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A-Rod Convo, Amazon Shareholder Letter · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: you get your podcasts, or watch us live on YouTube.
0:25
Speaker 3: Well, we are joined here in studio by Jason Kelly,
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Speaker 3: Chief corresponding for Bloomberg Originals and executive producer of a
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Speaker 3: new podcast, It's called The Deal with Alex Rodriguez and
0:36
Speaker 3: Jason Kelly. On this week's episode of The Deal, Alex
0:38
Speaker 3: Rodriguez and Jason Kelly speak with you as soccer legend
0:41
Speaker 3: Brandy Chastain about private equity firm Six Streets Sports investments
0:46
Speaker 3: and the bay FC owners.
0:48
Speaker 4: Hope for the sports.
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Speaker 3: She also talks about if the world is ready for
0:52
Speaker 3: women's sports, Let's take a listen.
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Speaker 5: I honestly believe that part of the equation that wasn't
0:58
Speaker 5: in our control was the mass, general public and the
1:03
Speaker 5: business sector not ready for women, not ready for powerful women,
1:07
Speaker 5: not ready for women with big voices who have grand ideas.
1:11
Speaker 5: We didn't have the deep pockets, and before coming here today,
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Speaker 5: I think that's the one thing that kept coming into
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Speaker 5: my head was I had zero dollars that I could
1:20
Speaker 5: be an owner with all right, very.
1:23
Speaker 3: Good stuff, Jessica che Chestain with our own Jason Kelly. Jason,
1:26
Speaker 3: thanks for cover much for coming into the studio. Big
1:28
Speaker 3: commute from your desk. You got a guest with you.
1:30
Speaker 4: I know, I brought a buddy. I thought it was
1:32
Speaker 4: bringing I thought it was bringing your former all star
1:35
Speaker 4: friend to workday. Oh is it?
1:37
Speaker 6: Oh?
1:37
Speaker 4: Yeah, sorry, I've remembered. I mean I'm a good sit Yeah.
1:41
Speaker 4: Hey Rod, my co host right here with me. Awesome,
1:43
Speaker 4: Thanks for coming in, Alex, appreciate it. Great to be here.
1:46
Speaker 4: Thank you guys.
1:46
Speaker 3: You guys, I've had so many cool podcasts and episodes
1:49
Speaker 3: here speaking to some really cool people. Jessica Chestain, I
1:52
Speaker 3: think for Brandy chester Brand, Brandy Chestain different chestin.
1:55
Speaker 4: Yeah, just amazing.
1:57
Speaker 3: Yeah, kind of when you think about nineteen ninety nine,
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Speaker 3: the world ripping the jersey off and everything, just that
2:02
Speaker 3: that's such a big image and you kind of thought
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Speaker 3: she maybe that would be the launch of right women's soccer,
2:08
Speaker 3: at least maybe women's sport. We haven't, I'm not sure
2:10
Speaker 3: we've seen it. What'd you guys talk.
2:12
Speaker 4: About I mean, I thought it was so fascinating Alex
2:14
Speaker 4: because you know, she's an icon, right. I mean when
2:17
Speaker 4: you think about like the people who have defined sports
2:22
Speaker 4: in our lifetimes, especially in women's sports, like nobody bigger
2:26
Speaker 4: than Brandy Chastain. And the amazing thing was that this
2:32
Speaker 4: moment in nineteen ninet nine, it was gonna be like
2:34
Speaker 4: the takeoff for women's sports, and it's like womp wamp,
2:36
Speaker 4: like it just didn't happen. It actually failed twice, and
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Speaker 4: now she's an owner of a team. I was fascinated
2:42
Speaker 4: by just kind of her perspective on all that. I
2:45
Speaker 4: don't know if you were.
2:46
Speaker 7: I thought it was great. And if you see what's
2:47
Speaker 7: happened with Caitlyn Clark, now, we thought that was gonna
2:49
Speaker 7: happen ninety nine and it kind of stalled, as Jason said,
2:52
Speaker 7: But for me was how she's kind of going through
2:55
Speaker 7: her journey from sports to business as a sports owner
2:58
Speaker 7: and all the lessons that she's learned sports, the hard times,
3:01
Speaker 7: the good times. She shared some incredible stories. But I'm
3:04
Speaker 7: really interested how her next decade goes because she's all in.
3:08
Speaker 6: Can I ask it? Okay, first of all, we should know,
3:10
Speaker 6: I know very little about sports. So I'm going to
3:12
Speaker 6: ask this question. I have a question about energy power prisons.
3:16
Speaker 6: You can come to me, But why is it so
3:19
Speaker 6: hard for women's sports to take to take off in
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Speaker 6: a material of way? Is it like the type of
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Speaker 6: sports we play? What's the problem, Alex? What do you think?
3:26
Speaker 8: Well?
3:27
Speaker 7: I think Kaylen Clark has captured the imagination of everyone.
3:31
Speaker 7: And I'm old enough to remember when the NBA was on.
3:35
Speaker 7: You watch the finals on tape delay, right, it was incredible,
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Speaker 7: right to think about that and the amount of tens
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Speaker 7: of millions of people that watch today. What Kayln Clark
3:44
Speaker 7: has done is very much what I think Magic Johnson
3:46
Speaker 7: and Larry Bird did in nineteen seventy nine, when you
3:49
Speaker 7: know Bird was at Indiana State, Magic was at Michigan State,
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Speaker 7: and it was like these two Midwestern guys that captured America.
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Speaker 7: I think that is now here is true the moments right.
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Speaker 7: I think post COVID de Lance, the world has changed,
4:01
Speaker 7: and I think it's been a perfect storm and she's
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Speaker 7: been the perfect ambassador. To have almost twenty million people
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Speaker 7: watching this is incredible.
4:07
Speaker 4: And by the way, more people watched the Women's final
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Speaker 4: this year than the men's final first time in history,
4:13
Speaker 4: and that actually, I think is one of the biggest
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Speaker 4: points of this is that there was long this assumption
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Speaker 4: of like, people are gonna watch women's sports on TV,
4:21
Speaker 4: and so they just didn't put it on. I mean, shockingly,
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Speaker 4: a bunch of men made a decision that people wouldn't
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Speaker 4: watch women on TV. And then what happened was they
4:31
Speaker 4: saw and you've seen this in your investment work, Alex,
4:35
Speaker 4: what they saw was when they did put it on
4:37
Speaker 4: the air, people watched and then it just kept building.
4:41
Speaker 4: And I think the other really interesting thing that we
4:44
Speaker 4: learned from Brandy was this idea that the investment wasn't
4:49
Speaker 4: there initially. I mean, those two leagues failed because the
4:52
Speaker 4: two previous soccer leagues for women in the US failed
4:55
Speaker 4: because they tried it for like a year or two
4:57
Speaker 4: and they're like, oh, that didn't work. Instead of you know,
5:01
Speaker 4: you think about the NBA, you think about the NFL,
5:04
Speaker 4: those were leagues that took decades to take hold. The
5:07
Speaker 4: MLS is in its like twenty fifth thirtieth season and
5:11
Speaker 4: is just getting traction. So part of it is just
5:14
Speaker 4: like putting in the time in the month. I think,
5:16
Speaker 4: you know, it's a former Wall Street guy, What makes
5:18
Speaker 4: me about this transaction? You got private equity, yes, coming
5:21
Speaker 4: private acquas not in Major League Baseball are there?
5:24
Speaker 7: Yea?
5:25
Speaker 4: Now they are getting there. I mean this is a
5:27
Speaker 4: big thing that you're seeing up close and personal.
5:28
Speaker 7: Yeah, I mean sports have these franchises have gotten so expensive.
