CalPERS Chief Investment Officer Musicco and Son in NBA Playoffs Courtside Seats Next to Billionaire Warriors Owner and Kleiner Perking Partner Joe Lacob. What Gives?

CalPERS’ sense of privilege knows no bounds. The latest example is its Deputy Executive Officer, Communications & Stakeholder Relations Brad Pacheco unsuccessfully trying to ‘splain the very bad optics of Chief Investment Officer Nicole Musicco and her son getting NBA courtside playoff seats that are not available for purchase.

Even if Musicco was careful enough to have her receipt of these seats laundered through the box office, the pretense that a member of the general public could buy these seats is an insult to the intelligence of sports fans all over America.

The photo below came via a CalPERS insider, from Game 1 of the NBA playoff on April 15, between the Golden State Warriors and the Sacramento Kings, at Sacramento. The circled figure is Nicole Musicco. To her left is her son.¹ Beyond her son, in the blue jacket, is billionaire Joe Lacob, for many years the managing partner of venture capital heavyweight Kleiner Perkins and still a partner there, and also the owner of the Golden State Warriors:

The game highlights video shows this trio, at 5:09 to 5:11:

If you pause at 5:11, you will see a Golden State Warriors player in white uniform out of bounds on the lower right side of the screen. Right behind him is Musicco’s son, the boy standing up in a black shirt. She is sitting down to his right in the pale pink top and on his other side, you can also see Lacob in blue.

Now one could argue that assuming Musicco bought the ticket, it’s still a sign of bad judgment for her to have gotten a courtside seat at a prized playoff game, the sort normally reserved for the connected and famous, and not state employees.² But sports enthusiasts, season ticket resellers, and sports insiders all say no way, no how could Musicco have obtained these tickets, whether nominally purchased or not, without connected insiders making them available to her.

These were not just courtside seats, which are well nigh impossible for mere mortals to snag at other than nosebleed prices.³ The local NBC affiliate KCRA put the price for courtside tickets at this game at $12,406 each.

These were owner seats. From an eyewitness at Lacob-owned team games:

It is HIGHLY unlikely that the Kings would have given the owner of the Golden State Warriors a seat adjacent to a couple of rando’s. He always has the surrounding seats and his security folks are always nearby. That’s how it works when you’re a billionaire.

And keeping the riff raff away isn’t just a matter of security. Imagine some hungry tech entrepreneur being able to get a seat next to Lacob and trying to pitch him! The horror!

Even pros in other sports were skeptical. From a boxing industry insider with expert knowledge of arena ticket sales:

They usually offer some of that seating to regular people but it wouldn’t be courtside in the bigger cities. Bigger cities will maintain a list of various celebrities and big wigs that they will put into those seats. There’s a whole pecking order thing.

Predictably, when asked about how Musicco wound up in seats even if they were available for purchase, would have cost over $12,000 each, CalPERS’ Pacheco’s answer was factually challenged. First our query:

Someone familiar with CalPERS sent me the following photo of CalPERS CIO Nicole Musicco and her son at Game 1 of the NBA playoffs on April 15 in Sacramento in what is apparently an owner’s seat with her son next to billionaire Joe Lacob, owner of the Golden State Warriors and a partner at Kleiner Perkins. These seats typically cannot be bought and the proximity to a billionaire team owner makes it seem vanishingly unlikely that Ms. Musicco purchased them on a market basis.

If Ms. Musicco in fact paid market price for these seats, which NBC-10 News recently reported were trading in the range of $12,000 each, please confirm whether payment was made before or after the date of this inquiry. If the source of the seats either as a gift or a purchase was Mr. Lacob, Kleiner Perkins, or persons holding any interest in Golden 1 Center, please describe in detail CalPERS plans for recusal from dealings with those individuals or entities.

Pacheco’s reply:

Nicole Musicco was a season ticket holder and purchased the tickets from the King’s ticket office.

The misdirection Pacheco is trying to sell is that there was nothing insider-y about Musicco and her son winding up in owner seats, which are never offered to the general public, including season ticket holders.

Indeed, the Kings’ own ticket policy makes clear that for playoffs, season ticket holders can buy only the seats they held during the regular season. From the Kings’ website:

PLAYOFFS
You will receive an opportunity to purchase your seat(s) [emphasis added] for home playoff games unless otherwise notified by SKLP. Playoffs are at an additional cost to your membership dues.

So the assertion that Musicco was a season ticket holder and that allowed her to get these seats is false. Again, she may have been permitted to pay through the box office to try to establish a veneer of legitimacy, but whether she had ever bought any sort of Kings tickets before had nothing to do with how she and her son got these playoff spots. As an NBA ticket reseller said:

There is no way that Nicole Musicco has floor seats as a brand-new season ticket holder.

You would wait years and years and years to get seats that good, if ever.

Only the well-connected get seats like those.

There is no way you can buy floor seats for the playoffs at the box office. What a joke!!!

