AMAZON CHANGE OF HEART

Amazon Reconsidering Plan to Put Campus in New York City Amazon Reconsidering Plan to Put Campus in New York City – The Wall Street Journal

On principle, government should focus on creating environments attractive to all businesses, not crafting sweetheart deals to lure select entities. Governments should not pick winners or losers, but provide a fair and equal shot at success or failure. In the case of Amazon, New York City and the State of New York gave a significant incentive package that has some lawmakers raising questions.

In response, Amazon is rethinking its commitment to bring $2.5 billion worth of investments and jobs to Long Island City in Queens. Essentially, it may walk away from the reported $3 billion in incentives to choose another site with less local uproar. There were many other places where Amazon probably could receive a good incentives package while making an impact on the local community. But, Amazon went with a pretty strong sweetheart deal. If reports are correct, pay $2.5 billion for $3 billion of government incentives, not including revenues, is not a bad deal.

Amazon is not the first private sector entity to make local government’s bid on attaining their business. The practice is common for sports teams and other corporations seeking incentives to move significant lines of business to new cities. Many sports teams request financing deals from state and local governments, threatening relocation. The economics of these financing projects are highly questionable at best. Some instances are worth it. Sometimes not.

Understandably, city governments and local politicians want the jobs and the tax revenues. The publicity today can propel political careers for years to come, while local taxpayers deal with the financial ramifications. In the case of Amazon, one can reasonably assume much of the required infrastructure upgrades will run over-budget and create great burden to the already congested area. Over a ten year period, will the economic boom be felt only by Amazon or by the taxpayers as well? We will have to wait and see.

Advertisements

FACEBOOK

Facebook’s Timeline: 15 Years In – The Wall Street Journal.

Mark Zuckerberg did not invent social media when he founded Facebook, but he certainly changed its trajectory. During its inception, MySpace was the king of the social media hill. Ever since, Facebook now sits atop the social media world and MySpace is no longer a relevant name in the market.

As Facebook alludes to in their marketing campaigns, the social media brought the world closer together. The ability to maintain connections with friends, acquaintances, or relatives improved. Geographic distance or varying time zones no longer served as barriers to remain up to date with those in one’s inner circle. Facebook allowed people to grow their network and identify the six degrees of separation between them and others they come across. Facebook allowed people to communicate more efficiently with a single message instantly reaching multitudes of people.

Facebook not only changes our individual behaviors, but it also sparked changes in how companies market products and engage with consumer markets. User behaviors provide great insight on how brands can construct product offerings and marketing campaigns. Instead of costly television adds, many brands are able to connect with core members of their target markets with social media campaigns. Facebook also greatly impacts our social conscience and political system, as it is a common place for people to display political views or voice opinions. 

Like anything that becomes globally popular, there will be some downsides brought to light by inappropriate uses of the product or service. Some people with low moral standards utilize the anonymity of social media to harass, stalk, or bully others. Others used social media to circulate purposefully untruthful content to mislead the public. People evolve over time to understand the need for balance with social media, weighing the level of engagement and separation as well as how to evaluate circulated material.

As it celebrates its 15 years in existence, Facebook should be celebrated for its overall positive impact on society. Whether one simply scrolls to kill time, posts messages to friends and family, or peruses for various products or content, Facebook will continue to serve its over 2.2 billion daily users.

FREE MARKETS AND SPORTS

The broken winter: Why baseball must fix free agency ASAP(ESPN)

The anxiety for the fans waiting for free agent decisions is understandably high. But that does not mean market economics failed.

As mentioned in the article, baseball executives are learning from past spending mistakes. Utilizing data and information to make the best informed decision possible. To decide whether to bid or pass on assets. Doing so requires change in offer structures and more time for both sides to analyze contract value.

Market economics at its core reflect the true price a buyer is willing to pay for a product or service and the price the seller is willing to accept. Market economics at its best occurs when both buyer and seller are highly informed about the total value and impact of transactions. Baseball executives are now becoming more informed buyers and more efficient spenders.

Most unionized structures are the exact opposite of free markets. Many deny the individual of the opportunity to maximize value attainment. What is perceptually good for the gander may harm individual geese.

Baseball fans need to be patient. Teams are being more analytical in decision making and players are demonstrating greater patience to maximize value. Monster contracts of the past harmed both teams operation and the reputation of players not living up to fan expectations. Now, the market is correcting itself.

IN NEED OF A LIBRARY

What if you can’t raise $90k for a library? In Philly schools, there are haves and have-nots (PHILLY.COM)

crc cpA call out against bad public policy combined with a bit of class warfare. In the article from the link above, the journalist writes about how a Philadelphia community overcame the lack of a publicly funded library. Through fundraising efforts and development of a non-profit, community members secured the needed funds to start a library.  In contrast, the journalist points out the inability for high poverty areas to achieve a similar feat. Also, the public policy failure of local elected officials not securing enough funds from the state to have performing libraries. While there are clear disadvantages in varying economic environments, the narrative overlooks a personal and social responsibility demonstrated by one group that provides a pathway for other groups, regardless of economic prowess.

There is no disagreement that areas with high poverty rates lack social networks with excess income for donations. The lack of proper education funding does places these communities at an economic disadvantage, not of their own choosing, compared to wealthier counterparts. Ideally, all communities would place greater value in maintaining quality education programs than using taxpayer dollars on programs better suited for the private sector. In this case, neither rich nor poor areas were set to receive the needed funding. The people that see it as an obstacle to overcome rather than a point of contention will be the ones that find solutions.

