Cardinale, who grew up in the city’s affluent Main Line suburbs and rowed for Harvard University before attending Oxford University as a Rhodes scholar, has made a study of appealing to stubborn, outspoken entrepreneurs. He won Steinbrenner’s friendship after the former Yankees boss and New Jersey Nets co-owner Ray Chambers turned to Goldman Sachs for help in splitting from Cablevision and launching the YES Network. The deal was unveiled the day before the Sept. 11, 2001 attacks and resulted in a legal fight over whether Cablevision must carry the fledgling network as part of its basic cable package—a battle YES eventually won.
“When you’re dealing with a family vs. a company or an individual, things tend to be more emotional,” said Hal Steinbrenner, who inherited the Yankees with his brother after their father died in 2010 and who invests some of the family’s money with RedBird. The elder Steinbrenner’s criticisms “could oftentimes be ferocious,” his son said, but Cardinale was “able to handle that with a smile and keep focusing on message.”
Cardinale met Cowboys owner Jones and his family in 2008. They’d been invited by Michael Ovitz, the founder of Creative Artists Agency and former Walt Disney Co. president, to spend time on his yacht in Saint Barts.
By the end of the trip, Cardinale and Jones had the germ of an idea for a new business: convert a team of employees hired to sell luxury suites and club seats at the new Cowboys Stadium into a company and market its know-how to other sports and entertainment venues. The result was Legends Hospitality Management, created by the Cowboys, the Yankees and Goldman Sachs.
“It was, from the get-go, Gerry’s idea,” Jones said.
After leaving Goldman in 2012, Cardinale spent a few months at BDT Capital Partners before striking out to start his own firm. RedBird’s first investment was in TierPoint LLC, a data center operator run by telecommunications entrepreneur Jerry Kent. Cardinale had worked with Kent earlier, investing $350 million of Goldman’s money in Suddenlink Communications as it bought up cable companies.
Kent approached Cardinale in 2013, when he started thinking about how to raise money for TierPoint. “I said, ‘Gerry, I want you to get a group together that has long-term capital, that doesn’t have a typical private-equity time frame, where the day you close is the day you start worrying about your exit,’” Kent said in a phone interview.
Cardinale assembled a shareholder group mostly composed of family offices, which gathered $180 million and gave rise to RedBird. He soon brought on two partners from Little Rock, Arkansas-based Stephens Group, a family office that invested in the TierPoint deal. Hunter Carpenter and Robert Covington had previously managed money on behalf of the family of Witt Stephens Jr. and Elizabeth Campbell.
Of the $1.7 billion that RedBird invested across 13 deals, more than half has been doled out after the initial investment, Cardinale said. The firm has been making three to five new investments per year of $50 million to $100 million each. The investments have returned 21 percent annually on average over the past three years before fees and taxes, according to a person with knowledge of the matter.
“Capital should be a strategic weapon,” rather than money that needs to be put to work on a specific timeline, Cardinale said. “Everybody tends to operate within the constructs that are presented to them. And my whole thing has always been: Well, if the constructs don’t work for you, change the constructs.”