The stakes behind Musk’s China briefing

The boundaries of Elon Musk’s influence appear to be expanding by the day: The Times broke the news that the Pentagon was scheduled to brief him on its plans for any war with China.

While the highly unusual development raises all sorts of questions, it underscores just how deeply entwined the billionaire is becoming in the federal government — and raises fresh concerns among critics about how his businesses could benefit from those ties.

By any standard, Musk’s request was extraordinary. The Times notes that the Tesla chief and government contractor, who asked for the briefing, was set to be appraised on how the Pentagon would size up China as a military threat, including what targets would be hit if things escalated. While Musk has a security clearance — albeit one that has been under investigation over compliance matters — he’s neither in the military chain of command nor an official White House adviser on Chinese military matters.

After the news broke, President Trump and administration officials denied that the session would center on China war plans: “China will not even be mentioned or discussed,” Trump wrote on Truth Social. (The Wall Street Journal subsequently confirmed that Musk was to be briefed on the topic.)

It’s possible that Musk sought the briefing because of his government-cutting work. Knowing which military programs would be at play in such a conflict could factor into what his Department of Government Efficiency cuts.

The bigger point: Musk could get an enormous business advantage. Knowing confidential Pentagon plans could give Musk-run defense contractors like SpaceX and Starlink a leg up on rivals.

“Giving the C.E.O. of one defense company unique access seems like this could be grounds for a contract protest and is a real conflict of interest,” Todd Harrison, a senior fellow at the American Enterprise Institute, told The Times.

It could also better prepare Tesla in China, a significant market. Musk presents a complex figure in U.S.-China relations: He has repeatedly praised Beijing — to the point that officials there have hoped he could serve as a go-between with Washington — and said that China should be given some control over Taiwan. But Beijing has also been worried about SpaceX, viewing it as an extension of the U.S. military.

Musk has continued to get other boosts from the administration. Commerce Secretary Howard Lutnick urged Fox News viewers on Wednesday to buy Tesla stock, while Attorney General Pam Bondi has announced the arrests of several people accused of attacking Tesla products.

But Tesla faces headwinds. The company recalled nearly all its Cybertrucks, about 46,000 vehicles, over exterior panels falling off. (It’s the eighth recall tied to the polarizing pickup truck.)

And amid a continued slide in Tesla’s shares, as even longtime bulls turn nervous, Musk told the carmaker’s employees in an unannounced all-hands meeting to “hang on” to their stock.

HERE’S WHAT’S HAPPENING

Heathrow Airport shutdown disrupts global travel. A substation fire nearby forced the closure of the main London airport, the world’s fourth busiest, creating a wide-reaching air traffic snarl that is expected to last days. There is no sign of foul play, officials say, but the crisis again shows the vulnerability of a global travel network dependent on a few key hubs.

CoreWeave sets its I.P.O. terms. The Nvidia-backed cloud computing company is seeking to raise up to $2.7 billion in its hotly anticipated I.P.O., according to a securities filing. But the company’s biggest client, Microsoft, reportedly chose not to exercise an option to buy nearly $12 billion worth of extra computing power, according to Semafor, underscoring industrywide concerns about A.I. spending.

President Trump’s latest executive order singles out critical minerals. Trump invoked the Defense Production Act to increase domestic production of key materials like uranium, copper, gold and possibly coal, a measure that the Biden administration also pursued.

Paul, Weiss caves

In a meeting few could have anticipated months ago, Brad Karp, the outspoken chairman of the law firm Paul, Weiss, met with President Trump this week to make a deal after the president launched a potentially existential attack against the firm.

According to Trump, Karp agreed to represent clients regardless of their political affiliation, to contribute $40 million in legal services to causes and to other terms. Trump also said that Karp had acknowledged “wrongdoing” by a former partner, Mark Pomerantz, who had tried to build a criminal case against Trump several years ago while working at the Manhattan district attorney’s office.

In return, Trump dropped an executive order against Paul, Weiss that had already cost the firm one client. The move could have major implications for how Big Law and corporate America respond to Trump’s escalating attacks, writes DealBook’s Lauren Hirsch.

What gave? Perkins Coie, another law firm targeted by Trump with an executive order, is expected to win its legal challenge against the presidential directive after a federal judge temporarily blocked some elements. So why did Paul, Weiss — a much larger and more profitable firm that brings in $6.5 million per partner — feel compelled to cave so quickly?

The firm is a public face of many social justice causes and had become closely aligned with the Democratic Party. (One of its partners, Karen Dunn, helped Kamala Harris prepare for her debate against Trump.)

But after Harris lost the election, the political winds turned against Paul, Weiss. Causes it once proudly promoted posed a potential risk to some of its largest revenue-generating businesses — like deals. Were more big clients threatening to flee?

Law firm partners are debating how to respond. Since Trump first issued the executive order against Perkins Coie earlier this month, partners at other major firms have been debating whether to support the practice with a friend-of-the-court brief. They’ve been considering the risk of drawing Trump’s anger by raising concerns about the implications of his actions.

Now, some partners are wondering if Karp’s agreement with Trump — made to rescind an executive order many considered unconstitutional — tips the scales toward speaking out. What’s to stop the president from making similar demands of their firms? If they can’t defend themselves in front of Trump, how can they defend their clients?

