Marketplace - American Public Media

If Clippers are for sale, what's the franchise worth?

Wed, 2014-04-30 13:35

As the next step in the public punishment of Los Angeles Clippers owner Donald T. Sterling, the NBA says it’s going to try to force him to sell his team. But this isn’t exactly a fire sale.

The traditional profit-focused reasons for buying a sports franchise are well established says Michael Leeds, a sports economist at Temple University. “I mean, you can go back to the 19th century," he says. "People would buy baseball teams because they owned a tavern nearby and they wanted to sell their beer.”

Nowadays, Leeds notes, owners are more likely to buy shares in media networks, but he says the payoff for ownership can come in different forms.

“When you own a sports franchise, you join a very exclusive club," he says. "As George Steinbrenner once said, 'Before I bought the Yankees, I was just some ship builder in Tampa.'”

Leeds says there’s a rush that comes with seeing your name in the paper, and some buyers are willing to pay a premium for that. Celebrities from David Geffen to Oprah Winfrey are reported to be interested in buying the Clippers. And all that buzz can drive prices up. While Donald Sterling  bought the Clippers for only $12 million dollars more than 30 years ago, one currenet estimate is $575 million

 

 

 

 

The shrinking board of Fed governors

Wed, 2014-04-30 13:29

The Fed’s Board of Governors is shrinking. There are supposed to be seven governors, but right now, there are just four, with three nominees awaiting Senate confirmation. And another vacancy is looming in May.

“We’ve never had a situation like we’re in now,” says Peter Conti-Brown, a fellow at Stanford law school who’s writing a history of the Fed. He says it’s rare to have so many vacancies on the board of governors.

Every MIT student just got $100 worth of Bitcoin

Wed, 2014-04-30 13:13

Two stories today  in what may well be a sign of the crypto-currency's slow rise to relevance:

  • Bloomberg is going to start tracking the Bitcoin-U.S. dollar exchange rate on its data terminals.
  •  
  • And on a more interesting note, every undergraduate at MIT is going to get $100 in bitcoins thanks to the MIT Bitcoin Club. They raised half a million dollars from alumni and "the bitcoin community." In their words, they fundraised to "spur academic and entrepreneurial activity."

Basically... every MIT undergrad just got a hundred bucks!

Only one person has gone to jail for the financial crisis

Wed, 2014-04-30 13:01

Only one banker has gone to jail for his role in the financial crisis. That person is Kareem Serageldin, formerly an executive at Credit Suisse. He began serving his 30 month sentence earlier this year.

“It’s not a conspiracy,” says Jesse Eisinger, a senior reporter at ProPublica, on why there have been so criminal proceedings. Instead, the Department of Justice was chastened by a series of court losses, and “effectively lost its ability to indict corporations or go after individuals at the highest echelons of corporate America.”

Eisinger details how the Department of Justice "lost its way" in an article for the New York Times Magazine.

In his account, the turning point was the case against Enron’s Arthur Anderson. Two years after winning the original case, the Supreme Court overturned the verdict. Eisinger says the Supreme Court “didn’t say that Arthur Anderson was not guilty of the crime that they had been indicted for, which was obstruction of justice. It revolved around jury instructions. But the Department of Justice took this as a huge black eye.”

Ever since, the DOJ has focused on crimes that are easier to win – such as insider trading cases. And they’ve been reluctant to investigate or bring charges against company CEOs.  

“The real bad actors are the top officers in companies that commit crimes," Eisinger said. "And you have to go after them successfully if you want to deter white collar crime.”

Drought puts California rice in a sticky situation

Wed, 2014-04-30 12:08

That sweet sticky rice that comes with your sushi likely came from California. The state grows almost all of the nation’s medium grain rice, and about half of it is exported.

And California's drought is expected to have a dramatic effect on rice production. Economists say the mere speculation of production losses is already driving up prices.

Ninety-seven percent of California’s rice is grown in the Sacramento Valley, including at Montna Farms, where a huge drag scrapers level fields in preparation for planting. Nicole Van Vleck says medium grain rice will grow here, which is perfect for sushi.  

“If you’re eating sushi rice in New York, or in Florida, or San Francisco you’re most likely undoubtedly going to be eating California rice,” says Van Vleck.

Van Vleck stands next to a water pump that’s flooding the field behind her.

