[piano intro] - Hello, I'm Nido Qubein.

Welcome to "Side By Side".

My guest today started as an unpaid intern for the Orlando Magic 26 years ago.

Today, he is the President of Business Operations.

His name is Charlie Freeman, and he's my guest on this show.

- [Announcer] Funding for Side By Side, with Nido Qubein is made possible by.

- [Announcer] Here's to those that rise and shine, to friendly faces doing more than their part.

And to those who still enjoy the little things.

You make it feel like home.

Ashley HomeStore.

This is home.

- [Announcer] For over 60 years, the everyday leaders at The Budd Group have been committed to providing smart, customized facility solutions to our clients and caring for the communities we serve.

- [Announcer] Coca-Cola Consolidated is honored to make and serve 300 brands and flavors locally.

Thanks to our teammates.

We are Coca-Cola Consolidated, your local bottler.

[upbeat music] ♪ - Charlie Freeman, welcome to Side By Side.

You are the President of the Business Operations for the Orlando Magic.

What does a president of business operations for an NBA team do?

- Well, that's a great question.

First, Nido, thanks for having me here today.

It's an honor to be here and to be with you, but in terms of what a president does, I think the biggest thing, and we'll talk about some of the leadership stuff later, but just being a good leader for the group.

But in terms of the day to day stuff, on the business side, we do everything from sales, marketing, concessions, retail, corporate partnerships.

We're in the entertainment industry and obviously in Orlando, Florida, we have some competition down the road.

So we need to put on a good show.

And our mission is to be a world champions on and off the court, delivering legendary moments every step of the way.

And that's what we try to do each and every game.

- You manage the business affairs clearly.

- Exactly right.

- Do you get involved with the players?

- Well, we have a great President of Basketball Operations, Jeff Weltman and our CEO, Alex Martins and they handle the player stuff.

I'm on the business stuff.

If I will tell you when we're winning, I'm a lot smarter, I can tell you that.

- No question about that.

Your business escalates when you're winning.

- It's amazing.

The beer's colder and the hot dogs are warmer and everybody's happy when you win.

- And people are coming by the truckload.

Yes, I get it.

That's true of life though, Charlie.

- [Charlie Freeman] It is.

- When you're doing well, it seems like the world opens up its doors and welcomes you in.

- [Charlie Freeman] Absolutely.

- When you're down, that's when your real friends and loyal fans will show up.

Lots of stuff is going on with NBA.

- Yeah.

- [Nido Qubein] What troubles you the most?

- I don't know, necessarily trouble, I think we're really excited about all the stuff that we're doing overseas.

I mean, the following of the NBA across the globe is at an all-time high and to see all of the interests from all the way from Europe, all the way through Asia, now Africa, it's just been an amazing run.

And I think in the US, we continue to grow as a sport and we're just really excited with the future of the NBA.

- And so how does that work?

The global part.

- Yeah.

- Educate me about, the whole team goes overseas?

- So a lot of the NBA, and this goes back to David Stern, when he was with us.

And now Adam is taking that torsion to move forward and really focusing on the international game and taking and having games, I mean, we played in Mexico City, we played in London, we played in Tokyo.

- And when you play there, you're not playing another NBA team?

- [Charlie Freeman] Yes we are.

- You're playing another American?

- [Charlie Freeman] NBA team.

- I see.

So you're not playing a local team there.

- Correct.

And sometimes we'll do some exhibition games, whether you're down in Brazil, we played a club team in Brazil, but yeah, we've traveled a lot and they rotate all the teams through, just to create that international presence.

- And that's not part of the regular season?

- Actually, some of the games are.

When we played in London, we flew over, I would say the basketball operations guys aren't a big fan of spending five or six days traveling, back and forth to London, but it was great.

We played the Toronto Raptors in London, full house.

And then in Mexico City, we played two games in the regular season and it was fantastic.

You're playing in 22,000 people in Mexico City.

It's pretty cool.

- That's awesome.