5:32
Speaker 7: To think a guy like Jerry Reinsdorf bought in nineteen
5:34
Speaker 7: eighty one the White Sox for about sixteen million dollars,
5:38
Speaker 7: and three years later, in eighty four, he buys the
5:39
Speaker 7: Bulls with a guy with the name of Michael Jordan
5:42
Speaker 7: already there for nineteen million dollars. It's incredible, right, and
5:46
Speaker 7: those franches are worth close to ten collectively today.
5:48
Speaker 4: So the world has exploded.
5:50
Speaker 7: So what's happened is individuals can't really afford to write
5:53
Speaker 7: checks for a billion two million dollars. It's hard to
5:55
Speaker 7: have the type of liquidity. So what that leagues have
5:57
Speaker 7: done is they've opened up the capital markets and private
6:00
Speaker 7: eco groups like Arctos and Dial are now big investors.
6:03
Speaker 7: And they said as LPs while passive LPs it's been
6:06
Speaker 7: an industry for the last thirty years, has gone up
6:08
Speaker 7: into the right about fifteen percent a year a year
6:11
Speaker 7: over year.
6:12
Speaker 6: And this is why Jason you were here because you've
6:14
Speaker 6: covered private equity for a very long time. You literally
6:17
Speaker 6: wrote books on it, and then you kind of saw
6:19
Speaker 6: a while ago like where the direction of travel was
6:22
Speaker 6: really going, Yeah, what's the kind of the return? Like
6:25
Speaker 6: what's the return like on these things? Like like what
6:27
Speaker 6: do you think?
6:27
Speaker 4: I mean TBD A little long pause. Well, because we
6:34
Speaker 4: haven't really you know, we've seen a couple exits. I mean,
6:37
Speaker 4: so Dial made some money on the Phoenix Suns when
6:40
Speaker 4: they were sold for four billion dollars a couple of
6:42
Speaker 4: years ago, So that's been one exit. I mean what's
6:44
Speaker 4: interesting is so Sixth Street. Just speaking specifically about Sixth Street,
6:48
Speaker 4: and you know this is started by Alan Waxman, former
6:51
Speaker 4: special situation said for Goldman Sachs was in a partnership
6:54
Speaker 4: with TPG. You know, so they've invested one hundred and
6:57
Speaker 4: twenty five million. They led an investment for one hundred
6:59
Speaker 4: and twenty five million dollars into BAFC. I mean that's
7:02
Speaker 4: real money, paid a record franchise fee fifty three million
7:06
Speaker 4: dollars just to buy the team. I mean they're looking
7:09
Speaker 4: at a scenario where they can get a five x
7:12
Speaker 4: ten X. I mean, this is a long hold. So
7:16
Speaker 4: the franchise values, as Alex just demonstrated, I mean, think
7:18
Speaker 4: about I mean, Jerry Jones bought the Dallas Cowboys for
7:21
Speaker 4: less than two hundred million dollars in the late eighties
7:24
Speaker 4: early nineties, which, by the way, they said he was insane.
7:28
Speaker 4: That was a crazy amount. This is a franchise now
7:30
Speaker 4: worth nine or ten billion dollars. Alex, let's talk about ownership.
7:33
Speaker 3: You're part of an ownership group for the Minnesota Timberwolves, right,
7:37
Speaker 3: talk to us about that experience, and I love you
7:40
Speaker 3: to talk to you about My personal opinion is I'm
7:43
Speaker 3: concerned about the evaluation of franchises. I'm concerned about salaries
7:46
Speaker 3: because it's all predicated in large part.
7:49
Speaker 4: On broadcast rights.
7:51
Speaker 3: Yeah, and with cord cutting, I'm not sure ESPN's going
7:53
Speaker 3: to continue to write these crazy checks. So talk to
7:56
Speaker 3: us about kind of what you've learned about as being
7:58
Speaker 3: an owner there.
7:59
Speaker 7: It's funny because one of my good friends and mentors
8:01
Speaker 7: of Magic Johnson, and of course he played basketball for
8:03
Speaker 7: a long time and he owns a baseball team, and
8:06
Speaker 7: I played baseball for a long time, and I'm part
8:08
Speaker 7: of the ownership group of the Minnesota Timberwolves and the Lynks.
8:11
Speaker 7: You know what I think is there's no question that
8:14
Speaker 7: the giant in sports in America's NFL. Right, And to
8:17
Speaker 7: think that, you know, almost twenty million people watch Kayln Clark.
8:21
Speaker 7: Those are NFL numbers on Sundays. I mean that is
8:24
Speaker 7: that's the number one driver for all sports and which
8:27
Speaker 7: creates a lot of people to be very bullish in
8:29
Speaker 7: women's sports. But going back to well we have the
8:32
Speaker 7: links as well. But I do think that the NFL
8:34
Speaker 7: and the NBA are global sports, especially the NBA.
8:37
Speaker 4: It's growing year over year.
8:40
Speaker 7: If you look at social media as an example. As
8:42
Speaker 7: a metrics, we're almost ten to one to the NFL.
8:45
Speaker 7: We're almost fifteen to one to Major League Baseball. So Lebron, James,
8:49
Speaker 7: Michael Jordan, Steph Curry, these are global names. I think
8:53
Speaker 7: that is going to be a different landscape. But you'll
8:55
Speaker 7: have more contributors. Maybe you have NBC pop in Amazon.
8:59
Speaker 4: Apples, a lot of shooters.
9:01
Speaker 7: Is not going to be the traditional So ESPN may
9:03
Speaker 7: not write as big as check, but is there. I'm
9:05
Speaker 7: not speaking for the NBA. I'm just giving you my
9:07
Speaker 7: opinion that you may have a world where NBC may
9:09
Speaker 7: split the finals with ESPN and ABC, So I think
9:13
Speaker 7: you'll get to a similar result, just a different way.
9:17
Speaker 6: So you said those words, and I knew those people,
9:19
Speaker 6: so I feel like I'm not qualified ask this question.
9:22
Speaker 6: But then for someone like me who's a newbie who
9:25
Speaker 6: maybe wants to watch some stuff like I'm I don't know,
9:27
Speaker 6: I would I need like a spreadsheet to like find
9:30
Speaker 6: out like what's playing where or when what time, like
9:33
Speaker 6: Amazon Prime, Netflix, something like that. And I wonder if
9:35
Speaker 6: that's going to be a hurdle. Jason, what do you think.
9:38
Speaker 4: To like, I mean, it could be. I mean, and
9:40
Speaker 4: Paul knows this space better than anyone. You know, there's
9:45
Speaker 4: been sort of a fracturing, but now sort of a reconsolidation.
9:50
Speaker 4: It feels like of how we're going to consume sports.
9:52
Speaker 4: I mean, you've followed this for years. You know that
9:56
Speaker 4: live sports. Alex knows it from being on tele Division
10:00
Speaker 4: and being broadcast himself. People love live sports and that
10:04
Speaker 4: it's one of the only things that actually keeps people
10:07
Speaker 4: coming back to live content. I do think, though, we
10:10
Speaker 4: are in this weird world where sometimes you don't know
10:13
Speaker 4: where to find it, and yet when you do, it
10:16
Speaker 4: attracts the eyeballs. My New York Yankees off to a
10:20
Speaker 4: great start this year.
10:21
Speaker 3: Yes, what's your scouting You could say an hour New
10:23
Speaker 3: York games in this room. Also a great start this year,
10:27
Speaker 3: and now what's your scouting report of them?
10:29
Speaker 7: Well, I think the Yankees have done a bunch of
10:31
Speaker 7: good things this year.
10:33
Speaker 4: Excuse me.