“So this is water that’s coming from the Feather River. The Feather is just to the east of us, we divert out of the Feather,” she says.

Northern California farmers typically have plenty of water compared to those in the south, even during dry years. But not this year.

“This is the first time I know of that we cut back rice acreage because surface water allocations were cut so severely to water districts north of Sacramento,” says Dan Sumner, an agriculture economist at the University of California Davis.

Montna Farms has been in the Sacramento Valley for generations. But this is the first time a drought has caused so much uncertainty.

“It’s unlike anything I’ve ever had to deal with,” says Van Vleck. “Day to day, things change. Right now we are down 48 percent over last year.”

Rice farmers will leave 100,000 acres of their fields fallow. That’s a big deal. Van Vleck says medium-grain rice grows in just a few places around the world.

“California does export about half of their crop. And so if California is affected because of the drought, it all of a sudden changes the price of medium grain substantially,” she says.

Sumner has already seen the price increase.

“Farmers were getting between $15 and 20 for a 100 pound sack of rice,” he says. “It’s now up in the range of $25 or $30 -- or more.”

Customers have seen the price bump at Oto’s Marketplace in Sacramento, a store that specializes in Asian foods.

“A lot of the distributors and everybody went in increments. You don’t see a big price raise all at one time," says Russell Oto, the store’s general manager. “But by May or June it might go up a little bit more than what my prices are now.”

What worries rice farmers like Van Vleck the most is the possibility that California could see more dry years ahead.

“We have this wonderful system of customers that count on us each and every year,” she says. “I don’t know that they’ll all be able to be serviced this year. Someone else will fill that void. You might not get the customer back.”

And economists say that’s the danger. Suppliers might just start buying their rice elsewhere, like Australia or Arkansas. The drought may send a signal to the world market that California rice isn’t reliable.

Bikes + Salad = I've got the month of May

Wed, 2014-04-30 09:06

From the Marketplace Datebook, here's a look at what's coming up Thursday, May 1. (Really? It's May already?)

In Washington, the Commerce Department reports on how much we earned and how much left our wallets in March. It releases its personal income and spending report.

Automakers are scheduled to release sales figures for April.

The Council of Chief State School Officers says Sean McComb, National Teacher of the Year, will be honored by President Obama tomorrow at the White House.

The Senate Energy & Natural Resourced Committee discusses the events that led to last winter's propane crisis.

And it's National Bike Month. It's also National Salad Month. (Why don't we just call it Get Ready for Swimsuit Season Month?)

PODCAST: Winter came for the GDP

Wed, 2014-04-30 07:00

On Wednesday, the government reported GDP numbers. Turns out, January to March showed hardly any growth -- an annual rate of just one-tenth of one percent, way below forecasts. Spending on goods was down, but for services, like healthcare, consumer spending was up. Business investments and exports were down, so it wasn't just the weather. But analysts say more recent data suggest the current quarter will be better.

Plus, it seems like you can get everything at a Walmart—including the kitchen sink. And, now, auto insurance. Wal-Mart is rolling out a new service via its website, walmart.com, that allows consumers to shop online for auto coverage, compare premiums, and sign up for a policy all in one sitting and from a single website. It’s part of the giant retailer’s strategy to offer more financial services as it struggles to sell more to consumers in its stores, says retail consultant Burt Flickinger III at the Strategic Resource Group in New York.

“Whether it’s money transfers, or competing with GameStop on used videos, or auto insurance, Walmart is struggling to attract shoppers,” says Flickinger. “And the shoppers aren’t coming to the supercenters.”

 

Walmart wants to sell you auto insurance

Wed, 2014-04-30 06:10

Seems like you can get everything at Walmart—including the kitchen sink. And, now, auto insurance.

Walmart is rolling out a new service via its website, walmart.com, that allows consumers to shop online for auto coverage, compare premiums, and sign up for a policy all in one sitting and from a single website.

It’s part of the giant retailer’s strategy to offer more financial services as it struggles to sell more to consumers in its stores, says retail consultant Burt Flickinger III at the Strategic Resource Group in New York.

“Whether it’s money transfers, or competing with GameStop on used videos, or auto insurance, Walmart is struggling to attract shoppers,” says Flickinger. “And the shoppers aren’t coming to the supercenters.”