Yes.

And how do you manage language when you go to places?

Not so much London, but.

- Brazil was tough.

I mean, we did some crash courses on language for the players and the media and all that stuff, but it's just one of the things we have to do.

- How do you know if the fans are cheering you or cursing you?

- Well, what was good was when we were Mexico City, it was funny, we played the Bulls the first day and I think they all thought Michael Jordan still played for the Bulls.

- Yes, exactly.

- But then the next game we played Utah and everyone had Magic jerseys on.

So it was pretty easy to tell who was rooting for you.

- Give me the history of the Orlando Magic.

Now you've been there for a long time.

You began as an intern.

- [Charlie Freeman] Yeah.

- And then when you were 32 years of age, you took on a big job and it was a big risk.

- Yeah, absolutely.

So the Magic came into fruition in 1989.

Pat Williams helped found it.

He came down from Philadelphia with no guarantee of a franchise coming.

And then in 1991, the DeVos family bought the team and have really been great stewards for the organization as we've grown from the 90s.

We've been to the Finals twice and just close couple of championships and just a little short to Kobe Bryant into the Houston Rockets.

But it's been a great journey and I was fortunate enough to get there when Shaq was there and so that was an experience in itself.

- He's still on TV all the time.

- [Charlie Freeman] He is.

Absolutely.

- What is Value Next Technology?

- Venue Next Technology.

Well, so what we do is, it's not only Venue Next, but we have a tremendous amount of data and analytics that we try to do and predictive modeling in our business.

- Which means what?

You're predicting what interests the fans, you're predicting capacity and ability and skill of the players?

What exactly are you?

- So it's across the board.

So I guess a couple from the business side, won't speak to the basketball side, but a couple from the business side is, what we can do is if you're a season ticket holder, we can, based on your behaviors and all the trends we can.

- [Nido Qubein] I see.

- Predict the likelihood for you to renew.

And then we can try to do, based on all of our analytics and strategy teams, determine what can we do to create legendary moments for you, special things to try to get you to come back.

Another thing we try to do is we oversell our building, which is something that not many teams do, where we have a cool product where when you're within a mile of the building it geo locates your location, and it's a pass product, a subscription product, that today's younger generation is really into.

And so you can buy five or six games for $50 and you don't know where you're gonna sit, but when you get within a mile of the building, it'll give you a seat location.

And so it allows us to oversell and our goal was not to, it was to make sure everyone had a seat.

So I think we got as close as having to have everybody in the press box one time, but it's been a great thing for our business.

And the technology is.

- Did you learn that from the airlines?

That's what they.

- Absolutely.

We've studied Delta, Southwest.

Southwest was a big partner of ours for a long time.

And just how they did that and how they manage their yield, how they manage their capacities and all that stuff.

So the fan doesn't know that we're overselling, but we're able to take advantage of it.

- I mean, running an operation like Orlando Magic is a serious business.

Is it public what the revenues are?

- No, it's a privately held company.

- It's a privately owned.

Are NBA team's business operations profitable?

- Yeah, I think a lot of it depends, obviously you've seen a lot on player sellers and all that, but the goal of the league and through revenue sharing is to try to get the teams to be profitable.

I will say over the years, it's been a challenge at times, depending on how you perform on the court.

And I think some of the bigger markets can be more profitable because they can garner some of the revenues, but the smaller markets you have, you're challenged.

And I think we've been able to do very well over the last decade.

- What is the percentage of revenue that comes from television versus what comes from concessions versus what comes from ticket sales?

- So if you take the national television rights and your local television rights, you're looking at about close to 45 to 50% of it.

- [Nido Qubein] Really?

- Yeah.

- So half the revenues would come from television rights?

- [Charlie Freeman] Yes, absolutely.

- And then ticket sales?

- Tickets, corporate partnerships, premium sales, then you get in.

- [Nido Qubein] Suites, et cetera.

- Suites, retail, concessions, et cetera.