What’s happening with Paul, Weiss and D.E.I.? The agreement comes just days after the Equal Employment Opportunity Commission targeted twenty law firms over their diversity, equity and inclusion practices. The firm has been a huge proponent of such initiatives, with Karp launching a task force in 2023 to advise companies on defending their inclusion efforts. (Paul, Weiss has also been criticized for not promoting diversity enough.)

Trump wrote in a Truth Social post that in the future Paul, Weiss “will not adopt, use, or pursue any DEI policies.” (The White House and Karp had settled on wording for a statement, The Times reports. In the end, the statement changed, including that the firm would “not adopt, use, or pursue any D.E.I. policies.”)

The deal raises major questions inside Paul, Weiss. Will it be seen as a tactical move that saved the firm or as capitulation? How will junior associates respond, particularly as many across the legal industry have called on Big Law to counter Trump’s attacks? And how will partners feel about Karp’s decision to publicly disassociate himself from Pomerantz?

Area man buys Boston Celtics for record sum

The National Basketball Association’s all-time winningest franchise just secured the highest sale price for an American pro sports team. A deal to sell the Boston Celtics for up to $7.3 billion is the latest example of owners turning to private equity, instead of trophy-seeking billionaires, to cash out on skyrocketing valuations.

The details: The Celtics agreed to sell the team to an investor group led by William Chisholm, a managing partner at a private equity firm, in a transaction that is valued initially at $6.1 billion, but will later be worth as much as $7.3 billion, people familiar with the matter tell DealBook.

Other investors include Sixth Street, which just bought a stake in the San Francisco Giants; Rob Hale, the billionaire who was already a co-owner; and Bruce Beal, Jr., the president of Related Companies, a real estate firm. The deal still requires approval of the N.B.A. Board of Governors.

More telling: As sports leagues rise in value — fueled by blockbuster media rights contracts — the teams have become too expensive for even the uber wealthy. Big investment groups, and specifically private equity dollars, are needed to close on a sale.

Valuations are likely to keep climbing. As traditional television continues to wither, it only enhances the value of live sports since it’s the one thing keeping the cable bundle intact.

But the announcement raises a big question. If you’re wondering who Chisholm is, you’re not alone. His firm, STG, has bought or made small investments over the years, according to data from S&P Capital IQ. It did pay $1.4 billion to acquire the media-editing software business Avid Technology in 2023.

Chisholm, “a lifelong Celtics fan and Boston-area native,” according to the statement, outbid well-known figures including the Celtics co-owner and billionaire Steve Pagliuca, the Phillies co-owner Stan Middleman and The Friedkin Group, to secure the team, according to The Boston Globe.

The deal structure is unusual. Sports sales are most often one big transaction, akin to any corporate takeover. This one is in two steps, with the first payment this summer and the second in the first quarter of 2028. Dan Primack of Axios was first to report that the second payment will raise the team’s valuation to $7.3 billion.

Wyc Grousbeck, a co-owner and the C.E.O. of the team, will manage its operations through the 2027-28 season.

Chisholm and his investors face challenges. The payroll for the 11 Celtics players under contract for the 2025-26 season will top $220 million, making it the highest in the league. Add in the luxury tax, which penalizes big-spending teams, and Chisholm will be on the hook for more than half a billion dollars. The team is also one of the few that doesn’t own its arena: It has to pay rent and is shut out of the high-margin luxury box windfall.

But the record sale price puts the team’s valuation in a league closer to the mighty N.F.L. That’s good news for all N.B.A. owners.

The catch: The Celtics deal means the valuation of N.F.L. teams are only likely to go higher.

Seen and heard, C-suite edition

Corporate bellwethers continue to deliver downbeat outlooks. On Thursday, Nike, FedEx and Accenture followed suit. Here’s what they said about their cloudy outlooks.

The DOGE effect:

“As you know, the new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue.”

— Julie Sweet, C.E.O. of Accenture. The consulting firm forecast a potential hit from the sweeping cuts being made by Elon Musk’s government-cutting team. Accenture’s federal services business unit, which accounts for roughly 8 percent of global revenues, has already lost contracts.

Tariffs, sinking consumer confidence and more:

“We are also navigating through several external factors that create uncertainty in the current operating environment, including geopolitical dynamics, new tariffs, volatile foreign exchange rates and tax regulations, as well as the impact of this uncertainty and other macro factors on consumer confidence.”

— Matthew Friend, C.F.O. of Nike. The sportswear giant warned that President Trump’s trade war, and especially his tariffs on China, would probably dent profits.

Worries about corporate America:

“Our revised earnings outlook reflects continued weakness and uncertainty in the U.S. industrial economy, which is constraining demand for our business-to-business services.”

— John Dietrich, C.F.O. of FedEx. The company lowered its full-year sales and profit targets, also because of trade-war uncertainty.

THE SPEED READ

Deals

Politics, policy and regulation

• UBS is said to be looking at relocating its headquarters should Swiss regulators require the banking giant to keep an extra $25 billion in capital reserves. (Bloomberg)

• Elon Musk’s super PAC plans to offer registered Wisconsin voters $100 if they sign a petition “in opposition to activist judges,” reviving a ploy it used during the 2024 presidential campaign. (NYT)

Best of the rest

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