10:33
Speaker 7: One of them is they've introduced baseball people back. If
10:36
Speaker 7: you think about the powerhouse of the Yankees, they've been
10:39
Speaker 7: built by great baseball people like Geene Michael's Stick Michael
10:42
Speaker 7: as they call them, you know, Lupenela, Billy Martin. They've
10:46
Speaker 7: gone away from that the last four or five years,
10:47
Speaker 7: and they've suffered tremendously. The fact they brought baseball people
10:51
Speaker 7: back in. They brought a much more balanced lineup, meaning
10:53
Speaker 7: Alex there's more lefties than righty's. Historically, Yankee Stadium is
10:57
Speaker 7: better for lefties. Last year they have like nine righties
11:00
Speaker 7: in the lineup, which just way too much. They've gone
11:03
Speaker 7: back to a much balanced lineup and now they have
11:05
Speaker 7: the best one two punch in the sport with Aaron
11:07
Speaker 7: Judge and Juan Soto. The challenge is do they have
11:11
Speaker 7: enough pitching is one and two? They have they cornered
11:14
Speaker 7: themselves by bringing in Juan Soto and not have a
11:17
Speaker 7: long term contract. Where now? Is he gonna want the
11:20
Speaker 7: tiny contract for seven hundred million dollars? And is he
11:23
Speaker 7: just a one year wonder here in New York? I
11:24
Speaker 7: think he's gonna have a massive year.
11:26
Speaker 2: Yep.
11:26
Speaker 7: The question is can they keep them? Second question is
11:28
Speaker 7: do they have enough pitching to win the title?
11:30
Speaker 3: Well, let me ask you that question. We like to
11:32
Speaker 3: think New York fans that New York is a selling
11:34
Speaker 3: point everybody would love to be. If you can be
11:36
Speaker 3: a star here, you can be a star anywhere. There's
11:38
Speaker 3: nothing better to be a star than New York City.
11:40
Speaker 3: A lot of players, it's that I think they find
11:43
Speaker 3: it hard to play in New York.
11:44
Speaker 4: What was your experience coming to New York. I know
11:47
Speaker 4: you're a New Yorker, so you you kind of know this,
11:49
Speaker 4: But some of the people you saw during your career.
11:52
Speaker 7: No, Paul, You're exactly right. I mean some people, you know,
11:55
Speaker 7: the kitchens maybe a little bit too hot for some players,
11:57
Speaker 7: and you know right away if they're uncomfortable, it's a
12:00
Speaker 7: different place. He's the biggest media market in the world.
12:02
Speaker 7: As they say, the pinstripes are very very heavy and
12:04
Speaker 7: not everyone can carry them. Juan SODA's obviously one that
12:07
Speaker 7: is going to play and play really well. Aaron Judge.
12:09
Speaker 4: The Jetters of the.
12:10
Speaker 7: World, they're icons for life because they won here in
12:12
Speaker 7: New York. But some, I mean they melt into the sun.
12:15
Speaker 7: I mean, you've seen a couple over the last four
12:17
Speaker 7: or five years that were a shell of themselves and
12:20
Speaker 7: you quickly have to pivot and get them out of here.
12:21
Speaker 2: Yep.
12:22
Speaker 4: One interesting thing on that note. First of all, we
12:24
Speaker 4: talked about Michael talked to Michael Strahan about that on
12:26
Speaker 4: the previous episode of The Deal. One person we are
12:29
Speaker 4: literally going to tape with today, it's one of the
12:31
Speaker 4: reasons Alex is in the building is stephen A. Smith,
12:33
Speaker 4: and he's actually talked about Soto and like the power
12:37
Speaker 4: of the pin stripes maybe enough to lure him in
12:43
Speaker 4: to stay. So yeah, tune into that episode of The
12:45
Speaker 4: Deal coming up in a few weeks because stephen A
12:47
Speaker 4: he's got literally some takes. It's a sole job, that's
12:51
Speaker 4: what he does, and what a career.
12:53
Speaker 6: So this is this is really cool, Like what you guys,
12:55
Speaker 6: do is super fun. Jason comes in and he talks
12:58
Speaker 6: about it and you can tell he's like totally digg
13:00
Speaker 6: is what's it like to work with Jason Kelly? How
13:03
Speaker 6: do you manage that guy? Like?
13:04
Speaker 4: What, Alex?
13:07
Speaker 7: We already made a deal this morning because we are
13:09
Speaker 7: you know, he's covered private equity. He's a great writer,
13:11
Speaker 7: so I say, he writes, and I used the bat
13:13
Speaker 7: so I hit he writes, and.
13:14
Speaker 4: We made a good team.
13:15
Speaker 7: But no, Alex, in all seriousness, is really the intersection
13:19
Speaker 7: of Jason's career, mostly here at Bloomberg, in my career
13:22
Speaker 7: mostly with the Yankees. And the fact is what we're
13:24
Speaker 7: talking about is exactly both. And we live in a
13:27
Speaker 7: world where it used to be sports and media and culture.
13:31
Speaker 7: Now all three have come together, and that's what we
13:33
Speaker 7: try to take away. And then also a lot of
13:35
Speaker 7: lessons learned in this world of Shark Tank where young
13:37
Speaker 7: people want to be more entrepreneurs than athletes, right, And
13:40
Speaker 7: that's I think we're serving up and teaching and hoping
13:43
Speaker 7: and inspiring through storytelling.
13:46
Speaker 3: A lot of greats and I like you guys do
13:48
Speaker 3: kind of bringing sports, entertainment, you know, all that together
13:52
Speaker 3: and we're seeing it actually now in college sports with
13:54
Speaker 3: it the nil the transfer portals, a lot of these
13:58
Speaker 3: kids are able to monetize their value totally.
14:01
Speaker 4: But there's some downside to that. It seems like if
14:03
Speaker 4: you talk to you know, coach j.
14:05
Speaker 3: Right at Villanova or maybe even coach k I'm going
14:07
Speaker 3: to see today down at Duke or some others, they're saying, boy,
14:10
Speaker 3: I'm not sure, maybe we've gone too far. What do
14:12
Speaker 3: you think, Alex about what's happening in the college ranks
14:14
Speaker 3: about paying some of these athletes.
14:15
Speaker 4: It's a very dangerous road.
14:17
Speaker 7: It's a very dangerous and very slippery and the reason
14:19
Speaker 7: why I love that players are getting you know, the
14:21
Speaker 7: finances and all of that. But maybe there's a structure
14:23
Speaker 7: where there's more parity. Maybe there's a structure where kids
14:26
Speaker 7: don't get the money when they're not ready for it
14:28
Speaker 7: and they get in trouble by not knowing how to
14:30
Speaker 7: pay taxes, And is this more of a liability than
14:32
Speaker 7: an asset. I'm all for somebody getting market value, but
14:36
Speaker 7: is there a world that we can, you know, hold
14:38
Speaker 7: unto their thirty or thirty five until they get the
14:40
Speaker 7: majority of that where that money is compounding for them,
14:43
Speaker 7: so gift from the curse. And the other part is
14:46
Speaker 7: that I'm concerned is we want to teach Coach k
14:48
Speaker 7: is one of my great friends and one of the
14:50
Speaker 7: great great personalities in all of sports. You want athletes
14:53
Speaker 7: to be around coach k for three or four years,
14:55
Speaker 7: not just one great point. So and same thing with
14:57
Speaker 7: Kyle Party and all of that. So we want to
14:59
Speaker 7: teach these kids that you know the power of restriction
15:02
Speaker 7: and to be able to wait a little bit before
15:04
Speaker 7: they get you know, the marshmallow, as they.
15:05
Speaker 6: Say, before you let you go. And this is a
15:08
Speaker 6: question we ask everybody, So, hey, why not you What
15:10
Speaker 6: are you gonna buy?
15:11
Speaker 1: Now?
15:12
Speaker 6: What do you like?
15:14
Speaker 4: This is a question. We have support folio matter what,
15:17
Speaker 4: You've got a lot of investments.
15:19
Speaker 6: Yeah, so what do you like?
15:20
Speaker 4: You know that is a great question.