Yeah.

- Yeah.

That's the other 50%.

- [Charlie Freeman] Yeah, exactly.

- Interesting.

Very interesting.

So television really controls sports.

- Well, and the broadcast world is changing as you know, and the world is changing so fast with broadcast.

So I think the NBA has really tuned into how do we look at the next gen of broadcast and the cord cutting and people like my son who doesn't exactly know what cable television is.

So we have to figure out how we're gonna tackle that in the years ahead.

- With all the changes that's going on in society and in sports and in the world around us, what are some of the cultural issues that an NBA basketball team has to deal with?

- Well, I think one of the biggest core values of the Magic is community.

And we wanna welcome community to our games and want people to feel welcome and be a part of it.

And I think over the last few years, we've really wanted to make sure that people feel welcomed and feel a part of everything that we're doing.

And I think what we do and how we give back to the community is a huge part of that.

And the DeVos' have donated $35 plus million over the last 30 years in the Orlando community.

- And players are tough to deal with?

Work with?

Live with?

- It's funny.

- Are they prima donnas, are they?

- We're very fortunate, so, 11 of our 15 players are under the age of 24.

- [Nido Qubein] Young players.

- So we have a nice young.

- You draft them straight from college.

- We've got, as I mentioned, we have.

- You feel guilty about stealing them when they're sophomores or juniors?

- Freshmen?

Yeah, no.

So our first pick this year was Paolo Banchero from Duke.

And we have Cole Anthony, who went to University of North Carolina.

So we're pretty excited about them, but they're, Paolo's 19 and Cole's 21 and so when you get these guys, I think it's important, really to help them learn about the NBA, learn about business and I think it's been great for us.

And we're really excited about the young core.

- Do the college coaches talk to you after you take their best players?

- After.

We cannot talk to 'em before.

- So no, no, but I mean, I'm being silly.

Do they acknowledge they know you or they hate you forever?

- Well, it's interesting.

So obviously with the retirement down at Duke, he was very complimentary of Paolo and Mike Krzyzewski is very excited for his opportunity, but he knew, everybody knew what a great player he's gonna be, that he was gonna play one year in college and then come to the NBA.

- One of the biggest changes now of course, is this portal in collegiate basketball, which has tremendous effect on, let's say mid-sized schools.

- [Charlie Freeman] Yes.

Absolutely.

- I think it's gonna change the game to a great extent.

I know you're not in the collegiate world, but what do you think is gonna happen with all that?

- Yeah, I think we have to be very careful.

Obviously, you have the shoe companies, you have a lot of colleges that are creating sponsorship programs through the NIL program and potentially playing these athletes to come to their programs and I think it's still too early to tell.

It'll be interesting to see how it evolves, but it's something that we're keeping our eye on.

But again, we have to be very careful because obviously we can't recruit or be a part of that at our stage.

We have to wait until they're draft eligible.

- I see.

What makes a collegiate player draft eligible?

- So in the NBA right now, currently, you have to have at least completed one year of college or one year abroad, or at least play basketball, so you have to have completed that.

And I think the age is 19.

And so once you're 19, you can then enter the NBA draft.

- What do your fans at the Orlando Magic tell you that they like the most and what is it, they like the least, in terms of the experience?

- So obviously.

- Besides winning, we get winning, besides winning.

- So what's great is, we've been in Orlando and the new building that we completed in 2010, we really wanted to create amenities for everyone.

I think you have a lot of these sports facilities today that really focus on the premium product and we have our fair share of premium products, but how do you create an experience for everyone?

So we have a playground and a kids' area up on the upper level.

We have some great spaces where you can overlook the floor.

We have a restaurant that a lot of restaurants aren't open to the general public, if you make a reservation and you buy a $10 ticket, you can come and sit and have that great experience.

So for us, we want to have just an exceptional time.

And again, with the type of competition in Orlando, we've gotta make sure that you enjoy what you're coming to.

- And you wanna make it a family experience, is that right?