Flickinger says Walmart needs to do something. He says same-store sales have been down for the past five quarters. Price-conscious consumers have been struggling to afford even Walmart’s discounted prices in the prolonged economic downturn, and Flickinger says Walmart has stumbled on customer service, with inadequate staffing and understocking of its stores.

“The auto insurance adds customer continuity and frequency, and Walmart has the second-biggest IT capabilities anywhere in America, second only to the Pentagon,” says Flickinger. “Walmart certainly has the size and scale to make financial services pay off.”

Walmart senior vice president Daniel Eckert explained Walmart’s new auto insurance as an at-home or in-the-office opportunity to compare quotes from multiple insurers, and to bind (actually secure coverage based on the quote offered)—without leaving its website.

The online market is hosted at the website of Walmart’s partner in developing the product, AutoInsurance.com. Eckert says the new service will be promoted at Walmart.com, and in displays at Walmart stores. It is being launched initially in Arkasnas, Louisiana, Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee and Texas, with rollout plans for the rest of the country later in 2014.

A computer program to write your essays

Wed, 2014-04-30 05:53

A writing professor at MIT has developed a computer program that writes a college essay in one second, after you input a few key words and it actually scores pretty well on an online grading system meant for actual human student writing.

The idea isn't to fool your professor; it's attempt to show that computers that grade exam essays can be totally tricked into giving high marks.  

Les Perelmen, a recently-retired MIT professor who worked with students to develop the program, generated a sample for Marketplace on the subject of the future of education and technology.  The essay begins:

"Teaching has not, and no doubt never will be exemplary. Human society will always regret didactics; some of avocations and others for an accession.  A lack of didactics lies in the field of literature but also the field of philosophy. Teaching is the most cordially arrogant trope of mankind. "

What does it actually mean?  We're not sure, but it merited a whopping 5.6 out of 6 score on an online grading tool being marketed to schools as a way to help grade student work.  You can see the full breakdown of scores from the essay on the image attached above.

Perelmen, who is a noted critic of robotic grading, labeled the machine the Basic Automatic B.S. Essay Language Generator, or "BABEL."  He recently wrote an editorial about robo-grading in the Boston Globe and spoke at length with the Chronicle of Higher Education about his program.

The full essay generated by Perelmen's program for Marketplace can be read below if you have the stomach to make it through the whole thing:

Teaching has not, and no doubt never will be exemplary. Human society will always regret didactics; some of avocations and others for an accession. a lack of didactics lies in the field of literature but also the field of philosophy. Teaching is the most cordially arrogant trope of mankind.

Reiteration, especially for excess, masticates an interloper on exorbitantly but fallaciously truculent assassinations by instruction. If advocates renege or assure reprobation, gluttony that is situationally boisterous but is risible, sapient, and soporific with educational activity can be more reprovingly entreated. Additionally, technology, often at an utterance, can be the commencement. In my experience, all of the reprobates to our personal consequence of the dictator we countenance delineate the escapades in question. Even so, armed with the knowledge that the recondite disruption encounters establishment, most of the organisms for my precinct assent. Our personal scrutinization to the contradiction we placate howls. Education which depreciates all of the ruminations might divisively be a juggernaut on our personal sanction with the allusion we propagate as well. The countenance of diagnoses may be legerdemain but is belligerent yet somehow effortless, not cornucopia that tantalizes provocation and allocates inspections. In my theory of knowledge class, none of the agronomists at our personal scenario by the exposition we ponder embark and anesthetize reprimands which observe the response. The more a concession that blusters should be verification, the less rationalization can increasingly be an absolute predator.

As I have learned in my semiotics class, technology is the most fundamental affront of humankind. Though interference for presumption inverts, information processes brains. The same pendulum may process two different orbitals to process an orbital. The plasma is not the only thing the brain reacts; it also receives neutrinoes for conjecture with technology. Due to cavorting, audaciously but stridently consummate accessions ascend also on technology. a substantiated education changes the intercession at education.

