RETAIL SPACE IS NOT WHAT IT USE TO BE

Fifth Avenue Losing Luster as Vacancies Climb, Rents Fall – The Wall Street Journal.

Premium retail space in premium markets is no longer a draw in a market shifting further online. Many shopping malls struggle to find profitable tenets and now the problem is hitting Fifth Avenue as well.

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THAT WAS QUICK

Source – AAF to immediately suspend operations (ESPN)

Although not official, many sports news agencies are reporting that the AAF will suspend operations and move towards folding short of completing their inaugural season. The spring football league some hoped would serve as a talent farm for the NFL, where the fringe players could harness their skills. Unfortunately, the league is struggling financially.

Football is king in the American sports world, but it needs to fit into a convenient block of the calendar year. After the Super Bowl, sports fans continue to watch potential free agent news while shifting to other sports. One has to question whether competing with the NCAA tournament was the best approach. Combine the interest in the NBA playoff run and Opening Day in MLB, there might not be a convenient window for another football league.

Given the potential quick hook for the AAF, one must question whether resurrecting the XFL makes any sense. The financial situation for the XFL is much different.

TO PASS A DRUG TEST

Legalized Marijuana Gives Hiring Managers a Headache – The Wall Street Journal.

If hiring managers struggle to fill positions, they might need to reconsider their candidate pools. There are plenty of people who do not partake in marijuana, legal or illegal. In certain, the impact of influence while on the job could be catastrophic, like the building incident in Philadelphia not that long ago. Recreational use may be legal but companies need to consider whether use is an acceptable risk.

SEARS CUSTOMERS

How Sears Lost the American Shopper – The Wall Street Journal.

The above article is a great read on how an iconic American company lost it’s way.

Sears made many mistakes along the way. The lack of concern about the rise of Walmart, Best Buy, and Home Depot. The merger with a bankrupt KMart. The clear lack of concern for store maintenance and appearance. The biggest one was not really knowing its customers and prospective customers.

From the above article,Sears did a lot of things first that are now staples of retail. But, their customer base was not one that sought those conveniences. A clear lack of connection was Sears believing its customers would drive 25 miles to purchase an appliance if they had any other option.

Like many mature companies, Sears leadership valued returns more so than customer growth. Profitability in the near term placed greater importance than profitability in the long term. Sears needed to connect with new audiences to augment its base.

Sears was a great retailer that stood by its products. Sears was a fixture in the homes of many generations. The shame is many future generations may not experience the unique experience of shopping at a Sears.

INDUSTRY STANDARDS

The Problem for Small-Town Banks: People Want High-Tech Services

Small and medium businesses, especially new operations, have the challenge of matching service standards in competing for customers against industry leaders. Industry leaders benefit from brand awareness of not only their name, but their product lines. New players must generate both.

In many industries, there are minimal performance expectations that producers must meet to qualify as a viable option for consumers. In the above article, community banks struggle to meet the convenience standards big banks established in the minds of consumers. Online banking capabilities makes people less likely to go into a branch.

Community banks need to find strategies to provide similar convenience if they want to avoid bank runs.

TRASH TO POWER

SYNOVA Garbage In, Energy Out: Synova Power Turns Waste Into Electricity (Entrepreneur)

Free enterprise will always be the sources of our nation’s best ideas. In the above link, Synova might have found a direct solution to utilizing garbage for the creation of power, which would reduce landfill utilization and ocean pollution. While some on the far left of center want to create green armies, Synova uses innovation and entrepreneurship to identify rational solutions.

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.

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.