- Exactly and we do.

We focus on families.

We have some games, we have a five o'clock game this year, coming up, that's focused on families.

We have various theme nights throughout the year, and it's great to get the families out and to see the young kids get a part of it.

And the youth basketball program is a big focus of ours to kind of create that fandom at an early age.

- [Nido Qubein] Did you play basketball at Rollins College?

- I did not.

I played golf for Rollins for a couple years and did not, my basketball career sure stopped in high school.

I stopped growing, so at 6-3, I'm not quite tall enough to play with the big boys.

- I hate to bring up the subject, but it is on my mind.

So you'll forgive me if I ask this question.

But there was a chapter in NBA's history where there was some controversy about winning, losing, refereeing.

Is that all behind us?

- Oh yeah.

I think Adam has done and David too, have done a great job of making sure.

And especially with where the future of sports betting is, that has to get all cleaned up and has been all cleaned up and there's no concerns there.

- What is the difference in your mind, in terms of the experience, in terms of the fan response, between a collegiate basketball and a professional basketball?

- That's a good question.

I think obviously it depends on the college and have some avid and you get to the NCAA tournament.

I dunno if you've noticed, but on the broadcast, Charles Barkley and Shaq and those guys are now doing the NCAA Tournament, Grant Hill.

And so really they love that sort of amateur status of the college athletes.

And then to watch them go to the NBA, what's hard to believe is when you think about it, such a small percentage of all these college athletes actually go on to the NBA.

- What is the percentage?

- Gosh, I wish I knew offhand, but it's probably in the two or 3%, - [Nido Qubein] Two or 3%.

- Or maybe less than that.

- Yet they all aspire to go to NBA.

- They do.

We literally only have two rounds in the NBA draft.

So we have 60 players that come out of college and not all of them make an NBA roster.

And so a lot of 'em go overseas.

We have now the NBA G League that allows them to develop.

And there's some great stories that have come out of the G League, these players that have not made it to an NBA roster, but then have gone on to play and get these big contracts in the pros, which is great, but it's hard.

And that's where I think the college game is, it's one thing, but then when you get to the pros, everyone's incredible at what they do.

- Everybody's good.

So it's were a star when you were in college, but when you got over here, you found everybody was a star in college.

How do you determine what you pay your players?

- So a lot of.

- What are the criteria that you look at to determine whether it's X or Y?

- Yeah, so a lot of it, we implemented, the League implemented a rookie scale contract way back when, in a collective bargaining agreement.

So it used to be way back when Michael Jordan was in his prime, the rookies could come in and make whatever they wanted or whatever a team would offer.

And it just got outta hand because they were paying on the future potential.

And you had some unfortunate players that just maybe didn't meet that potential.

So the League did a great job of creating a rookie scale.

- [Nido Qubein] What does that mean?

- That means from the first pick down to the 30th pick, it's already predetermined what those pay rates are and then it allows teams.

- Are you telling me this is consistent?

- Yeah.

- Across all NBA teams?

- Yeah, so you can only offer the first round pick an average of, I think it's the last three years, or I don't have all the specific details, but.

- So the Orlando Magic, would have the same pay scale as another team?

- For the rookies.

- [Nido Qubein] For the rookies, okay.

- The rookies.

And so that allows you to keep your rookie in the system.

- [Nido Qubein] I see.

- For three to four years, and then you can match an offer at the four year because one of the things, and we learned this the hard way is Shaq left us to go to LA.

And I think the NBA implemented a rule where they wanted to try to keep players with their home teams that they've drafted them.

And they've done a great job of being able to do that with allowing you to match salaries or keep them.

And so that allows for not as much player movement so that you could start to create some fan bases behind your players, but then once you become a free agent, then it's sort of an open market.

- Whatever they're willing to pay.

- Yeah.

I mean, LeBron.

- Becomes a competitive.

- LeBron signed the biggest deal in NBA history yesterday.

- That's where the agents and the lawyers get involved.