15:21
Speaker 7: I mean, I'm so excited about the Minnesota Timbles and
15:23
Speaker 7: the Lynx and we've done a lot of good work
15:25
Speaker 7: over the last three years. We've been in first place
15:28
Speaker 7: for most of the year, only two games remaining, so
15:31
Speaker 7: we're sound to make a poison to make a good run,
15:33
Speaker 7: hopefully in the postseason. But look, I think you wake
15:36
Speaker 7: up every day you're prepared, you're ready for opportunities. That's
15:40
Speaker 7: exactly how the opportunity of the timbulves came up and
15:42
Speaker 7: the links. So the answer is, I don't know, but
15:44
Speaker 7: we're always looking.
15:46
Speaker 4: What are you guys going to ask steven A. I
15:47
Speaker 4: can't imagine this thing could get heated quickly, you know.
15:51
Speaker 4: I mean what I'm really interested in with him is
15:54
Speaker 4: the business of stephen A. You know, I mean, because
15:57
Speaker 4: he he's a game changer in so many ways. You know,
15:59
Speaker 4: we both had chance to read his book ahead of this.
16:02
Speaker 4: I mean, this is a guy who completely reshaped the
16:06
Speaker 4: business of sports media. My sheer force of will got
16:09
Speaker 4: knocked down a bunch. He had a great mentor in
16:12
Speaker 4: Mark Shapiro, another upcoming guest on the deal. I'm just
16:16
Speaker 4: telling all of our guests here, that's what I did.
16:19
Speaker 4: Shameless plug, shamelessly, that's my middle name. But you know,
16:23
Speaker 4: for stephen A, I think we don't know where it's
16:26
Speaker 4: going to go. We know he doesn't like the Dallas Cowboys,
16:28
Speaker 4: he doesn't, and he does love the Yankees.
16:30
Speaker 7: And I just say, in conclusion, with Steven A is
16:31
Speaker 7: really a story of rags to riches, But it hasn't
16:34
Speaker 7: been straight up into the right. I mean to think
16:36
Speaker 7: most people forgot this reading his book. I just remembered
16:40
Speaker 7: he got fired from ESPN, he had to go to
16:41
Speaker 7: Fox Radio, and then he's come back. And to think,
16:44
Speaker 7: not only is he going to be the first guy
16:46
Speaker 7: that makes person that makes over probably twenty to twenty
16:48
Speaker 7: five million, but he's also could be the next Johnny Carson. Yeah,
16:52
Speaker 7: and he's built an incredible business and I can't wait
16:54
Speaker 7: to ask.
16:55
Speaker 4: Them Michael Strahan talk about another mazing career coming in entertainment.
16:58
Speaker 4: All right, guys, thanks very much.
17:00
Speaker 3: Podcast It's called The Deal with Alex Rodriguez and Jason Kelly.
17:04
Speaker 3: On this week's episode of The Deal, Alex Rodriguez and
17:06
Speaker 3: Jason Kelly speak with US soccer legend Brandy Schestain about
17:09
Speaker 3: private equity firm Sixth Street Sports Investment and the Bay
17:13
Speaker 3: FC owners hope for the sports. She also talks about
17:15
Speaker 3: if the world is ready.
17:16
Speaker 4: For women's sports. So take a listen to that good stuff.
17:21
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
17:25
Speaker 2: weekdays at ten am Eastern on applecard Play and Android
17:29
Speaker 2: otto With the Bloomberg Business app. You can also listen
17:32
Speaker 2: live on Amazon Alexa from our flagship New York station,
17:35
Speaker 2: Just say Alexa play Bloomberg eleven thirty Caroly Paul.
17:40
Speaker 6: Amazon had a let her out today.
17:41
Speaker 4: Yeah, this is something to do.
17:43
Speaker 6: Is that a thing we do?
17:44
Speaker 1: No?
17:44
Speaker 4: Well, I think we start doing it now with mister Jesse.
17:46
Speaker 6: M hmm, okay, I mean do we care about Amazon letters?
17:49
Speaker 6: Is that something that.
17:50
Speaker 3: I mean, there's so big and its retail goes to
17:53
Speaker 3: the consumer. It's now they're a tech behemoth. They're now
17:56
Speaker 3: huge advertising play. So I think the answer is yes.
17:59
Speaker 3: And so let's check in with an expert. Punam Goyle,
18:01
Speaker 3: senior US retail analyst for Bloomberg in Intelligence. She joins
18:06
Speaker 3: us from our Princeton offices down there in.
18:09
Speaker 4: The swamps of New Jersey. Punam, what did you make
18:12
Speaker 4: of this letter? I mean, I think mister Jasse is
18:14
Speaker 4: trying to just make sure that the market doesn't take
18:18
Speaker 4: its attention away from the fact that Amazon is in
18:20
Speaker 4: effect an AI play.
18:23
Speaker 1: That is part of the story. Definitely. I think the
18:25
Speaker 1: focus on the letter goes into all its businesses, starting
18:29
Speaker 1: with retail, where they continue to push the envelope on
18:31
Speaker 1: value and driving that GMB higher through its logistics platform
18:36
Speaker 1: where they're improving same day delivery and really taking costs
18:39
Speaker 1: out of the equation as much as they can. On
18:42
Speaker 1: the AWS side, AI is the name of the game,
18:45
Speaker 1: and they want to make sure that they are visible
18:48
Speaker 1: that they are playing in that space and that is
18:50
Speaker 1: going to improve every part of their business, not just
18:53
Speaker 1: AWS alone, but in terms of AWS.
18:56
Speaker 6: It feels like what they were saying is that AWS
18:58
Speaker 6: is going to be the foundation for all the AI plays.
19:01
Speaker 6: Is that Am I reading that correctly?
19:04
Speaker 4: Yeah?
19:04
Speaker 1: I mean, you know, where AI is built is going
19:06
Speaker 1: to be inside of AWS. For Amazon, They're going to
19:09
Speaker 1: be building or you could call it, the raw materials
19:12
Speaker 1: of the codes and really providing that as an entry
19:15
Speaker 1: point for businesses that use AWS and even within their
19:19
Speaker 1: own businesses to create the efficiencies and the speed that's
19:23
Speaker 1: needed to operate in the agile environment we live in
19:26
Speaker 1: today and compete with OpenAI.
19:28
Speaker 3: You know what I've learned since moving down to the
19:31
Speaker 3: Jersey Shore is Central New Jersey and southern New Jersey
19:34
Speaker 3: is like a warehouse capital.
19:36
Speaker 4: Of the world. It seems like everywhere you go and
19:38
Speaker 4: Punam lives around.
19:39
Speaker 6: There, is it all Amazon or just it's everything.
19:42
Speaker 4: It's everything about tons and tons of Amazon because you
19:44
Speaker 4: got and you get to part and the gardens, the
19:47
Speaker 4: State Parkway, got the new Jersey Turnpike, Philadelphia Port, New
19:50
Speaker 4: York Port. I think it's all there. It's just amazing.
19:53
Speaker 4: So pun them, I mean, talk to us about do
19:57
Speaker 4: investors that you talk to that they still want Amazon
20:00
Speaker 4: On to invest aggressively in their retail operations? There is
20:06
Speaker 4: there more to go there and to investors, are they
20:08
Speaker 4: okay with that given that maybe some of those dollars
20:10
Speaker 4: could be to the cloud, or maybe Amazon has got
20:13
Speaker 4: so much money they can invest in anything they want.
20:15
Speaker 1: I mean, I think they need to invest in both
20:17
Speaker 1: the cloud and retail. I don't think you want them
20:19
Speaker 1: to stop investing in retail because remember, Paul, as the
20:22
Speaker 1: retail business grows, which we estimate the GMA to grow
20:25
Speaker 1: to our trillion dollars in the next coming years, that
20:29
Speaker 1: impacts their advertising business, right, which has grown to nearly
20:32
Speaker 1: fifty billion dollars today. The bigger retail gets, the more
20:35
Speaker 1: money they can get for advertising too. So there is
20:38
Speaker 1: a connection here and that's how retail is made profitable.
