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orbemnews · 4 years ago

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The Growing Fallout From the Super League Fight The fallout from the Super League is spreading The biggest business and policy story in the world at the moment isn’t about taxes or infrastructure. It’s about the fate of European soccer, as the fight over the Super League draws in everyone from Jamie Dimon of JPMorgan Chase to President Emmanuel Macron of France to the N.B.A. star LeBron James. Critics have denounced the proposed league, which would guarantee 15 of Europe’s top teams a spot, as a cash grab by the richest clubs. We’ve also heard from sports executives who argue that the plan could hurt the economies of cities whose teams are excluded. JPMorgan, which is backing the plan, faces a backlash. Irate soccer fans denounced the bank for providing over $4 billion to finance the creation of the league. (“#JPMorgan” was a trending topic on Twitter yesterday, and not in a good way.) The bank was brought into the deal through its relationship with the Super League’s chief architect, Florentino Pérez, the billionaire president of Real Madrid. Its bet is that supporting a star-studded competition, in a sport with a gigantic worldwide fandom will pay off in the long run, not least through broadcast rights. JPMorgan’s involvement was vetted by its internal reputation committee, which assesses high-profile and potentially controversial assignments, according to people briefed on the decision. But that committee didn’t fully expect the emotional reaction from sports fans that has flooded the airwaves around the world, these people added. Big media and tech companies could get entangled. Many are expected to bid on the broadcast rights for the Super League, with speculation surrounding Amazon, Apple and Facebook. But they may have to worry about more than ratings. Political leaders like Mr. Macron and Prime Minister Boris Johnson of Britain (and even Prince William) have spoken out against the league; is that a fight they want? And do they want to run afoul of FIFA, the sport’s global governing body, or UEFA, its European counterpart, and risk losing out on rights to the World Cup or other high-profile competitions? Others in the sports world tied to the proposal may get caught in the middle. Mr. James, for instance, is a part-owner of Liverpool, a founding member of the Super League, through his partnership with the Fenway Sports Group. But he wasn’t involved in the club’s decision to join the league, a person briefed on the matter said. Nevertheless, there is growing concern that athletes outside European soccer and minority owners of teams could get pulled into the global debate over the league, potentially putting them at odds with fans of the world’s most popular sport. HERE’S WHAT’S HAPPENING The White House seeks to exploit a rift between big business and Republicans. The Biden administration is courting corporate America to support its infrastructure initiative, taking advantage of a rift with Republicans over political and social issues like restrictions on voting rights. But opposition to higher taxes and more regulation may yet reunite the estranged allies. Exxon Mobil unveils a $100 billion plan to profit from carbon capture. The oil giant said it would make a business based on trapping the carbon emissions of industrial plants around Houston. But the strategy would require government support, including a new carbon tax — which has little political backing. Amazon is accused of corrupting the recent warehouse unionization election. The union, which lost the vote 2-to-1, said the e-commerce giant had intimidated and surveilled workers. If the National Labor Relations Board agrees with the claims, it could order a new election. Xi Jinping warns against economic decoupling. In a speech today, the Chinese president called for greater global economic integration and made thinly veiled critiques of America’s efforts to reduce its dependence on Chinese exports like computer chips. “Bossing others around or meddling in others’ internal affairs will not get one any support,” Mr. Xi said. Oatly files for an I.P.O. The oat milk company — whose backers include Oprah Winfrey, Blackstone and the state-owned Chinese conglomerate China Resources — disclosed in its prospectus that sales more than doubled last year, to $421 million, though it lost about $60 million. It’s reportedly aiming for a $10 billion valuation, betting on the plant-based food trend. Activists send a message to asset managers More than 140 racial justice leaders published an open letter in The Financial Times urging asset managers to match their pledges on social and political issues with their votes at coming shareholder meetings. Of top importance: votes on board diversity, racial equity and political spending disclosures. The top three asset managers have significant power to influence corporate decisions. BlackRock, Vanguard and State Street control about 80 percent of all indexed money, making them a dominant force in the governance of public companies. The activists behind today’s letter — including Rashad Robinson, the president of Color Of Change; Alicia Garza, the principal of Black to the Future; and Derrick Johnson, the president of the N.A.A.C.P. — argue that the money managers are not sufficiently exercising their power: In 2020, BlackRock voted against all 48 resolutions to expand policy-influence disclosures that received more than 20 percent shareholder support at S&P 500 companies. Of the 178 S&P 500 companies that had no Black directors as of their 2020 annual shareholder meetings, BlackRock voted to support the entire board at 163 and Vanguard did the same at 166. The “big three” asset