- With the team executive.

- What is the tenure of, what is the longest tenure of your players right now at the Orlando Magic?

- So who is?

- [Nido Qubein] The longest.

- Who's been with us the longest?

- Yes.

- Yeah.

So as I mentioned, we're so young.

We've got a couple, Gary Harris and a couple players that have probably been in the League 7, 8, 9 years, but we want a couple veterans to help the younger guys.

And then what happens is these teams try to go for a championship, they'll bring in these veterans late in their careers.

You saw this with Chris Paul in Phoenix, and some of these players where they're really pushing for that.

- Chris Paul went to Wake Forest.

- And was right there in the Finals a couple years ago to try to win one in Phoenix.

And so they're in their late thirties and LeBron's in his late thirties.

And so they all want to try to win that coveted ring before they retire.

- How long, typically, how long does a basketball player last on the court?

- Career?

It's a good question.

I don't know the specific details, but I would say that probably, I would say a 10 or 11 year career in the NBA is a strong career.

- So thirties.

How does that compare to football?

- Yeah.

Football's a lot less.

I believe football's somewhere in your four to five or six, based on injuries.

There's a lot more injuries in football than there are obviously in basketball.

- How many employees at Orlando Magic, how many full time employees?

- So it's interesting.

So full time, we're right around 300.

- 300!

You have 300 employees at the Orlando Magic, inclusive of players, but the players are only?

- 15.

- 15.

- But a lot of support staff.

But then to put on these shows, I mean, we laugh.

And then when we expand, what's really interesting is when we have a game at the arena and you're putting 18,000 people in a building with all the part-time staff, we're up to eight, 900 people.

- And you outsource that, though.

- Some of it we have.

We have third party.

- Show Pros and.

- We have third party vendors to help with security and ushers, but we have a lot of our own part-time staff there as well.

And so to put on a show, you're over a thousand plus people in a building, which is.

- Really?

- Yeah, it's like a cruise ship almost.

- It takes a thousand people.

- [Charlie Freeman] Yeah, to put on a show.

- To put on a game effectively?

- Absolutely.

Yeah.

- And what do the 300 people do?

So some in business ticket sales, I get that.

Some are coaches and assistants and sports medicine and so on.

- A lot of that, I mean, we have a tremendous amount on the basketball side and on the business side, it's amazing.

As I mentioned, the data and analytics side of the business has grown.

Marketing side of the business grown, social media side of the business has grown.

And then you've got your public relations.

You've got your corporate sales, ticket sales, premium sales.

So you'd be surprised.

It adds up pretty quickly.

- For a novice like me, this is all interesting information because I've never seen the operations sort of in the back office to see really what goes on.

I guess at some of it, but I don't know all of it.

What do?

The players are traveling all the time, aren't they?

- [Charlie Freeman] Yeah.

- How do they maintain a family life?

- It's difficult.

I would say.

And we have.

- [Nido Qubein] And how many months a year do they travel?

- So really it's from October through April and then including play-offs, can take you all the way to June.

- And then you have practice, right?

- And then, well, in the off season, we try to give them, it's collectively bargained where the players can get some time off.

But I mean, they all wanna get back in the gym and get better.

So during their careers, they're on the road a lot, so obviously we play 82 games, 90, about 88 games, when you count the preseason.

And so you're talking about half of those 44 games where they're traveling to another city and then turn around.

- Typically the day before.

- The League requires you to be in the city the day before.

And then if we're playing on a back to back, if we're playing, let's say in New York, and then the next night's in Orlando, we've gotta leave that night after the game to get to Orlando.

So you've got some getting home at 2, 3, 4 o'clock in the morning.

So again, obviously with private air travel and charter programming, it makes things easier, but it's still a lot of travel for them.

- So you charter the planes, you don't own your plane, you charter.

- Yeah, Delta has a charter program through the League and I think about 16 or 20 teams do that.

And it's very convenient for 'em, yeah.