The appendage, frequently to a tyro, taunts educational activity. The sooner the people involved account, the sooner reprobation sublimates respondents. Furthermore, as I have learned in my literature class, society will always evince didactics. Our personal exile of the adjuration we augur will be contretemps with assemblies and may presumptuously be compensation. The casuistry might, still yet, be unintentional in the way we insist or enlightenment the awkwardly and despicably predatory recrudescence but presume avocations. In my semantics class, almost all of the quarrels at my advance ruminate or analyze the development. a quantity of engineering is slight for our personal postulate on the civilization we accuse as well. The axiom aggregates dislocation, not a commencement. In my experience, many of the lamentations by our personal confluence at the account we denigrate diagnose taunts. The less palaver that culminates is petite in the extent to which we fascinate most of the adherents for the realm of reality and insinuate or should tenaciously be an accumulation, the more reprobates masticate the accumulation of community.

Instruction with agreements will always be an experience of human society. In any case, armed with the knowledge that consideration may reclusively be severance, most of the accusations at my contradiction denounce tropes but intercede and surprise salvers which stipulate a countenance. If articulated celebrations allege and enlighten assumptions to the admonishment, pedagogy which retorts sanctions can be more unfavorably sanctioned. Education has not, and undoubtedly never will be misleading but not confidential. Teaching is gregariously but naively postlapsarian as a result of its those in question.  

Economic growth in the U.S. stalled this winter

Wed, 2014-04-30 04:19

On Wednesday the government reported GDP numbers. Turns out, January to March showed hardly any growth -- an annual rate of just one-tenth of one percent, way below forecasts. Spending on goods was down, but for services, like healthcare, consumer spending was up. Business investments and exports were down, so it wasn't just the weather. But analysts say more recent data suggest the current quarter will be better.

GDP measures when money changes hands. On this program, we keep track of alternative measures. Chris Hoenig is President of The State of the USA, an outfit that's working with the government to come up with an online, interactive scorecard for how we're doing. He joins Marketplace Morning Report host David Brancaccio to discuss. 

The person managing your future, revealed

Wed, 2014-04-30 03:12

Like it or not, more and more Americans have their futures wrapped up in Wall Street. Old age once included a sizable pension paid for by the employer you retired from. But these days, many Americans have to fend for themselves by saving and investing through 401(k)s and other retirement accounts. That means putting money into the complicated and mysterious gears of Wall Street.

Liz Gross is part of that. The 31-year-old Oconomowoc, Wisconsin resident invests a chunk of her salary in a 401(k). Like many Americans, she thinks of herself as something of a novice when it comes to investing.

“I understand the basic ideas of investing and saving early,” she says. “As far as picking the stocks and the funds that I should be in, it’s not something I’m entirely comfortable with.”

That’s why she chose a target date mutual fund, a popular choice these days. The idea is investors choose the year they want to retire and the fund does the rest. (Ideally, they also check the fund’s fees first.) Each is a little different, but the basic idea is the investments become more conservative over time as the retirement date draws near.

Since so many Americans are investing this way, we thought it’d be interesting to connect Gross with the person managing her future. After we talked to Gross and learned about her investments, we called up Andrew Dierdorf, a portfolio manager at Fidelity. His team oversees nearly $200 billion dollars in retirement money, including the fund Gross has invested in. The futures of millions of American, including Gross, are quite literally in his hands.

We connected them both an invited Gross to ask him questions.

Gross: This is definitely your wheelhouse and not mine, so I kind of wanna turn the tables on you and ask how do you plan for your retirement and have you thought about investing in a target date fund?

Dierdorf: They’re my sole holding in my 401(k) account. So, I struggle with a lot of the same types of issues around making sure that I have my asset allocation appropriate as I’m moving through time. So I’m eating my own cooking.

Mark Garrison: Meet Liz Gross.

Liz Gross: I’m 31 and I live in Oconomowoc, Wisconsin. I have a 401(k) in which I invest a portion of my salary.

Her job kicks in money too. But unlike traditional pensions, she has to figure out how to invest. Alicia Munnell runs Boston College’s Center for Retirement Research.

Alicia Munnell: All the risks and responsibilities have shifted to the employee, that is, to us.

A nation of untrained investors faces choices with lifetime consequences.

Gross: I understand the basic ideas of investing and saving early, but as far as picking the stocks and the funds that I should be in, it’s not something I’m entirely comfortable with.

That’s why Gross chose a target date mutual fund. You choose the date you wanna retire and the fund changes over time to fit that. If you’re smart, you also check the fees first. Since so many Americans are investing this way, we thought it’d be interesting to connect her with the person all the way up the chain.