managers made commitments to racial justice after the killing of George Floyd last year. They’ve incorporated that focus into their voting guidelines: BlackRock has said it may vote against directors when it considers a board to be “insufficiently diverse.” State Street said it would vote against certain directors at firms that do not disclose diversity data this year and firms that do not have at least one director from an underrepresented community next year. When it comes to voting rights, BlackRock and Vanguard signed a recent letter opposing “any discriminatory legislation” that would make voting more difficult. The activists are asking funds to do more, including: Oppose all-white boards. Oppose directors in charge of political spending at corporations that “failed to address their role in funding elected officials” in the Jan. 6 Capitol riots. Support shareholder demands for racial equity audits. The letter sets the stage for a potentially contentious proxy season, targeting specific shareholder resolutions at a host of S&P 500 companies in its “voting guide” for investors. Neuberger Berman, which manages $429 billion in assets, said yesterday it plans to vote against management at Berkshire Hathaway on topics including diversity reporting, which also features in the activists’ guide. “We’re trying to behave like owners and shareholders and help make the company better,” Neuberger’s C.E.O., George Walker, told CNBC. “Software, data, electronics and biology are changing the world. But they won’t reach every American or ensure national competitiveness without public investment.” — Brad Smith, Microsoft’s president, on his support for the Biden Administration’s proposed $2 trillion infrastructure plan in a USA Today op-ed. (He did not address the increase in corporate taxes that would pay for it.) What can public companies reveal through private channels like Discord and Substack? Yesterday, Mark Zuckerberg announced that Facebook is expanding into audio, including Clubhouse-style chat rooms, podcasting and more. An interesting wrinkle about the announcement was that it was made in a private Discord chat with Casey Newton, a reporter who writes a Substack subscription newsletter. Facebook sent a message that the traditional gatekeepers are gone. The private channel chat was just one sign; another was Mr. Zuckerberg saying so explicitly. “If you look at the grand arc here, what’s really happening is individuals are getting more power and more opportunity to create the lives and the jobs that they want,” he said of the new media age. What about fair disclosure? Mr. Zuckerberg was speaking on social media but using a restricted channel. Companies can’t selectively disclose material information but the S.E.C. has said that “most social media are perfectly suitable methods for communicating with investors.” Still, the rules were designed to ensure that no one can get a jump on other investors, so channels don’t qualify “if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.” Dan Primack of Axios asked, “So how does revealing big new product news on a private Discord server fit into that?” Assuming Facebook’s product announcement qualifies as material — which given the company’s size it may not — past rulings can help answer this question, which will arise more often as the media splinters into niche networks. “Issuers must take steps” to let investors know the news channels they’ll use, the S.E.C. wrote in a 2013 investigation of Netflix after its C.E.O., Reed Hastings, posted data about the company on his private Facebook page. The S.E.C. didn’t take action, noting “market uncertainty” about how fair-disclosure rules applied to social media at the time, and said it would consider each case individually. Facebook also published a blog post yesterday announcing its new audio products, which could help address fair disclosure concerns. A Facebook spokesperson told DealBook the post was intended to complement the Discord discussion. THE SPEED READ Deals The British government will examine Nvidia’s $40 billion takeover of the computer chip designer Arm over antitrust concerns. (BBC) The co-heads of Credit Suisse’s prime brokerage unit are resigning, after the Swiss bank lost nearly $5 billion from the meltdown of Archegos. (WSJ) The office-furniture maker Herman Miller agreed to buy a top rival, Knoll, for $1.8 billion, betting on both office reopenings and employees outfitting home work spaces. (Bloomberg) Politics and policy How much sway does the N.R.A. still have? (NYT) The House approved a bill that would let banks work with cannabis companies where cannabis is legal. (Reuters) The Treasury Department named John Morton to lead a climate hub, meant to coordinate work on finance, tax and other issues. (Treasury) Tech Apple readmitted Parler to its app store, after the conservative social network altered its content moderation policies. (NYT) Elon Musk asserted that Autopilot hadn’t been activated in the Tesla involved in a fatal car crash in Texas, though he offered little evidence to back his claim. (CNN) China appeared to shift its tone on Bitcoin by calling it an “investment alternative,” in what industry experts said may represent greater acceptance of crypto. (CNBC) Best of the rest The main pandemic shifts in population were confined to people leaving New York and San Francisco. (NYT) The downside of missing out on office gossip. (WSJ) “My whole life, I worked on the idea that government can be an instrument for social progress.” Walter Mondale, the former vice president and champion of liberal politics, died on Monday at 93. (NYT) We’d like your feedback! Please email thoughts and suggestions to [email protected]. Source link Orbem News #fallout #Fight #growing #League #Super