20:42
Speaker 6: What also is interesting, aside from retail is what they
20:44
Speaker 6: said about their Amazon Prime Video. They seem to think
20:48
Speaker 6: it could be its own standalone, like good enough to
20:50
Speaker 6: live on its own. What did you make of that?
20:53
Speaker 1: I thought that was interesting. You know, Amazon Prime Video.
20:55
Speaker 1: We know that it's something that they've been investing aggressively.
20:59
Speaker 1: But I think the game changer here really is going
21:01
Speaker 1: to be advertising again. Where as they implement ads within
21:05
Speaker 1: the Prime videos, that's what's going to take it to
21:08
Speaker 1: be profitable. Whenever that is. We haven't run the model yet,
21:10
Speaker 1: but we think there's still a bit of time before
21:13
Speaker 1: you can say that Prime Video on a standalone entity
21:16
Speaker 1: is going to be profitable.
21:17
Speaker 6: Do you do prime video?
21:19
Speaker 4: I'm going to just say yes.
21:21
Speaker 3: I mean, you know, you know what I do periodic
21:23
Speaker 3: and maybe I'll do it on the plane ride down today.
21:25
Speaker 4: Is I just go through and I delete.
21:27
Speaker 3: Them all, you know, just periodically go and just delete
21:29
Speaker 3: like I don't need this right now. I mean, you know,
21:31
Speaker 3: because it's so easy to delete. Is as opposed to
21:34
Speaker 3: trying and disconnect from Verizon or Comcast, which takes like
21:37
Speaker 3: a half a lifetime.
21:38
Speaker 6: It's true at the one hundred percent, and then there's
21:40
Speaker 6: weird fees and it doesn't work in the whole thing.
21:42
Speaker 3: Hey, put, what's the what's the investment call on Amazon
21:46
Speaker 3: these days? I'm looking at the stock here, it's up
21:49
Speaker 3: twenty two percent year to date, it's up over eighty
21:51
Speaker 3: percent or but the trailing twelve months, so it's really
21:52
Speaker 3: performed well. We're just under two trillion dollars in market cap.
21:57
Speaker 3: When when you talk to investors kind of why do
21:59
Speaker 3: people own it today? Why do people buy it today?
22:02
Speaker 1: We think it's all about profitability. For the longest time,
22:05
Speaker 1: for over two decades, Amazon was about market share gains
22:08
Speaker 1: and top line gains. Today we're starting the store to
22:11
Speaker 1: see the story turn into a profit play. So as
22:14
Speaker 1: Aws climbs to over two hundred billion dollars in revenues,
22:17
Speaker 1: which we expect, as the GMV for its online business
22:21
Speaker 1: climbs to over a trillion dollars, and as advertising gain
22:24
Speaker 1: scale to over one hundred billion dollars, you're talking about
22:27
Speaker 1: the profit ability of this company improving vastly. Just last year,
22:32
Speaker 1: you know, the profit's improved to about over six percent
22:35
Speaker 1: from two percent the year before that. So we're starting
22:37
Speaker 1: to see that play out, and we think the road
22:40
Speaker 1: ahead is still very clear in terms of how they
22:43
Speaker 1: parse out their way to be even more profitable.
22:46
Speaker 6: Put before we let you go. Usually the reason why
22:48
Speaker 6: we like the Jamie Diamond letter is because we get
22:52
Speaker 6: really great macro reads and like calls on raids and
22:55
Speaker 6: opinions about the FED. Did we get any of that
22:58
Speaker 6: from Anny Jassey and of like consumer outlook, how their
23:03
Speaker 6: end user me, how I'm doing in the market.
23:07
Speaker 1: Well, they talked a little bit about value and how
23:09
Speaker 1: they continue to really focus on low prices, which they
23:12
Speaker 1: had done in four Q with Prime Prime Day, and
23:14
Speaker 1: they also launched earlier this year a Spring Day sale.
23:18
Speaker 1: So we do see that push on value, which tells
23:21
Speaker 1: us that the consumer cares about prices. So they are
23:24
Speaker 1: being sensitive to that and responding to that, and we
23:27
Speaker 1: don't expect that to change as a year unfolds.
23:29
Speaker 3: I tell you if I were an investor here, it'd
23:31
Speaker 3: be for this reason. Free cash flow in twenty twenty
23:34
Speaker 3: three thirty two billion.
23:36
Speaker 4: Nice.
23:37
Speaker 3: How about twenty twenty four sixty three billion is the
23:39
Speaker 3: forecast and in twenty five eighty three billion a free cashlow,
23:43
Speaker 3: So growth and free.
23:44
Speaker 4: Cash flow put in, what do they do with the
23:46
Speaker 4: free cash flow?
23:47
Speaker 1: They're going to invest it back in the business. Right
23:49
Speaker 1: as you said it. They still need to invest in AI,
23:51
Speaker 1: they need to invest in AWS, and they need to
23:54
Speaker 1: invest in logistics, so that will be the primary drivers
23:57
Speaker 1: of their cash investments.
24:01
Speaker 6: How I guess is the question. Rightly, they can't go
24:03
Speaker 6: buy stuff, can they? Because of all the regulatory scrutiny
24:06
Speaker 6: over big tech in that way. I mean, they can't
24:08
Speaker 6: just go by TikTok for example.
24:10
Speaker 1: No, I don't. I think it'll be much harder for
24:12
Speaker 1: them to make an acquisition. They have to grow organically,
24:15
Speaker 1: and they have to invest in their own businesses. That said,
24:18
Speaker 1: there's plenty of opportunity for them to invest in what
24:21
Speaker 1: they own, whether it's across advertising, prime video, their retail business,
24:25
Speaker 1: and AWS. There's still a long runway for them to go.
24:28
Speaker 1: Digital commerce alone is just at twenty five percent penetration
24:32
Speaker 1: in the US and probably a little over that globally,
24:36
Speaker 1: So there's opportunity across all of their businesses, even their
24:39
Speaker 1: biggest business.
24:40
Speaker 4: Yeah.
24:40
Speaker 3: I mean, they're spending you know, sixty billion dollars a
24:42
Speaker 3: year in capital expenditure, so it's sound like they're you know, yeah, exactly,
24:46
Speaker 3: all right. Put them thanks so much for joining us there.
24:48
Speaker 3: Put them Goyle, senior US retail analysts for Bloomberg Intelligence,
24:51
Speaker 3: Joining us from our studios down in Princeton, New Jersey.
24:56
Speaker 2: You're listening to the Bloomberg Intelligence podcast live weekdays at
25:01
Speaker 2: ten am Eastern on Effocarplay and Android Otto with the
25:04
Speaker 2: Bloomberg Business App. Listen on demand wherever you get your podcasts,
25:08
Speaker 2: or watch us live on YouTube.
25:12
Speaker 6: We also cover Bloomberg Big Take stories, and that's when
25:15
Speaker 6: we take a broad look at some of the major
25:17
Speaker 6: trends in the market and we dive deep. And they
25:19
Speaker 6: are really amazing stories and they're worth a ton of work.
25:22
Speaker 6: And the one today blew my brain And for a
25:27
Speaker 6: mother of a daughter who's nine and a half, I
25:29
Speaker 6: gotta tell you, I love the story. This has to
25:33
Speaker 6: do with basically your return on investment for Ivy League colleges,
25:37
Speaker 6: private colleges, Mini ivys, public schools, et cetera. And it's
25:42
Speaker 6: very different from what you may think. Joining us now
25:45
Speaker 6: are the personal finance reporters in charge of the story,
25:47
Speaker 6: Paulina Chiceriro and Francesca Maglioni. Joining us now live in
25:51
Speaker 6: our inactive broker studio. Ladies, First of all, how did
25:54
Speaker 6: you come up with this. I would never have thought
25:56
Speaker 6: of sort of putting a bloomberg angle ROI of college
25:59
Speaker 6: in this particular regular light. How did you guys together
26:02
Speaker 6: come up with it?