Andrew Dierdorf: Hi, Liz.

Gross: Hi, Andrew.

Andrew Dierdorf manages the Fidelity fund Gross has. His team oversees nearly $200 billion dollars. The retirements of millions of Americans are quite literally in his hands. So Gross wasn’t shy.

Gross: What is it that you know and what you’ve learned that makes you the person to manage this instead of me, to have me put my trust in you?

He gave the answer you might expect about his experience and the team. But then, Gross threw a curveball.

Gross: This is definitely your wheelhouse and not mine, so I kind of wanna turn the tables on you and ask how do you plan for your retirement and have you thought about investing in a target date fund?

Dierdorf: They’re my sole holding in my 401(k) account. So, I struggle with a lot of the same types of issues around making sure that I have my asset allocation appropriate as I’m moving through time. So I’m eating my own cooking.

Liz Gross felt good about her decision after the talk. Make sure you get answers too. Your job may be able to connect you with free professional advice.

Gross: I just hope other folks are having these conversations with people they trust so that we’re taken care of when the time comes to quit working and go have fun.

In New York, I'm Mark Garrison, for Marketplace.

Sizing up Donald Sterling's other business interests

Wed, 2014-04-30 02:58

Donald Sterling is number 972 on Forbes' list of billionaires, with a net worth of $1.9 billion. Forbes values the LA Clippers at $430 million, though some say they could be worth more.

The bulk of Sterling’s wealth comes from real estate -- buildings in LA.  So, will his real estate business be tarnished because Sterling has been banned from the game for racist comments?

“Yes, of course,” says Robert Baade, an economist at Wake Forest University. Baade wouldn’t be surprised if people started boycotting all things Sterling.

Any fall out will be short-lived, according to Leonard Baron, a San Diego realtor and lecturer at San Diego State.  He doesn’t think Sterling will lose any tenants. “People renting are going to be like, 'What’s the price and what’s the location?'" he says. "So I doubt it’s going to have any lasting effects at all.”

And, Baron says, if Sterling wants to sell any real estate, there are plenty of buyers willing to pay top dollar.

AT&T jumps on board with airplane Wi-Fi

Wed, 2014-04-30 02:43

This week, AT&T announced it will offer Wi- Fi service on U.S. flights next year.

Until this week, the in-flight internet business was dominated by Gogo.

Roger Entner, with Recon Analytics, says the challenge for AT&T is that only a small fraction of passengers actually use Wi-Fi on flights.

“AT&T is looking at it and says if we bring down price, and we accelerate the speed, more people will use it and then it will become a bigger market.”

Are we moving away from "too big to jail"?

Wed, 2014-04-30 02:32

Federal prosecutors are preparing criminal charges against Credit Suisse and BNP Paribas, according to reporting in the New York Times. 

Ben Protess, with the Dealbook section of the New York Times, wrote:

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades.

In doing so, prosecutors are confronting the popular belief that Wall Street institutions have grown so important to the economy that they cannot be charged. A lack of criminal prosecutions of banks and their leaders fueled a public outcry over the perception that Wall Street giants are “too big to jail.”

"These investigations have been going on for years," Protess told Marketplace. "This is kind of a new batch of cases the last few years."

In the case of the Swiss bank, it involves allegations that it helped clients avoid taxes. In the case of BNP Paribas, it's about doing business with companies in violation of U.S. economic sanctions. The Times says this would challenge a common belief in the financial world that big banks are too important to charge in criminal cases.

"In the Credit Suisse case, that one could really be in the next couple weeks," Protess says. "We're expecting either a guilty plea for the main arm of Credit Suisse in Zurich, or perhaps even the parent company."

Donald Sterling donates a lot of Clippers tickets

Wed, 2014-04-30 01:55

Donald Sterling, the owner of the Los Angeles Clippers who on Tuesday was banned for life from the NBA and fined $2.5 million for racist remarks, reportedly has something of a history of offensive remarks and questionable business practices. Even before the furor over Sterling's most recent indiscretion, he was widely reviled by the rest of the NBA for his tight-fisted management of the Clippers that for years earned the team a reputation as the worst franchise in the NBA (and even all major league sports).

