May 15, 2023 · 1h 10m · capital-allocators
Marc Lasry – Avenues of Opportunity (Capital Allocators, EP.315)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides interviews Avenue Capital Group co-founder Marc Lasry to discuss his journey from immigrant beginnings to pioneering distressed debt and direct private credit. Lasry shares insights on institutional growth, his championship tenure owning the Milwaukee Bucks, evaluating cross-border legal risks, and capitalizing on commercial bank retrenchment.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 17.6% of the talking time here. How this is scored →
Ted as informed peer 4.2 Guest teaching 3.2 Guest disagreement 1.1 Ted pushing back 0.2
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 51:22 Lasry challenges Ted with the curling test
Lasry directly tests Ted on whether he watches Olympic curling to forcibly prove that consumer appetite for live competitive sports is boundless regardless of macroeconomic cycles.
Hardest push from Ted ▶ 49:10 Ted pushes back on macro pessimism vs sports investmentsTed directly challenges Lasry on the apparent tension between his bleak recession forecast for small businesses and his bullish outlook on high-valuation sports investments.
Biggest teaching moment ▶ 38:25 Lasry explains actual vs perceived legal risk globallyLasry corrects conventional investor assumptions by breaking down why jurisdictions like the UK and Singapore provide stricter legal protections for creditors than parts of the US and southern Europe.
Ted holds their own ▶ 41:45 Ted highlights the threat of levered competitorsTed incisively articulates how mega-managers suppress market yields by employing low-cost leverage, forcing Lasry to defend Avenue's smaller fund sizing and bilateral deal sourcing.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Marc Lasry's Early Life, Family, and Law School | 3 | 1 | 0 | 0 | Ted guides the biographical narrative with open-ended questions about Lasry's upbringing and path to law school. Lasry shares colorful personal anecdotes in a warm, storytelling tone without friction. | |
| Entry into Distressed Debt and R.D. Smith | 5 | 3 | 1 | 0 | Ted demonstrates solid industry familiarity by referencing the Bass family network and early distressed pioneers. Lasry explains how archaic the distressed bankruptcy landscape was in the 1980s compared to modern markets. | |
| Founding Avenue Capital and Strategic Evolution | 4 | 2 | 0 | 0 | Ted asks about the structural conditions that permitted outsized returns in the 1990s. Lasry details their informational edge before internet filings and the decision to shut down the lucrative brokerage arm. | |
| Managing Growth, Capital Returns, and Minority Stakes | 5 | 4 | 1 | 1 | Ted probes the memory of institutional allocators when Avenue returned capital in 2011 and examines the minority sale to Morgan Stanley. Lasry offers a candid post-mortem on why staying private over going public turned out to be a miscalculation. | |
| Owning the Milwaukee Bucks and Sports Management Economics | 4 | 4 | 1 | 0 | Ted asks how buying the Milwaukee Bucks crossed over into investment discipline and investor reactions. Lasry explains the non-linear economics of professional sports contracts and the stewardship mentality required. | |
| Exiting the Bucks and Ownership Takeaways | 4 | 2 | 0 | 0 | Ted inquires why Lasry chose to exit his Bucks ownership and how LPs should view outside managerial commitments. Lasry outlines valuation discipline driven by media rights multiples and his direct communication with investors. | |
| Avenue Today and Opportunities in Private Credit | 5 | 3 | 1 | 0 | Ted prompts Lasry on Avenue's current positioning in private credit. Lasry highlights senior secured lending opportunities yielding 12-15% as banks pull back following interest rate spikes. | |
| Geographic Risk Assessment and Legal Frameworks | 4 | 5 | 2 | 0 | Ted asks about geographic deployment criteria. Lasry educates on the nuance between perceived risk and actual legal risk, comparing bankruptcy protection in the UK and Singapore against continental Europe and the US. | |
| Direct Bilateral Lending and Sourcing Advantages | 5 | 3 | 1 | 1 | Ted raises the competitive threat from mega-funds using cheap bank leverage to lower lending yields. Lasry explains how keeping fund sizes sub-billion dollars allows Avenue to secure unlevered returns without competing for jumbo tranches. | |
| Strategic Adjacencies, Venture Debt, and Talent Selection | 4 | 4 | 2 | 0 | Ted asks about business adjacencies and capital redeployment. Lasry moves into an expansive macroeconomic critique, detailing how the Federal Reserve's rate hikes intentionally force unemployment and distress onto small businesses. | |
| Sports Lending Opportunities, Consumer Trends, and Wagering | 4 | 4 | 2 | 1 | Ted challenges Lasry to reconcile his macro recession forecast with sports team investments. Lasry engages Ted directly with a curling trivia test to prove consumer demand for elite sports and the secular rise of micro-wagering. | |
| Geopolitical Risk and Investing in Asian Markets | 4 | 5 | 2 | 0 | Ted asks how Avenue navigates heightened Asian geopolitical risks. Lasry explains why he avoids direct China asset exposure while investing in peripheral Asian markets that benefit directly from regional GDP growth. | |
| Political Engagement, Chess, Poker, and Professional Drive | 3 | 2 | 1 | 0 | Ted asks about Lasry's engagement in politics, chess, and poker. Lasry outlines how multi-move probability thinking shapes business and candidly discusses his compulsive drive to work despite reaching financial independence. |
Statements from this episode (29)
Lasry: R.D. Smith bought Lionel claims at 20 cents before 80-cent payout
“They were paying 20 cents for claims, and under the plan of reorganization, we were paying them 60 cents for cash and 20 cents in stock.”