Richer communities do have an advantage in fundraising, being able to bring people seeking tax write-offs together. In spite of this, other communities may need to seek unconventional targets for fundraising campaigns. Many corporations and business will readily donate if advocates have the persistence and people skills to cultivate relationships and make a reasoned case for providing funds for schools. Also, geographic barriers should not restrain fundraising efforts. There are many people and organizations that will help outside their own domains if people can make them aware of the need.

There needs to be a champion willing to advocate for these programs. Our current society has numerous tools to crowdfunding endeavors, which should be utilized to attain needed funds. The task is obviously difficult, but not impossible by any means. Americans need champions not complainers. Advocates not wayward activist. Problem solvers not problem creators. Government may not be able to provide solutions, but that does not mean there is not one available.

EXPANDING ECONOMIC OPPORTUNITIES

EXPANDING ECONOMIC OPPORTUNITY

crc cpThere is great economic potential in many communities that get typically overlooked by public and private sector investors. Because of local demographics, people lack access to good paying jobs, quality education, and opportunity that better managed areas readily have.

In the above link, ideas for how to change the status quo and expand economic opportunities by removing biases that exist and making communities more attractive for investment.

Please click on the link above to experience the content and more on The CRC Review.

CHANGING ECONOMICS

MLB PLAYERS CONCERNED OVER DELAYED SIGNINGS (ESPN)

The continued free agency of Bryce Harper, Manny Machado, and other big name players concerns many other MLB stars. Spring training is around the corner, where contracts are typically settled well before. As teams set aside traditional thinking in free agency, players having to wait until near spring training may become the norm.

The concerns raised are understandable. Harper, Machado, and Kimbrel are free agents that can make big impacts on teams. Especially Harper and Machado, who are still heading into their prime, can contribute to teams for the next decade. Players work hard to earn their payday, once they are eligible for free agency. The lack of teams interested, able, or willing to pay the salary requests constricts their ability to obtain their dream contract.

Players in all sports complain about metrics used to change the way teams and their fans view player performance. Largely starting in baseball, the use of advanced metrics help provide a better picture of how players contribute to wins, beyond traditional stats that may help player profiles but not the team’s win total. The advanced statistics change the way teams play the game and alter their free agent needs. A team that believes it can win games without the cost of power hitters will no longer enter the markets for certain players.

In any unionized environment, workers will defend each other regardless of the economic factors driving change. In the case of sports, the economic factors driving the greater use of advanced statistics and reluctance to pay bloated contracts is the clear lack of value these contracts traditionally provide over the life. Many decade long contracts create buyers remorse for owners, general managers, and the fan, who pay the gate revenue and create the market for advertising revenue.

There are numerous examples of players who did not live up to the size of their dream contracts. For instance, Albert Pujols never reached his iconic level of play with the Angels as he did during his time with Cardinals. Miguel Cabrera played well during the first years of his contract, but injuries and age appear to negatively impact his overall contributions. Alex Rodriguez will be remembered for his controversies and scandals, more than the contributions he gave during his bloated contract.

The right player can positively impact a team’s bottom line and its connection to the city’s fan base. Many players like Jim Thome more than offset their salary expense through connections with fans that increase revenue through higher attendance, merchandise, and advertising. When he came to the Phillies, Thome changed the culture and connected with the greatest fan base in all of sports. Teams will look to avoid the failed examples and find the Thome situation instead.

The fact of the matter is that most baseball teams do not have the financial resources to devote a significant cut of the team’s annual payroll to one player. Many teams do not have the gate revenue or television contracts to make such a commitment. Instead, these teams rely heavily on advanced metrics to attain value players for building a team that can compete with the big spenders.

No matter the industry, organizations will find new methods to measure success and attain value, especially when there are notable risks, like big contracts that deliver neither victory nor value. Data analytics brings greater insight on the risks and rewards of individual players and the team as whole. Agents and players will need to adjust their dogma on contracts and negotiations periods. Big contracts will take longer to negotiate with the additional complexity.

DIVERSITY AND PERFORMANCE

Future of black NFL coaches a concern after round of firings (ESPN)

The NFL should ensure that the limited opportunities to lead and shape the football activities of its franchises are available to all those who have the qualifications and resume. The recent firings of certain NFL coaches reduces the number of minority to coaches to 3, which is not statistically aligned to the percentage of minorities that make up the players that play for them. 

The most qualified person should get any job, whether it is leading an NFL team, a business, or an organization. But, the process where decision makers source candidates may not be inclusive for all those with the resume and experience needed for the job. Ideally, decision makers would build a diverse enough pool of candidates for consideration to ensure they truly found the right candidate. 

From an outside perspective, many NFL teams appear to identify a select few of head coaching candidates and focus efforts to land the top ranked candidate. For instance, the Miami Dolphins went all in on bringing in Adam Gase, a candidate many across the league had on their short list. A mere three years later he is once again available. In reality, the only coach still employed in the class is Philadelphia Eagles head coach Doug Pederson, who was the least heralded hire and only Super Bowl winning coach.

For the four coaches listed in the ESPN article, there should not be any surprise with the teams’ decisions. The coaches clearly under-performed and did not produce the desired results. There really is not a strong argument for continuing the relationships when Super Bowl victories are not in the forecast. While the results are not completely up to the coaching staff, the head coach is the one burdened with responsibility of the outcomes. The job security risk comes with the job description. 

The focus needs to be on identifying effective ways for NFL teams to diversify their candidate pools so that minority candidates have fair access to elite positions. There is difficulty in forcing organizations to not zero in on a single candidate, but more likely than not, that person will not be the right one. The NFL needs to find ways to prevent teams from giving token interviews in favor of substantive evaluations of candidates record and potential. 

The best people should get the jobs. The process needs to ensure organizations are able to see the best candidates.