26:03
Speaker 9: Yeah, So we had been talking to a bunch of families,
26:07
Speaker 9: college counselors, parents and kids that were nervous about getting
26:11
Speaker 9: into college, thinking about the cost of college, thinking is
26:14
Speaker 9: it even worth it? And we kind of wanted to
26:16
Speaker 9: give people a number to answer their question, like, yes,
26:20
Speaker 9: everyone says college is overwhelmingly worth it, but like, how
26:23
Speaker 9: does that change depending on the school that you're looking
26:25
Speaker 9: at and the kind of institution that you're thinking of attending.
26:28
Speaker 9: So we kind of wanted to give people a tool
26:30
Speaker 9: to answer that question a little bit more.
26:33
Speaker 2: Yeah, and smart way.
26:34
Speaker 10: Francesca has done really a lot of great reporting tracking
26:37
Speaker 10: just how much colleges costs, especially elite institutions. She wrote
26:41
Speaker 10: a great story about how college is today, the elite
26:44
Speaker 10: colleges that most students want to get into, the costs
26:46
Speaker 10: are stretching past ninety thousand dollars.
26:49
Speaker 4: Paul knows.
26:49
Speaker 6: Paul knows aware.
26:53
Speaker 10: And so when you think of those costs, I think
26:55
Speaker 10: a lot more families are being forced to consider, like
26:57
Speaker 10: what is the ROI, and they've been doing these calculations themselves,
27:01
Speaker 10: so we wanted to, you know, crunch the numbers for them.
27:03
Speaker 4: Of the four kids of mine who I've paid for,
27:07
Speaker 4: Penn State was the best value.
27:09
Speaker 3: It was a relative by well relative to everybody else
27:12
Speaker 3: way low, and it's got one of the best engineering schools,
27:15
Speaker 3: and the numbnuts got a great job and aerospace engineering
27:20
Speaker 3: doing all kinds of crazy stuff.
27:22
Speaker 4: So it makes sense to me. I think one of the.
27:24
Speaker 3: Parts of the story that's interesting is just generally is
27:28
Speaker 3: college in general worth it relative to or also you
27:31
Speaker 3: could go maybe go to a trade school and come
27:34
Speaker 3: out with little to no debt and still get jobs, and.
27:37
Speaker 4: That ROI looks very interesting. I mean, how do you
27:40
Speaker 4: guys think about that?
27:42
Speaker 10: Yeah, So we actually, like in our story, did look
27:45
Speaker 10: at what would the ROI be of someone who graduated
27:48
Speaker 10: from high school. So someone making ten dollars an hour
27:51
Speaker 10: would have an ROI of about one hundred and ninety
27:53
Speaker 10: one thousand dollars ten years after, you know, when normal
27:57
Speaker 10: college graduates enroll. And to put that into perspective, the
28:01
Speaker 10: average ROI for all colleges was about ninety eight thousand,
28:05
Speaker 10: so you can see how you know, initially it might
28:09
Speaker 10: seem like beneficial, but that's because when you're going to college,
28:12
Speaker 10: you know, you're paying for college, you're putting in that investment.
28:15
Speaker 10: But you know, once you graduate, college graduates do tend
28:18
Speaker 10: to have higher earnings, so it does balance out in
28:21
Speaker 10: the longer term.
28:22
Speaker 6: So for ESSCA, help me understand the different buckets that
28:24
Speaker 6: you guys looked at and sort of the data that
28:27
Speaker 6: you found.
28:28
Speaker 9: Yeah, so we wanted to understand what types of schools
28:31
Speaker 9: were doing better than others, and so we grouped schools
28:33
Speaker 9: by the ivys, which obviously overperformed as they do always,
28:39
Speaker 9: and then we looked at private elite institutions, which were
28:42
Speaker 9: a group of sixty three schools that are any school
28:44
Speaker 9: that you would think of is competitive, selective, think Vasa, Oberlin,
28:52
Speaker 9: Wake Forest, those kinds of schools. Then we looked at
28:55
Speaker 9: public flagship institutions and other public and elite, other public
29:00
Speaker 9: and private schools, and what we found was that after
29:03
Speaker 9: you look at the ivys, the private elite institutions and
29:07
Speaker 9: the public flagships kind of performed the same at the
29:09
Speaker 9: ten year mark. And that was I think our most
29:12
Speaker 9: surprising finding because we feel like a lot of people
29:14
Speaker 9: put a lot of emphasis on prestige when thinking about college,
29:17
Speaker 9: and we're kind of trying to tell them, Wait, maybe
29:20
Speaker 9: a public college that accepts most of its applicants can
29:23
Speaker 9: give you that same ROI.
29:25
Speaker 3: So how about what's the impact I guess or on
29:28
Speaker 3: your ROI calculations from what.
29:30
Speaker 4: Major you take?
29:32
Speaker 6: Yes, that's a good question, you know.
29:33
Speaker 4: Engineering, good business? I would think good.
29:38
Speaker 6: The same idea is, like, you go to Oberlin, it's
29:40
Speaker 6: a liberal arts education, right, like that humanities and psychologip
29:45
Speaker 6: play into the math.
29:45
Speaker 4: I guess. Yeah.
29:47
Speaker 10: So we did tend to find that major place a
29:50
Speaker 10: huge role in ROI. Schools where a majority of their
29:53
Speaker 10: graduates came from STEM fields tended to overperform well. And
29:56
Speaker 10: there are actually some surprise winners. When you look at
29:59
Speaker 10: our roy LIFT schools like the Colorado School of Mines,
30:03
Speaker 10: the Saint Louis Pharmacy Academy, and many more schools that
30:09
Speaker 10: have a STEM focus, we're doing just as well as
30:11
Speaker 10: some ivy's, or even better than other ivs as well.
30:14
Speaker 6: So what is it? I wonder if what this really
30:16
Speaker 6: tells us is that if you major in humanities, your
30:19
Speaker 6: ROI stinks, Like is this like what we're learning unless
30:22
Speaker 6: you do that in an ivy, because then you have
30:25
Speaker 6: the certain types of connections, et cetera, and you may
30:28
Speaker 6: get a better job other than that. Do we just
30:31
Speaker 6: is that the problem? Francesca's sort of laughing.
30:35
Speaker 9: I mean, it's typ a critical of me to say
30:37
Speaker 9: I studied visual and media.
30:38
Speaker 6: Science, girl, I was a theater director. We're all good.
30:42
Speaker 9: But I guess if you just look at the data
30:45
Speaker 9: and you're paying a hefty sticker price for college, then yes,
30:50
Speaker 9: it's strategically the strategically, the most I guess smart way
30:56
Speaker 9: to go about it is to study STEM because these
30:59
Speaker 9: jobs put you directly into the labor market and are
31:02
Speaker 9: really high paying careers. If you look further down the line,
31:07
Speaker 9: these liberal art colleges do tend to gain get better earnings,
31:12
Speaker 9: but it's more of a long run than it would
31:14
Speaker 9: be if you're like, really want to see those earnings
31:16
Speaker 9: right away?
31:18
Speaker 4: Please?
31:18
Speaker 6: Oh sorry.
31:19
Speaker 10: One thing I wanted to know is that with the
31:21
Speaker 10: rise of artificial intelligence, there has been a lot of
31:23
Speaker 10: discussion about how the critical thinking skills associated with a
31:27
Speaker 10: liberal arts degree, you know, might actually be more advantageous
31:31
Speaker 10: in the labor market later down the line, but we
31:33
Speaker 10: don't know what that is. So this is a snapshot
31:35
Speaker 10: of a point in time, probably the last ten years.