Lasry: Cowen distressed group posted 70% and 60% consecutive annual returns
“I mean, we were up our first year 70%.
So 70% on fifty million is
Thirty-five million dollars on five hundred million, which is what they were doing.
It was a lot of money.
And the following year, we were up 60%.”
Lasry: In 1988, $150M was the world's largest distressed fund
“In 1988, we were the largest distress fund in the world with one hundred and fifty million dollars.”
Lasry: Doubled proprietary capital annually for five straight years starting in 1990
“It was about 5,000,010 million. But we doubled the money every year for about five years, and that's how we started Avenue.”
Lasry: We shut down a brokerage generating 80% of our income
“Sonia came up with the idea that we needed to close the brokerage firm and just focus on the asset management business. And I don't think I was fully bought in on that. It was actually generating, I think for Sonia and I, probably 80% of our income. And she wa…”
Lasry: Avenue Capital returned half its AUM to investors in 2011
“We returned half the money, and we made this big decision to get back half the money because we thought there was just less and less distress, right?”
Lasry: Selling a minority stake instead of an IPO was a mistake
“I actually think we made a mistake. Morgan Stanley's been a great partner. That wasn't the mistake. I think at the time, the decision was, do you sell a stake to a financial institution such as Morgan Stanley, or do you go public?”
Lasry: Public asset management firms gained massive advantage through liquid stock
“And that the firms that went public had a massive advantage, which was that they had Currency to buy others and to tie up employees by giving them stock. And also that currency was liquid. Whereas what we were doing was giving people partnership interests in a…”
Lasry: We paid 100 times cash flow to buy the Milwaukee Bucks
“I bought the team, we paid a hundred times, and on the investment world, that seems high, because you would never do that”
Lasry: Top teams win by minimizing bad contract mistakes
“Within a year, you find out the contract you sign is either a really good contract or a really bad contract, and you see that over and over again, and the teams that do well are the ones who minimize the mistakes of signing bad contracts.”
Lasry: Sports franchise valuations require media rights to double or triple every decade
“And for them to keep going, you needed to keep doubling and tripling your media rights every seven, 10 years. So I just thought it was the right time, and it's bittersweet.”
Lasry: Avenue Capital plans to launch a sports investment fund
“I think we're gonna go do a sports fund, mainly because I think I learned quite a bit about investing in sports and understanding sports that I don't think others know.”
Lasry: Private equity will not return 15-20% over the next three years
“Today, you can make loans at 12 to 15%, because nobody else is making them, and you're senior and you're secured, but I don't think private equity over the next three years is gonna make you 15, 20%, and if it does, that's great,”
Marc Lasry targets 500 bps spread for Asia credit, 200-300 bps for Europe
“For investing in Asia. I always think it should be 500 basis points more. Europe should be two to 300 basis points more. Right? US is just more liquid.”
Marc Lasry: The UK legal system is stronger for creditors than the US
“I would say to you, that's true, unless you're investing in the U.K. Because the U.K., the legal system there, is actually stronger than it is in the U.S.”
Lasry: Avenue Capital shifted from 80% public bonds to 80-90% private credit
“10 years ago, 80% of everything we did was public. We'd buy public bonds. Today, 80 to 90% of what we do is private. So it's all bilateral.”
Lasry: Mega-firms like Ares and Oaktree now rely on bank leverage
“What you're finding is the larger firms, whether it's Aries, Oaktree, will go out and end up doing these bilateral deals, and they'll end up using the leverage from a bank To generate the return. So I think, I would tell you, 10 years ago, people didn't really…”
Lasry: Avenue caps fund size at $1B to avoid relying on leverage
“Our niche is we try not to raise funds that are larger than a billion dollars. Because the larger we get, the more we're going to compete and need leverage to generate returns. The smaller you are, the more you can generate unlevered returns.”
Marc Lasry: Avenue Capital launched venture debt by hiring Hercules executives
“So we started a venture debt group. Because the folks who used to work at Hercules were leaving, and they came over, and we hired all three guys and raised a fund around that, and that fund's done great, mainly because the people we brought in are super talent…”
Lasry: European debt investments are overpaying for risk
“I think opportunities in Europe today are pretty large, just simply because you're getting overpaid for the risk.”
Lasry: Bank lending pullback will last 1 to 3 years
“However, the fact that they're not lending and banks aren't lending, that's going to be a year or two years, or maybe even three years.”
Lasry: Federal Reserve focus will shift from inflation to recession
“I will guarantee you the focus of the Fed is not inflation, but is the recession.”
Lasry: Sports franchise lending offers ~20% loan-to-value ratios
“I think you can lend at around a 20% loan to value, which you can't find anywhere.”
Lasry: Women's sports will grow exponentially
“And what I want to do is get involved in women's sports. I think that is going to grow exponentially.”
Lasry: Avenue Capital is no longer comfortable investing in China
“Five years ago, we were comfortable investing in China. Today, we're not.”
Lasry: Russia seized four planes from Avenue Capital following Ukraine war sanctions
“We have an aviation fund that invests, and we own four planes. Those planes, at the time of the Ukraine war, were taking passengers from Turkey to Moscow. When sanctions came down, Moscow grounded those planes, and we found, all of a sudden, Four of our assets…”
Lasry: Investors should back the Asian region rather than direct China exposure
“You actually want to be investing in Asia for one simple reason. If the driving force in Asia is China, And that driving force is growing by five percent a year. Do you think that's beneficial for the region? Yes. But people look at your question, geopolitical…”