He also has a history of philanthropy, as Sterling has been the recipient of donor awards from numerous organizations like the Special Olympics and the NAACP. Whether or not Sterling's charitable efforts were a form of "reputation laundering," his aversion to spending money seemingly didn't extend to his charitable donations.

But one thing tends to pop up when reviewing Sterling's philanthropy: He gives away a lot of Clippers tickets in lieu of cash.

Not to misrepresent Sterling; he has donated millions of dollars over the years to various organizations. But his donations of Clippers tickets -- over 280,000 tickets to more than 2,000 community groups over the past few years -- are a high-profile aspect of his philanthropy.

Sterling would give around 2,000 to 3,000 tickets per game to youth groups. Those tickets may have been hot commodities over the past few seasons, but before the Clippers successful streak, Sterling's generosity had more of an appearance that he was just filling empty Staples Center seats to boost attendance.

A Sports Illustrated profile on Sterling from 2000 offers probably the most striking example of Sterling's attitudes toward his ticket donations:

Not that every charity has found it easy to separate Sterling from his swag. Linda McCoy-Murray recognized that last summer when she phoned him to help sponsor a golf tournament in honor of her late husband, venerated L.A. Times sports columnist Jim Murray. Every pro franchise in California, according to McCoy-Murray had forked over at least $5,000 to her foundation, which provides journalism scholarships. Every pro franchise, that is, except the Clippers, which had memorialized Murray on the final page of last season's media guide. Sterling offered McCoy-Murray two season passes. "You know, that's wonderful," she remembers telling him. "but we're trying to endow a college scholarship fund. We could really use cash."

Sterling, she says, replied, "Those two tickets have a face value of $4,000!"

"Fine," she said. "We can use the tickets for our silent auction. But would you also consider donating $5,000?"

Sterling said he would mull it over and call her the following week. He never did nor did he send over the season passes.

Becoming a YouTube star

Wed, 2014-04-30 01:00

Not many teenagers can claim self-made stardom. 18 year old YouTube star Bethany Mota has developed a devoted online following with her videos on makeup, clothes, and other teen-related topics. Her interest in making YouTube videos was a result of being bullied online. 

"I think because at the time I was experiencing the dark side of online media, I found this really positive community on youtube that I didn’t even know existed," says Mota. These days, she has a lot to be excited about - Mota has close to 6 million followers on her YouTube channel.

Check out her latest video here:

The history of the marketing of Cinco de Mayo

Tue, 2014-04-29 15:23
Friday, May 2, 2014 - 04:05 Bryan Steffy/Getty Images for Bud Light

Party goers enjoy the poolside Bud Light Lime 'Lime -A - Rita' Cinco de Mayo party on May 5, 2012 in Las Vegas, Nevada.

Technically, Cinco de Mayo falls on a Monday this year. But beer companies want people to get an early start, celebrating over the weekend.

But celebrating what, exactly? What does Cinco de Mayo mean for marketers and consumers?

Many in Los Angeles celebrated Cinco de Mayo last weekend. Tens of thousands of Latinos attended a street fair that big corporations saw as a marketing opportunity, even if their message was a little fuzzy.

At the Ford booth, I spoke with Marie, a 'brand ambassador.' I asked her to make the connection between the car company and Cinco de Mayo.

"Ford, to me, is about the people. And people need to drive to get around this city and Ford is a great way to do that," said Marie.

She struggled to make the connection. But, to be fair, it is sort of a hazy holiday.

After all, May 5 commemorates an obscure battle where the Mexican underdogs defeated the French.

"In Mexico, we don't really do Cinco de Mayo," said Marie. "It's more of an American-ized holiday."

In this case, 'American-ized' meant commercialized. Festival goers moved from line to line, waiting for free samples and gift bags. A fiesta of freebies from McDonald's and Palmolive and Colgate.

"The consumer products companies have been the early-adopters of understanding that this is the market that is going to move the needle, and they've really fought hard to create brand recognition," said Xavier Gutierrez with Meruelo Group, one of the event's sponsors.

While some companies try to connect with Latinos, beer companies try to get everyone to party.

According to Nielsen, the market research company, Americans bought more than $600 million worth of beer last year for Cinco de Mayo. That's more beer than was sold for the Super Bowl or St. Patrick's Day.