This assessment is consistent with the Kings’ policies. Even if what Pacheco said is narrowly true, Musicco got those tickets ONLY because of a favor by the Sacramento Kings. From their website:

SEAT LOCATION CHANGES

Requests for seat relocation are processed during the renewal period only. Requests for relocation will be considered in SKLP’s sole discretion and only if Membership dues are paid up to date.

And Musicco is most assuredly not a long-suffering Kings season ticket buyer who has finally seen their team perform well enough to go to the playoffs. Musicco joined CalPERS as Chief Investment Officer at the end of March 2022. So the 2022-2023 season is the first where she might have bought season tickets. Two prominent CalPERS beneficiaries say it is their understanding that Musicco is commuting so her son can finish the school year in Canada.⁴ That is plausible because CalPERS’ investment staff is in the office only Tuesdays through Thursdays. If Musicco is still commuting, she would have had to arrange for her son’s travel for him to attend this game.

While it is not easy to prove a negative, there is no evidence Musicco previously attended a Kings’ game this season, and certainly not in the seats CalPERS is effectively trying to pass off as her regular seats. As one CalPERS insider said:

I highly doubt she has season tickets. She would have mentioned it on one of her many calls to her team. She is very out of touch with the average Sacramento citizen and even the staff, from what colleagues tell me.

Indeed, one would expect a new boss to tell their subordinates they’d bought season tickets to the local team to build rapport and show interest in the community.

The reason for Pacheco trying to fob off the notion that Musicco had gotten these seats in a normal manner is that it would be perfectly kosher for her to buy a ticket just like any other member of the great unwashed public. Her astonishingly good luck at being seated not just courtside, but within spitting distance of a big investment honcho, as opposed to say a TV star, would just be a happy coincidence.

But aside from the decidedly bought-and-paid-for look, does Musicco winding up with these seats amount to a corruption problem under California law? If you read the relevant provisions with care, the answer is yes.

Musicco is at a level in the California government where she is required to make annual disclosure of outside income and her assets through a Statement of Economic Interests, more informally called a Form 700 (here is Musicco’s current Form 700). Form 700 filers are only allowed to receive a maximum of $590 in gifts from each source per year.

But getting a goodie not available to regular folk is not permitted even under California’s permissive rules around gifts to state employees.⁵ From Section 18946 – Valuation of Gifts:

a) General Gifts. Except as specified in subdivisions (b) and (c), a gift is valued at fair market value as of the date of receipt. Sections 18946.1 through 18946.5 provide for the valuation of specific types of gifts in the following situations:

Ticketed Events – See Regulation 18946.1…

(1) “Fair Value.” For a ticket offered for sale to the general public, the “fair value” means the face value of the ticket or pass. The “fair value” of a ticket or pass that does not have a face value indicated, or has a face value that is not available to the general public, is the price at which the ticket or pass would otherwise be offered for sale to the general public by the operator of the venue or host of the event who offers the ticket for public sale.

Note that Section (1) covers tickets “available to the general public”. The owner seats are not available to the general public, so the provision regarding face value is not applicable, since the general public could never buy seats next to team owners. Thus the value of the seat is the fair market value (at least $12,406, arguably more due to the additional value to a person in investments or tech in California getting in proximity to Joe Lacob), less whatever Musicco actually paid for them, presumably $1,200 each (if Pacheco is to be believed).

We have the unanswered question of who holds this chit with Musicco. Given that she presumably had to arrange for her son to travel to the game, it seems more likely that she asked for these tickets than was simply offered the opportunity to snag them at the box office. Musicco was a partner for a year in RedBird Capital Partners.⁶ You have only to look at the firm’s landing page to see it is heavily into sports-related investment, with football featured prominently. A recent speaker bio of RedBird founder and CEO Gerry Cardinale from the MIT Sloan Sports Conference:

The Firm’s prior and current investment portfolio includes many of the world’s most iconic entrepreneurs, properties and brands across the sports, media and entertainment industries – including Fenway Sports Group (Boston Red Sox, Liverpool FC, Pittsburgh Penguins, New England Sports Network); the Yankees Entertainment & Sports (“YES”) Network (New York Yankees and Amazon); Skydance Media (Larry and David Ellison); The Springhill Company (LeBron James and Maverick Carter); the XFL (Dwayne Johnson and his partner Dany Garcia); and European football’s A.C. Milan which recently won Italy’s Serie A Championship.

But rest assured Musicco would not have been able to collect this perk merely as a former partner in a sports-investment-happy fund; it is her status as current CalPERS Chief Investment Officer that makes her a celebrity-equivalent.

And keep in mind that celebrity treatment, normally kept well out of the public eye, is the norm in private equity. We’ve repeatedly discussed the soft corruption of government employees getting lavish perks like trips to attractive destinations with the fund manager providing lavish entertainment (such as the Stones and Elton John for the biggest funds) and meals, all charged to the fund, meaning the investors, meaning ultimately taxpayers. Here’s a recent indiscreetly-shared example from LinkedIn, of a sumptuous banquet at Westminster Abbey, of an annual meeting for Coller Capital, one of the largest private equity secondary investment firms (i.e., they buy the existing interests of limited partners). For once, enough gold to make even Donald Trump happy!

