National / International News
The department says it is looking into "possible unlawful coordination" by several major carriers.
Macy’s Wednesday says it’s phasing out its Donald Trump line of clothing and accessories. Trump’s comments about Mexican immigrants being drug dealers and rapists are, the company says, “inconsistent with Macy’s values.”
Still, the split comes with costs.
“There are orders being made,” says Matt Delzell of the Marketing Arm agency. “There’s current inventory in the stores. The shelf space, all of those things need to be replaced. That takes time. That takes money.”
Still, the costs are far lower than the price of staying with Trump.
And Macy’s likely built in an out long ago. Ever since O.J. Simpson’s brand went toxic for Hertz, companies have planned for these debacles.
“Companies routinely have clauses that say if there’s anything that is inconsistent with the morals or image of the organization, they have a right to remove a line or terminate a relationship,” says marketing professor Larry Chiagouris of the Lubin School of Business at Pace University in New York.
How costly is this split? The Trump line is not vital to Macy’s; it’s not Ralph Lauren or Tommy Hilfiger, analysts say.
“If I may call him the Don,” says analyst Paul Swinand at Morningstar, “he’s a little bit old at this point. I would say his shelf life is getting a little limited.”
In fact, several analysts think Macy’s may have already wanted to dump Trump. He’s now running for president, and a high negative rating doesn’t sell many paisley ties.
It’s not clear how quickly the Trump line will disappear from Macy’s. The Donald J. Trump money-sign cufflinks were still available at $45 each.
The tiny island of Puerto Rico, the U.S territory in the Caribbean, is being called “America’s Greece” by some.
Like Greece, Puerto Rico has more debt than it can pay back, upwards of $70 billion, and now it’s asking its creditors for a restructuring of that debt.
Unlike Greece, Puerto Rico isn’t talking about abandoning the dollar, but U.S. investors do stand to take a sizeable hit if the territory defaults on its loan obligations.
Puerto Rico has been an enticing place to park an investment for a long time, due to its so-called “triple tax exempt” status, meaning that income on Puerto Rican bonds can’t be taxed at the federal, state or municipal level.
That makes it a popular choice for everyone from hedge and mutual funds to individual investors. But does that mean Puerto Rico is our Greece?
“It might be a larger exposure, but it's not necessarily a more dangerous exposure,” says Brian Jacobsen, a portfolio strategist at Wells Fargo. Jacobsen notes the overall stake in Puerto Rican bonds is still just a drop in the total municipal bond bucket.
“It’s just really not enough to make a dent for the investing public as a whole. Puerto Rico has $72 billion in debts but the municipal bond market is about $3.7 trillion,” Jacobsen says.
But others says even a partial default may still cause a ripple effect felt by the larger bond market, an effect we might start seeing after the Fourth of July holiday.
“That’s when investors will come back and look at the value of their mutual funds after reading the headlines and start to have concerns,” says Tom Doe, president of Municipal Market Analytics.
Doe adds that even a small decrease in returns might be enough to set off a bank run of sorts, as investors rush to sell off Puerto Rican bonds.
“Prices decline, interest rates rise and the real unintended loser in this are other states and municipalities who are trying to borrow debt for infrastructure needs,” he says.
The island's state-run utility, Puerto Rico Electric Power Authority, is negotiating with creditors to potentially restructure its nearly $9 billion debt load.
As of April, Oppenheimer held $4.6 billion in Puerto Rican securities, about 17 percent of its assets. Franklin held $2.3 billion, roughly a 3 percent allocation to Puerto Rico.
Violent crime has ticked up in certain metro areas. Police are scrambling to hold the line while at the same time trying not to appear overzealous.
Two of the Big Three American automakers — Fiat Chrysler Automobiles and Ford Motor Co. — are reporting nice gains in their June sales, according to numbers out Wednesday. A stronger job market and easy access to credit are spurring many Americans to trade up from the older cars in their garages.
But that’s not the only reason carmakers are happy these days. A booming housing market is also a factor: contractors are breaking ground on more homes, which means they’re buying more trucks.
“The beneficiaries of that business are typically the Detroit Three. They make the bulk of trucks — the most popular ones,” says Michelle Krebs, senior analyst at AutoTrader. “Those are vehicles that contribute greatly to the bottom lines of those companies.”
She adds that strong demand means dealers are driving hard bargains and keeping prices up. Better deals can be found for those shopping for cars, rather than trucks and SUVs.
Local journalists and volunteers in Odessa are working to make sense of dozens of recent bombings — and prevent future attacks. They say that Russians have infiltrated the security services.
The early morning attacks on checkpoints were later claimed by the Sinai affiliate of the self-described Islamic State.
The latest data on payments from drug and device companies to doctors show that many doctors received payments on 100 or more days last year. Some received payments on more days than they didn't.
You know those fast-talking studs at the local ice cream parlor that stand in between you and that root beer float? Their official job title is soda jerk, and in 1954, Barry Friedman took his first job as one.
Friedman took the position at a local drug store. He says the job came with a lot of perks.
“There was a certain prestige associated with those of us who worked at Gill’s. The young girls would come in and giggle and would certainly make their interests subtly known that if we were going to a party, we might invite them,” Friedman recalls.
But the girls weren’t the only perks of the job. Having income came with responsibilities he enjoyed having.
“I was getting rich. Ninety cents an hour. A really good tip was 50 cents,” he says. “The tip money was mine to spend to save up … to go to a Chicago Cub baseball game. The 90 cents an hour went into my dad and mom to put aside for college. It gave me a sense of freedom.”