"Beer companies have been largely responsible for the commodification of Cinco de Mayo. I mean, they spend millions and millions of dollar in Spanish-language advertising," said Jose Alamillo, a professor of Chicano studies at California State University Channel Islands.

Alamillo said the beer industry ignores alcohol related health issues that affect the Latino community.

He'd like to see Cinco de Mayo promoted as a history lesson, instead of -- as critics allege -- an excuse to sell booze.

Marketplace Morning Report for Friday May 2, 2014Story Byby Jeff Tyler and Shea HuffmanPodcast Title The history of the marketing of Cinco de Mayo Story Type FeatureSyndication SlackerSoundcloudStitcherSwellApp Respond No

Frontier Airlines will charge to use overhead bins

Tue, 2014-04-29 14:29

You've got your low cost airlines, and then you've got your ultra-low cost airlines.   Frontier has a new pricing structure. Base fares are going down. But if you want to use the overhead bin, it'l be $20 for frequent fliers who book online, and $50 for those who wait until they get to the gate.   That space at your feet under the seat in front of you: Still free... for now.  

Yahoo's making content of its own

Tue, 2014-04-29 13:41

Original online content is still in its infancy, but boy, is it a crowded crib.

Beyond the TV and the movie screen, there's YouTube, Netflix, HBO GO, Vimeo, Vice, Vevo and Hulu -- and now there's Yahoo, too. 

Courtesy of a new deal with Live Nation, Yahoo will air live concerts every day starting this summer. It'll also offer two new comedy series: "Other Space," a so-called galactic adventure set a hundred years from now, and "Sin City Saints," about a fictional pro basketball team. Yahoo is getting into this business because video ads command much higher prices than typical banners and popup ads, but it's a costly strategy.

Whether it pays off ultimately depends on how good the shows are, how much visibility they get and how well they're marketed to the public. Otherwise, they risk sinking without trace.  

A Texas-sized bankruptcy for giant Texas energy deal

Tue, 2014-04-29 13:39

Texas was dealt a blow by the U.S. Supreme Court Tuesday, via a ruling that the Environmental Protection Agency can order states to cut down on emissions if those emissions are drifting over to neighboring states.

Texas has the highest CO2 emissions of any state in the country. Texas also consumes the most energy, which brings us to the second major blow dealt to Texas: The state’s largest electricity provider, Energy Future Holdings Corp., filed for bankruptcy.

In 2007, Goldman Sachs and private equity firms acquired TXU for $45 billion, making it the biggest leveraged buyout ever. There were lots of reasons to believe that owning the largest provider of electricity in the largest state in the continental U.S. had lots of potential for growth, so private equity firms loaded the company -- renamed "Energy Future" -- with debt.

“The problems, of course, are when the business becomes less valuable, or there are meaningful hiccups,” says Peter Cowan, managing director of Clear Capital Advisors.

Those meaningful hiccups can be caused by a larger economic downturn, or from changes within the industry. In this case it was both. The 2008 recession caused an overall decline in energy use. And then came the fracking boom, which drove the price of natural gas down, along with the utility’s profits. When Energy Future filed for bankruptcy today, its total assets were $36.4 billion. Its debt was nearly $50 billion. 

Barbarians at the Gate and the other largest LBO that you might have heard of 

by Tobin Low

It was the largest buyout in U.S. history. At the time, the 2007 purchase of Energy Future Holdings for $45 billion was called that.

But credited with creating the LBO environment of the next 20 years, the 1989 purchase of Nabisco was both contentious and dramatic. The food company sold for $31.1 billion at the time, and when adjusted for inflation, the sale price is closer to $55.38 billion. With the adjusted price of Energy Future coming in at around $47.23 billion, Nabisco's sale wins by almost $7 billion.

Plus, as dramatic as Energy Future's end may be, Nabisco's LBO started out with a bidding war that has since been immortalized in book and on screen. F. Ross Johnson, then executive of the company, partnered with with a buyout firm to attempt an in-house purchase of the company. Enter Kohlberg, Kravis, Roberts & Company (also involved in Energy Future's purchase). KKR started a bidding war that continued to hike the price of Nabisco higher and higher. At the end of the day, Johnson lost out, and ultimately left the company. 

To this day, it is still considered to be "one of the most game-changing deal in American financial history."

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