- And I'm always fascinated by the interrelationships of players.

I mean, they have to be a family, they have to be a team, they have to get along.

And these are adults we're talking about, these are not kids.

Maybe they're less impressionable and less, you can't fashion them and mold them as easily.

- [Charlie Freeman] Yeah.

- So what do you do?

Do you have a psychologist working with them?

- First, our head coach, Jamahl Mosley, who's our head coach.

He was the perfect person.

We hired him a couple years ago to really help this young core, teach them the values of the game, teach them the importance of teamwork and winning.

And I think that's been critical and why we've seen early success with his young group is they really wanna root for each other.

You watch 'em on the sidelines and they're standing up and cheering for one another.

And that's so critical as you talk about a team and wanting them to grow and win together.

And so really the coach is where it starts.

And then obviously you have various other resources.

- Support as needed.

I kind of know what the big guys make, 'cause that's public information, makes the papers and so on.

Typically a multi-year contract, correct?

Do they get a piece of the action, too?

- Meaning?

- Television revenue or concession revenue or is it a straight salary?

- So the way it works is the League has done a great job bargaining with the players where there's a split of total revenue.

So as the league revenues grow.

- [Nido Qubein] I see.

- Both sides will benefit, the players.

- So they get a base and then they.

- Well, no.

So the salary cap is actually calculated off of what the total revenue's for the entire League.

So the Players Association will come in and audit what all the revenues are.

And then the players, I think it's around 50%, will get 50% of that revenues.

And that's what sets the salary cap moving forward.

- What about a rookie?

Where do rookie start?

There's a minimum, you said.

- Yeah, there's that scale.

So depending on if you're.

- [Nido Qubein] Give us an idea where the scale is.

- So if you're the first pick, I don't have the specific data points in advance, but if you're the first pick, obviously you're paid very well, but then the 30th pick, it kind of goes on a sliding scale.

So I don't have the specifics to share with you.

- But they make good.

- [Charlie Freeman] Yes.

- Good income.

- [Charlie Freeman] They're doing well.

- [Nido Qubein] They live well.

- They're doing well.

- Why is it that so many athletes who do so well throughout their life, not manage their money well?

Then you hear all these stories of, and that's true of Hollywood, too.

You know, hear all these stories of people making millions and millions of dollars and then somehow somewhere along the pathway of life, it's all gone.

- Yeah.

I would say the League has done an incredible job of trying to get the players early in their career to educated on the importance of savings and investments and all that.

I would say recently it's gotten a lot better, but yeah, there's some of the one-off stories, but overall I think they're doing much better.

- And some of them, of course, have learned to invest, start businesses, do things.

And certainly Michael Jordan's an example of that.

- [Charlie Freeman] Michael Jordan, Shaq, Grant Hill.

- Yeah.

They have a continuum of success.

- [Charlie Freeman] And surround themselves with good people and all.

- But the dramatic thing is that only about 2%, maybe 3% of the stars in college make it in professional.

That's the amazing thing.

That's why they need to finish college.

You can't bet on the call.

- Well and that's where a lot of 'em end up going back and that's important.

- [Nido Qubein] Which is a good thing.

- It's very good, yeah.

- Charlie Freeman, thank you very much for being with me on Side By Side.

It's a pleasure to see you and to learn from you.

- Thank you so much.

Appreciate it.

[upbeat music] ♪ - [Announcer] Funding for Side By Side with Nido Qubein is made possible by.

- [Announcer] Here's to those that rise and shine, to friendly faces doing more than their part and to those who still enjoy the little things.

You make it feel like home.

Ashley HomeStore.

This is home.

- [Announcer] For over 60 years, the everyday leaders at The Budd Group have been committed to providing smart, customized facilities solutions to our clients and caring for the communities we serve.

- [Announcer] Coca-Cola Consolidated is honored to make and serve 300 brands and flavors locally.

Thanks to our teammates.

We are Coca-Cola Consolidated, your local bottler.