When Friedman looks back on those five years as a soda jerk, he has nothing but good memories.
“It was seemingly a carefree, feel-good time, but it had immense overtones with respect to my development. I loved the job,” Friedman says.
When people saw photos that linked a famous person with a famous place, it changed the behavior of certain neurons in their brains. And it changed their memories, too.
While the state permits people to possess and grow small amounts of marijuana, they still can't buy or sell recreational pot.
Just like the lottery, sports contracts can pay more when the profits are spread out over time. For example, let’s consider two of, arguably, the most bone-headed (or brilliant?) sports contracts of all time. The deal to fold the St. Louis Spirits has been called one of the best sports deals of all time. The contract has been so profitable that it’s used as a textbook example by business school professors. During basketball season, the deal inspires sports reporters to ask, “Would you believe a team that doesn’t exist still makes $17 million a year?”
The contract, signed in 1976, gave a small but lucrative portion of the NBA television broadcast revenues to three men. Dan and Ozzie Silna, who made their fortune in polyester, and their lawyer, Donald Schupak, owned a pro basketball team called the Spirits of St. Louis. The Spirits played for the American Basketball Association, or ABA. It competed with the NBA for players and fans. The two leagues took turns suing each other. From 1973 up until the end of the ABA in 1976, Michael Goldberg was general counsel for the ABA. “The league lurched to the finish line, kind of a bankrupt organization, exhausted, both mentally and physically, and hoping against hope that there wouldn’t be another ABA season because we didn’t know if we could muster ten teams to have a league and what have you,” says Goldberg.
Eventually, the ABA and the NBA struck a deal to combine forces. Four teams -- the Nets, the Pacers, the Spurs and the Nuggets -- would buy their way into the NBA. Those teams also had the responsibility to compensate the other ABA teams that didn’t make the cut. In the end, only St. Louis stood between the four teams joining the NBA. “St. Louis is holding the cards because unless they agree to something, this merger’s not going to happen for anti-trust and other reasons,” says Goldberg.
St. Louis held out for the best deal. But the teams didn’t have extra cash to sweeten the pot. So the owners of the Spirits got creative. They negotiated a cut of TV revenues expected in the future. And, here’s the kicker. They got the rights ‘in perpetuity.’ “That is something that they wanted,” says Goldberg, “because, I think that perhaps they saw, down the road, that this would be a way for them to get more money than they could have gotten from these four teams had they just kept negotiating a dollar figure.”
St. Louis negotiated a deal for one-seventh of broadcast TV revenues from each of the four teams joining the NBA. Over the years, that fraction has reportedly paid out around $300 million and counting. But back then, who knew? “The concept of cable television -- Turner Sports, ESPN -- these things didn’t exist. And it’s easy today to say, ‘Wow. They made a bad deal.’ But in those days it was not viewed upon that television would be the be-all and end-all as it is today for all sports,” says Goldberg.
The business landscape is always changing. That’s a lesson we see again in another notorious deal. It’s been more than 10 years since slugger Bobby Bonilla retired from baseball. Nonetheless, for the next 20 years, the New York Mets will pay him more than $1 million a year. “It’s very easy to look at from hindsight," says J.C. Bradbury, author of "Hot Stove Economics: Understanding Baseball’s Second Season.”
"You go and say, ‘Well, the Mets are paying Bobby Bonilla over a million dollars a year to not even play baseball. How silly is that?’” says Bradbury. But he says teams defer payments so they can afford new, and hopefully better, players. And that’s just what the Mets had in mind.
“The Mets were building a championship team around that point in time. And what they were looking to do was defer some of Bobby’s money,” says sports agent Dennis Gilbert, who negotiated the contract for Bobby Bonilla. The Mets would spend some of that deferred money on players. But some of it went into investments. “They had a fund. Or, at least, they thought they had a fund. They were investing with Bernie Madoff, and it didn’t work out the way they thought it would,” says Gilbert.
Gilbert structured Bonilla’s payment like an annuity. Here’s where his negotiating skills mattered. He locked-in the interest rate at 8 percent. With interest, the Mets will pay Bobby Bonilla $30 million instead of $6 million. I asked Gilbert for advice in negotiating contracts. “You listen well," he says. "You find out what would benefit the person that you’re negotiating against. Find out how they’ve negotiated historically and be a good counter-puncher.”
Sometimes a team will have its own financial motivations for trying to postpone a payment as long as possible. “Teams want to off-set the financial obligation as long as they can," says Michael McCann, who directs the Sports and Entertainment Law Institute at the University of New Hampshire. "And also, in some cases, they realize that the player will no longer be on that team when that amount of money is paid. Either the player is traded. Or perhaps the owner sells to a different owner who inherits that financial obligation.”
Deferring payments can work well for athletes too. But most of them (and most lotto winners) want the money now, even if it means there’s less of it. But Bobby Bonilla didn’t mind waiting to get paid. According to J.C. Bradbury, Bonilla “basically said, ‘I don’t want to have the opportunity to spend that money. I’d like to make sure that my kids have money later on. So limit the amount of money I have now.’ It’s worked out quite well for him,” Bradbury says.
Even if they involve a lower interest rate, deferred payments could work well for other athletes too. “I think there’s some logic to the idea that players may be better off when they turn 35, 40, 50 -- to get a substantial amount of money coming in -- it may be a very valuable piece of money for them,” says McCann. In 2009, Sports Illustrated reported that within five years of retirement about 60 percent of former NBA players are broke. And in pro football, the numbers are even worse. In which case, a deferred pay-day can be the preferred way to get paid.