31:38
Speaker 3: You know, I see you look at like one of
31:39
Speaker 3: the schools, the big state schools, the University of Georgia.
31:42
Speaker 3: You think about a big school like that, you know,
31:44
Speaker 3: one of the events is they have a big alumni network.
31:46
Speaker 3: But I mean the state schools in general, how did
31:49
Speaker 3: they kind of rank in general? Because there are some
31:51
Speaker 3: really really good state schools, whether.
31:54
Speaker 4: It's you know, Virginia or Michigan or in those kinds
31:56
Speaker 4: of things.
31:56
Speaker 9: Yeah, the state schools did really well. I think what's
31:59
Speaker 9: driving their ROI to be higher than many elite private
32:02
Speaker 9: schools is that they're just cheaper to attend. And at
32:06
Speaker 9: the end of the day, like Paulina mentioned at the beginning,
32:09
Speaker 9: paying ninety thousand dollars for college is just going to
32:11
Speaker 9: set you back in terms of ROI, You're going to
32:14
Speaker 9: be uh just it's the earnings are going to take
32:17
Speaker 9: longer to level out, and so public schools in this
32:20
Speaker 9: instance tend to overperform because of that.
32:23
Speaker 10: And one of the sources that we talked to went
32:25
Speaker 10: to the University of Georgia and is now working as
32:27
Speaker 10: a credit analyst at Blackstone, and one of the things
32:30
Speaker 10: that he mentioned was he knew he was someone who
32:32
Speaker 10: is ambitious and driven and was going to put the
32:34
Speaker 10: work in that he think he had the same outcome
32:37
Speaker 10: as people who did go to these elite colleges. So
32:39
Speaker 10: sometimes it is it is very individual dependent. If you're
32:42
Speaker 10: willing to put in the work and you're really ambitious.
32:45
Speaker 6: Right and graduate, Yeah, I flying down. And that just
32:54
Speaker 6: makes the point that like if you want humanities like
32:56
Speaker 6: maybe sort of the public institutions where you can get
33:00
Speaker 6: keeper but also get that humanity education, I'm wondering, and
33:04
Speaker 6: you're right, it all like the drive for sure, Like
33:07
Speaker 6: that's going to depend. That's why I keep telling my kid,
33:09
Speaker 6: like I'm like it's okay, Like great, I know, I know,
33:12
Speaker 6: but it's like grades are important, for sure, you got
33:14
Speaker 6: to get into a school, but like your ability to
33:16
Speaker 6: be a human is also more important. She did draw
33:20
Speaker 6: the whole hey do I have to go to college
33:21
Speaker 6: thing the other night out of like nowhere, and I
33:23
Speaker 6: was like, oh, yeah, you do. That's how you said
33:25
Speaker 6: it didn't matter, And I was like, not didn't it
33:28
Speaker 6: didn't matter where you went? Are you guys going to
33:30
Speaker 6: do this for New York City public versus private schools,
33:32
Speaker 6: because I would really appreciate that ROI please.
33:35
Speaker 4: Yes, exactly, they're not even they're.
33:37
Speaker 9: Not even Dad is available?
33:40
Speaker 8: All right?
33:40
Speaker 4: What's the what's the biggest surprise that you guys had
33:42
Speaker 4: from from your work here?
33:44
Speaker 10: The biggest surprise, I think that you know, there's a
33:47
Speaker 10: lot of intangible benefits that people think of when going
33:51
Speaker 10: to a prestigious school, this alumni network, this idea that
33:55
Speaker 10: it'll open doors and help you, you know, climb the
33:58
Speaker 10: economic ladder. And I think what was surprising is that
34:02
Speaker 10: people felt, even with all that and acknowledging that they
34:04
Speaker 10: did get those when they went to the prestigious schools,
34:07
Speaker 10: that you know, it's still the cost of that college
34:11
Speaker 10: kept them from achieving the things in life that they
34:13
Speaker 10: thought really mattered, like being able to start a family,
34:16
Speaker 10: owning a home, even being able to buy a car.
34:18
Speaker 10: One of the people we spoke with said he his
34:21
Speaker 10: student loan payments have been more than his rent and
34:24
Speaker 10: have been since he graduated, So I believe it.
34:28
Speaker 3: I'm going to have this conversation with my daughter about
34:30
Speaker 3: helping out with a home purchase.
34:32
Speaker 4: That's kind of Monday.
34:33
Speaker 6: Is that coming?
34:34
Speaker 4: I think that's money asked me to go to lunch.
34:38
Speaker 6: Like priorities change, Like your priority that you're going to
34:41
Speaker 6: have when you're eighteen is different when you're thirty.
34:42
Speaker 4: Like socialistic thing.
34:44
Speaker 6: I love the story. I'm like, all great, thank you
34:46
Speaker 6: so much.
34:47
Speaker 3: And Duke, so some pretty good schools there, you guys
34:50
Speaker 3: feel like it was good worth it?
34:52
Speaker 4: Yeah?
34:52
Speaker 10: Yeah, yes they did pretty decent ROII so yeah.
34:57
Speaker 6: Okay, right, frantask. Thank you very much for Tessca Maglione
35:01
Speaker 6: and also Paulina Chicero. Thank you very much. I highly
35:04
Speaker 6: recommend that you do private versus public in New York City.
35:07
Speaker 6: Thank you, next assignment, good job. You can check out
35:10
Speaker 6: that article. It's the big take. Definitely check that out.
35:12
Speaker 6: It is definitely worth reading. If you have a kid,
35:14
Speaker 6: or any grandkids or anything. It is worth talking about.
35:18
Speaker 6: This is Bloomberg.
35:21
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
35:25
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35:29
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35:32
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35:35
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35:40
Speaker 3: Let's talk about the food and beverage business a little bit.
35:43
Speaker 3: Constellation Brands, there are fifty billion dollar market cap company
35:47
Speaker 3: based in Victor, New York, and they reported some numbers
35:51
Speaker 3: here today. So let's break it down with Ken Shay
35:54
Speaker 3: Bloomberg Intelligence Senior Consumer products analyst. Ken remind everybody what
35:59
Speaker 3: constant relation brands is, what are the big brands that
36:01
Speaker 3: they have, and how's business going?
36:04
Speaker 8: Yeah, hi, Paul. Well, Constellation Brands is well known for
36:07
Speaker 8: its at line of Corona Beers, Nice and increasingly Medello
36:11
Speaker 8: part of that family. It also makes Woodbridge Wines, High
36:15
Speaker 8: West Whiskey. Pretty much a portfolio of beer, wine and
36:19
Speaker 8: spirits brands, but again mostly skewed towards beer.
36:23
Speaker 6: So how they do walk us through more stuff?
36:26
Speaker 8: So the quarter, you know, I think the backdrop, first
36:29
Speaker 8: of all, was for a slow quarter, you know for
36:32
Speaker 8: most wine and beer companies right now, and spirits you've
36:37
Speaker 8: been given some recent results from Brown, Foreman and Duckcorn portfolio.
36:41
Speaker 8: They're a producer of wines. Well they're all saying, you know,
36:45
Speaker 8: trade inventory reductions stemming from cooling demand across all alcoholic
36:50
Speaker 8: beverages was kind of the backdrop to this earnings report.
36:53
Speaker 8: So when it came out, it beat expectations. Beer sales
36:56
Speaker 8: were up eleven percent, Whine and spirits were weak. But again,
37:00
Speaker 8: this is mostly a beer company, and so that's why
37:02
Speaker 8: I was perceived very positively because you know, this was
37:06
Speaker 8: a dose of good news and otherwise very cautious market.
