama quarterback Bryce Young, a massive bet he hoped would transform the franchise into contenders. Instead, it has won a league-worst two games. 

Tepper’s frustration spilled into public view Sunday. As the Jaguars pounded the Panthers 26-0, he threw a drink into the stands in Jacksonville, earning a $300,000 fine from the NFL for “unacceptable conduct.” 

“I am deeply passionate about this team and regret my behavior on Sunday,” Tepper said in a statement. “I should have let NFL stadium security handle any issues that arose. I respect the NFL’s code of conduct and accept the League’s discipline for my behavior.”

Bold Bets

Tepper is legendary on Wall Street for making bold wagers. 

The former Goldman Sachs Group Inc. trader set up Appaloosa in 1993 and famously kept a pair of brass testicles on his desk in New Jersey. Through decades of managing money he’s had spectacular years as well as major declines. Still, over time Tepper has posted annualized returns of about 28% for investors, before fees. That included a 12.5% gain in 2022, when the market tumbled.  

A spokesman for Tepper declined to comment.

Last year, his bets on US-listed equities went from $1.3 billion at the start of the year to $5.4 billion in the third quarter as he went big on names like Nvidia Corp., Microsoft Corp. and Uber Technologies Inc. That helped boost Tepper’s net worth by roughly $2 billion, according to Bloomberg calculations.

David Tepper at Bank of America Stadium in Charlotte, North Carolina. Photographer: Jared C. Tilton/Getty Images

Tepper grew up in a working-class neighborhood in Pittsburgh. He bought the Panthers for a then-record $2.275 billion in 2018, becoming the richest NFL team owner at the time. A year later, he announced he would return outside money and convert to a family office so he could spend more time with the team.

He immediately made his priorities clear to the local media and fans. 

“The first thing I care about is winning,” the mogul told reporters. “The second thing I care about is winning.”

Finance Owners

But the transition from hedge fund honcho to the complex business of running an NFL team hasn’t been smooth. Tepper is on his sixth coach, firing three in the middle of a season. And he’s been unable to find a quarterback, an issue that can mire NFL teams in losing for years. He’s also angered locals by pulling out of a high-profile deal for an $800 million practice facility. 

“When you’re a hedge fund person, you’re used to making important decisions quickly — and if they’re not working out you get out of them fast,” said sports consultant Marc Ganis, who noted that he thinks Tepper will eventually turn the team around. “In sports team ownership, sometimes that works and sometimes it doesn’t.”

Tepper is part of a broader group of finance billionaires snapping up professional teams, attracted by media deals, real estate investments and the chance to own a rare and rapidly appreciating asset. Steve Cohen bought the New York Mets baseball team in 2020 and Josh Harris, co-founder of Apollo Management Group Inc., led a group buying the NFL’s Washington Commanders last year. Ken Griffin, founder of Citadel, is said to be in talks to acquire a stake in the Miami Dolphins. 

Read More: Carlyle’s Rubenstein Said in Talks to Acquire Baltimore Orioles

Cohen initially ignited excitement in Queens after a handful of splashy player acquisitions, but the Mets failed to make the playoffs despite an opening day payroll of more than $340 million, the highest in baseball. Harris, meanwhile, is just getting started with a rebuild in Washington. He’s expected to go hunting for a new coach and will be looking for a starting quarterback, arguably the single most important player in all of professional sports.

Tepper is facing heightened scrutiny on his team’s failures, highlighting concerns that he’s never managed a large organization. Despite its stellar record, Appaloosa is nothing like the so-called ‘pod-shops’ of Griffin’s Citadel or Cohen’s Point72 that employ more than 2,000 people. New Jersey-based Appaloosa mostly manages Tepper’s personal fortune and has only 23 employees, according to filings.

Read More: Victor Wembanyama Sets Course to Become a Basketball Billionaire Unlike Any Other

In contrast, an NFL team doesn’t just consist of its 53-man roster. There are more than 20 different coaches with their own specialties, and hundreds more people doing everything from operations and human resources to data research and marketing.

A report in The Athletic in early December detailed Tepper’s interactions with staff and illustrated how deeply involved he’s become, including instructing head coach Frank Reich to fix the quarterback’s footwork. After what turned out to be Reich’s last game as coach, Tepper, often seen grimacing and shaking his head during telecasts, is reported to have screamed an obscenity as he left the locker room.

Expensive Project

Financially, at least, Tepper’s investment has done remarkably well as valuations for sports teams have soared. The Walton family paid $4.65 billion for the Denver Broncos and Harris’s group spent more than $6 billion acquiring the Washington Commanders. The Panthers are worth $4.3 billion, according to Sportico.

But running the team is expensive. Dismissing coaches early in their multimillion dollar contracts adds up, and there was also a very public fiasco over a new headquarters and training facility.

In 2019, the Panthers agreed to build the project in neighboring South Carolina, after the state legislature approved tax breaks worth more than $100 million. The federal government also allocated $35 million for a highway interchange upgrade tied to the project.

But the host city, Rock Hill, never issued the $225 million of bonds the Panthers were expecting to pay for local infrastructure. Tepper halted the project and it devolved into contentious bankruptcy proceedings that eventually led his construction company to agree to a settlement with creditors costing about $100 million.

Demolition at the site started in February and more than 10,000 tons of steel and 40,000 cubic yards of concrete had to be removed.

Bank of America Stadium, where the Panthers play, is more than 25 years old and Tepper has expressed interest in building a new facility in Charlotte. But because the Rock Hill project “crashed and burned very visibly” negotiations around future projects are likely to be more complex, said Ganis.

On the field, the Panther’s problems are unlikely to be solved quickly, in part because of the structure of their trade to acquire Young, who won the Heisman Trophy winner at Alabama. They gave up their 2024 first-round draft pick, which will now be the number one selection because of the team’s dismal record. That’s been a tough pill to swallow for fans with USC star quarterback Caleb Williams expected to be available.

Frustrated Fans

So far, many have been voting with their feet. When the Packers came to Charlotte for a game on Christmas Eve, there were plenty of empty seats and plenty more filled with vocal Green Bay fans. On Sunday, Carolina will host Tampa Bay to finish the ugly season and tickets can be had for as little as $15.

For Joey Blethen, a 41-year-old Panthers fan who lives not far from the abandoned project in South Carolina, initial excitement over Tepper’s ownership has turned to frustration. He doesn’t like the losing, but he’s mostly upset with moves Tepper has made off the field, including the recent drink-throwing incident.

“It’s just really a black eye for the entire organization,” he said.

To contact the authors of this story:

Tom Maloney in New York at [email protected]

Katherine Burton in New York at [email protected]



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