With that largess as not unusual, no wonder Musicco has come to see special treatment as normal.

Regardless, California takes an indulgent posture toward CalPERS, ignoring sins like cooking its books and covering up employee embezzlement.⁷ Remember, even in its pay to play scandal, where former CEO Fred Buenrostro was caught taking paper bags of cash, it was the Department of Justice,not the California Attorney General, that successfully prosecuted him, resulting in a four-and-a-half-year prison sentence. Even though the general public will take offense at the latest chicanery, CalPERS’ status in California as too big to fail apparently means it is too big to be disciplined.

_____

¹ This photo was taken in public and there is no expectation of privacy.

² Because the Kings had not been in a playoff since 2006, there was great local interest.

³ Sports site AS explains:

Witnessing numerous famous figures occupying these front-row seats is a familiar scene. In sports, courtside seats are the ultimate symbol of prestige, and these highly coveted seats are not easily obtainable…However, getting hold of a courtside seat is no easy feat as they are limited and highly sought-after…

Celebrities have various ways of obtaining front-row tickets for NBA games.

They may have personal connections with NBA players, coaches, or team owners, providing them access to prime seats. Celebrities with endorsement deals with NBA teams or companies sponsoring the NBA may be given complimentary tickets. Some stars purchase front-row tickets at a higher price point than other fans.

And mind you, that’s for courtside seats for major teams at regular games.

⁴ I have yet to get the input from a source who should have or be able to obtain current information. I will update the post if needed.

⁵ Note that the Federal government is more strict. See the Department of Justice and the Department of the Interior as examples. Tickets received as gifts, and something that cannot be bought on the market is a gift, are valued at market price, not ticket face value. Recall that here the market price is at a minimum $12.406; one could argue the privilege of sitting next to a billionaire owner is worth even more. CBS says the face value of Golden Warriors playoffs courtside seats for the regular season ticket holders is $1,200; Kings pricing is probably similar.

⁶ It seems improbable, or else misconceived, for Musicco to have been hired by RedBird to do deals. She has no M&A, transaction structuring, deal valuation, or high-level negotiation experience in her background. She had previously spent 16 years at Ontario Teacher’s Pension Plan, a highly-regarded public pension fund. From a bio on Mergr:

Nicole Musicco is a Partner of RedBird Capital Partners. Nicole has been affiliated with the firm since its inception in 2014. RedBird was initially launched in 2014 with anchor capital from Ontario Teachers’ Pension Plan (“OTPP”) and a group of Entrepreneurs and Family Offices that had a long investment history with the firm’s principals. At the time, Nicole led the Private Equity Fund and Co-Investment program at OTPP, which oversaw the investment in RedBird. Nicole also represented OTPP on the RedBird Investment Committee from 2014 to 2017. Prior to joining RedBird, Nicole spent over 16 years in a broad range of senior leadership roles at OTPP. During her tenure, Nicole had oversight and responsibility for origination, analysis, execution and value creation of investment activities across multiple sectors, regions, and asset classes.

The wee issue here is that the “investment activities” of a private equity limited partner or a co-investor are far lower skill than those of deal analysts and doer in M&A or private equity, even though the descriptions may sound very much the same to outsiders.

Other bios, notably her current ones at CalPERS and at LinkedIninclude a brief time overseeing more investment categories, such as real estate: From LinkedIn:

Her role at RedBird depicted by CalPERS was to be in charge of Canadian investing, which is a broad geographic focus. But the RedBird firm overview indicates it has industry verticals, like sports and financial services, so it is selling industry expertise to the company owners it is wooing…and Musicco is lacking both in industry knowledge and technical deal chops. So it sounds as if the role created for her at RedBird wound up with her being a square peg in a round hole.

One has to wonder about these two one-year stints, as CalPERS did during her recruitment, particularly given her incestuous relationship with RedBird. Someone directly involved with the recruitment of the replacement for Ben Meng told us that Musicco was rejected during the first round of board interviews by both Stacey Olivares and Lisa Middleton, who despite both being very insistent that the new Chief Investment Officer be female, deemed her as lacking sufficient investment skills.

As we’ve explained, public pension funds are the biggest source of investment for the private equity investment industry. The most plausible way for her to have joined RedBird was to raise funds from public pensions. You can infer from the RedBird site that their main money sources have been big names in sports and media, plus family offices, so public pensions funds would be very attractive and largely or even entirely virgin territory. That role would mean she would not have have been able to build deep enough relationships in a year with either investee sports companies or sports figures invested in the firm’s funds to have been able to lean on them directly.

⁷The state did deign to make a slap on the wrist in one egregious case that did not have broader institutional ramifications. The California Fair Political Practices Commission (FPPC) recently fined Theresa Taylor, now CalPERS Board President, $200 for failing to report $60,000 of reportable income. The FPPC has still failed to take action against former Chief Investment OfficerBen Meng for a case opened in August 2020 for failing to report holds and trades. That case was broken on this website. We suspect the reason for the FPCC inaction is that Meng would argue CalPERS knew of and therefore implicitly sanctioned his actions. Key dates also point to a high-level coverup.