37:11
Speaker 8: So the company is doing basically what it said it
37:13
Speaker 8: would do. You know, it had good results for beer,
37:17
Speaker 8: it reduced debt some more, it's committed to expanding its
37:21
Speaker 8: big brewery operations down in Mexico, increased the dividend thirteen percent.
37:26
Speaker 8: So from a shareholder point of view, they're doing the
37:28
Speaker 8: things they said they would do, and the beer results
37:33
Speaker 8: beat expectations, and I gave the market a dosa good
37:36
Speaker 8: news today.
37:37
Speaker 3: Stop getting a fifty two week high today, up about
37:40
Speaker 3: ten point six percent year to date, up about nineteen percent.
37:43
Speaker 4: Over the past twelve months. What's the growth story here?
37:47
Speaker 3: I guess let's go go another way. What's Constellation saying
37:49
Speaker 3: about the.
37:50
Speaker 4: Consumer in general?
37:52
Speaker 3: Because you know, there's a lot of concern out there
37:54
Speaker 3: as we look at some of the big data coming
37:56
Speaker 3: out of Washington, DC about the consumers, is inflation and
37:59
Speaker 3: all that type of stuff.
38:00
Speaker 4: What do they sing, Well, they look at the paper.
38:04
Speaker 8: Also, they understand, you know, the environment that they're in
38:07
Speaker 8: that the consumer has definitely turned a little cautious here
38:11
Speaker 8: towards purchases that they can differ. I guess that's the
38:14
Speaker 8: best way to put it. You know, beer is you know,
38:17
Speaker 8: a roughtively low price point product visa the wine and spirits.
38:22
Speaker 8: You know, a high end bottle of wine or high
38:24
Speaker 8: end bottle of bourbon you can maybe put off for
38:26
Speaker 8: a while, but you know, a bottle of beer or
38:28
Speaker 8: even a six pack whatever, you're not as prone to
38:31
Speaker 8: do that. Even though Corona Medelic you know, command a
38:34
Speaker 8: very premium price. It's a premium product. So they're aware
38:38
Speaker 8: that they can't just keep you know, tacking on big
38:40
Speaker 8: price increases. They're aware of what's going on, but they
38:44
Speaker 8: see the consumer is resilient, particularly for beer right now.
38:47
Speaker 6: So Ken, when we get you on, we like to
38:49
Speaker 6: talk about all the things, and one of the things
38:51
Speaker 6: we like talk about is weed. Because you walk on
38:53
Speaker 6: the street in New York City you get the wafting.
38:56
Speaker 6: I mean, I think it smells.
38:57
Speaker 4: Good right Well, the clar fathers that Ken covers the cannabis,
39:02
Speaker 4: it's not that he's right, I.
39:07
Speaker 6: Did not frame this correctly. Ken. You're an analyst that
39:10
Speaker 6: also covers the cannabis stocks. When I walk around in
39:13
Speaker 6: New York City, I smell a lot of cannabis products.
39:16
Speaker 6: How are these companies actually doing well?
39:19
Speaker 8: Alex are doing pretty well from a sales point of view,
39:23
Speaker 8: from an ibada point of view, but you know that
39:27
Speaker 8: the taxation on cannabis companies is so onerous and a
39:31
Speaker 8: lot of not very many are profitable from a gap
39:34
Speaker 8: accounting point of view. So if you're if you're an
39:37
Speaker 8: investor in this market, you certainly have to be patient.
39:40
Speaker 8: And that's because you need some help from regulators from Washington,
39:45
Speaker 8: whether it's a reclassification from you know, a prohibited drug
39:48
Speaker 8: like marijuana is considered today, or it's outright legalization in
39:53
Speaker 8: some states and so on. So you need some help
39:56
Speaker 8: from regulators to keep this thing going. So it's going
39:59
Speaker 8: at a mod Sales are from an industry point of view,
40:02
Speaker 8: are moving positively. As more states legalized, you know, Florida,
40:07
Speaker 8: it's going to be on the bal foarda as they
40:08
Speaker 8: could be a you know, a six billion dollars legal market,
40:11
Speaker 8: or about three times the size that it is now in
40:14
Speaker 8: a very short order if in November voters approve, you know,
40:19
Speaker 8: a legalization for adult use in November. So it's moving positively,
40:24
Speaker 8: but again from an accounting point of view, you know,
40:26
Speaker 8: it's not looking as rosy.
40:28
Speaker 4: So what's this.
40:29
Speaker 3: You cover a lot of the consumer companies that can
40:32
Speaker 3: from the beverage companies to the beer companies and packaged goods.
40:35
Speaker 3: What's the sector that's that's doing the best year? Where's
40:38
Speaker 3: the most investor interest?
40:40
Speaker 4: These days?
40:41
Speaker 8: You don't go to a soft drinks, non alcoholic soft drinks,
40:44
Speaker 8: Coca Cola, PepsiCo, you know, care Doctor Pepper, Celsius Energy.
40:50
Speaker 8: You know, people love their soft drinks and it's a
40:53
Speaker 8: very very resilient market. It's doing well, whether it's it's
40:57
Speaker 8: a food service or it's you know, take home for
41:01
Speaker 8: home consumption doing very well. And that's what the pricing
41:06
Speaker 8: power is that you know, you're looking at categories like energy.
41:10
Speaker 8: Energy is no longer in an upstart category. It's a
41:13
Speaker 8: twenty billion dollar account. It's a big category, right, but
41:16
Speaker 8: it's still growing at high single digit rates and it's
41:20
Speaker 8: no sign of slowing down. Even the soft drink of
41:24
Speaker 8: the carbonated beverages you know, Coke, Pepsi, the products has
41:28
Speaker 8: been around a long time. I think they're discovering that
41:32
Speaker 8: maybe they were underpriced for a long time because they've
41:35
Speaker 8: been taking pricing up for a while. Consumers are not
41:38
Speaker 8: bulking at all. As a matter of fact, those mini
41:40
Speaker 8: cans have far higher unit prices than the regular size
41:44
Speaker 8: and consumers love them.
41:46
Speaker 4: I like that.
41:46
Speaker 8: So that's an area of particular strength right now.
41:49
Speaker 6: Yeah, cans nice and get flat if you don't drink
41:51
Speaker 6: the whole thing before, you know, can the non alcoholic
41:56
Speaker 6: spirit thing? Does that have real legs? John tuckerdo's anything?
42:00
Speaker 6: Only a minute?
42:03
Speaker 8: Uh? I think it does, you know to a small audience.
42:07
Speaker 8: I mean this is this reminds me of the the
42:10
Speaker 8: liquid death water. You know, it's basically spring water and
42:14
Speaker 8: it can it's called liquid death. People like to act
42:17
Speaker 8: like beer or not act, but they like to be
42:19
Speaker 8: social at parties, and you know, it's a certain vibe
42:23
Speaker 8: that's given off if you're drinking a bottle of you know,
42:26
Speaker 8: plane bottle of water as opposed to something that looks
42:29
Speaker 8: cool liquid death, even though it's buying largest same ingredients
42:33
Speaker 8: inside so same. It could be suf of non alcoholic
42:37
Speaker 8: beverages may make a little joke of this, but I
42:40
Speaker 8: think I think younger demographics tend not to imbibe in
42:44
Speaker 8: alcohol as much as you know, uh maybe my generation did,
42:50
Speaker 8: and I think that's part of the attraction as well.
42:52
Speaker 6: All Right, KEM, we gotta leave it there. Thanks a lot,
42:54
Speaker 6: Ken Shay, Bloomberg Intelligence, Senior Consumer Products Analyst. I tried
42:58
Speaker 6: all that stuff because I don't really drink that much anymore.
43:00
Speaker 6: And then I'm like, why I just drink juice and
43:02
Speaker 6: all that sugar.
43:02
Speaker 2: Anyway, Anyway, this is the Bloomberg Intelligence podcast, available on Apples, Spotify,
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