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deniscollins · 5 years ago

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WeWork’s Multibillion-Dollar Takeover by SoftBank Could Turn Into a Money Pit

WeWork, office space leasing and rental firm, was valued at $47 Billion in January and it’s biggest outside investor was SoftBank, owning 29% with its $10.6 billion investment. WeWork plans to go public were delayed following announcement of $1.6 billion in losses last year, and it’s value has declined to $7 billion. If you were a Softbank executive, would you: (1) continue to support the CEO and founder, (2) takeover the company for an additional $7 billion, or (3) bail out and accept billions in losses? Why? What are the ethics underlying your decision?

WeWork said it was going to transform the market for office space, reinvent the way people work and elevate the world’s consciousness. But in recent weeks, the brutal reality beneath the lofty visions has emerged.

After failing to go public, the company was running out of money fast and needed a bailout. On Tuesday, WeWork’s largest outside investor, SoftBank, provided a last-ditch lifeline — a multibillion-dollar takeover that would wrest control from Adam Neumann, WeWork’s co-founder and former chief executive.

Even though Mr. Neumann’s hypergrowth strategy drove WeWork into the ground, he could walk away with a billion dollars while giving up special voting rights and stepping down from the board.

It’s a messy, costly turn to an audacious corporate experiment — one that tried to remake the stodgy old business of subletting office space into a cutting-edge technology play. WeWork’s descent highlights the dangers of throwing money at inexperienced chief executives who say they can upend long-established industries.

“WeWork’s basic business model is nothing more than a real estate play,” said Vijay Govindarajan, a management professor at Dartmouth’s Tuck School of Business. “Let’s not fool ourselves by calling them a tech company.”

Now, SoftBank, which had already poured billions into WeWork, will be pouring billions more in hopes of recovering its investment. The company’s business — leasing space, refurbishing it and renting it out to its “members” — is not profitable and may not be for the foreseeable future.

On Tuesday, SoftBank’s chief executive, Masayoshi Son, backed WeWork and its ambitious mission.

“It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced,” he said in a news release. “Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support.”

SoftBank has a three-year plan to turn around the business and intends to install one of its own top managers, Marcelo Claure, who is also executive chairman of Sprint, as executive chairman of WeWork, said two people with knowledge of the matter.

Employees at WeWork are bracing for layoffs, and real estate experts say the company will have to significantly scale back its growth plans and possibly even give up some of the space it has leased in recent months for lack of paying customers.

Just a few weeks earlier, WeWork had been planning to sell shares to stock investors in what its investment banks had billed as one of the biggest initial public offerings in recent years. But that share sale was scrapped after Wall Street investors balked at the company’s huge losses and unusual corporate structure, which gave Mr. Neuman outsize power.

SoftBank’s takeover values WeWork at $7 billion, down from the $47 billion that SoftBank reckoned it was worth in January, these people said.

The rescue package, announced by both companies Tuesday, includes four main components. SoftBank will accelerate a $1.5 billion investment into WeWork that it had committed to making next year. SoftBank will buy up to $3 billion in shares from other investors in WeWork, including Mr. Neumann. SoftBank will also lend money to Mr. Neumann and hire him as a consultant. And SoftBank will lend up to $5 billion to WeWork.

WeWork’s board chose the SoftBank deal over a $5 billion debt-financing offer from JPMorgan Chase.

Given how much it has already plowed into the company, SoftBank’s takeover will be successful only if WeWork is eventually sold or goes public at a valuation of $15 billion or more, these people said. Once the deal is complete, SoftBank said it would own about 80 percent of WeWork but added that it would not hold a majority of WeWork’s voting rights. A SoftBank representative did not immediately respond when asked what proportion of the voting rights SoftBank would hold.

WeWork is hardly the only SoftBank-backed company to run into trouble. SoftBank and its $100 billion Vision Fund have also invested heavily in Uber and Slack, whose share prices tumbled after they started trading on the stock market several months ago.

For years now, Mr. Son has bet that pouring money into fast-growing start-ups would allow his chosen companies to grow faster than their rivals and establish dominant positions in their industries.

But recently, Mr. Son seemed to be backing away from that approach, telling entrepreneurs at a corporate retreat last month that they needed to focus more on building sustainable businesses within a few years of going public.

SoftBank’s takeover of WeWork is its most expensive and expansive effort to rescue one of its investments, at a crucial time for the conglomerate: It is in the middle of raising a second Vision Fund.

The big question now is whether SoftBank can turn WeWork into a sustainable business. The company’s most recent financial statements show that it has been burning through billions of dollars every year — and is close to running out of money.

“The new capital SoftBank is providing will restore momentum to the company and I am committed to delivering profitability and positive free cash flow,” Mr. Claure said in the news release Tuesday.

SoftBank’s rescue plan has bought some time, analysts said, but WeWork still has to make some difficult decisions. “The silver lining in the whole process is that SoftBank bought them,” said Vicki Bryan, chief executive of Bond Angle, a research firm.

Over the past several weeks, SoftBank executives have been developing a new business plan for WeWork, according to two people with knowledge of the plan. They are looking to sell and shut down unprofitable divisions and lay off employees — WeWork had more than 12,500 at the end of June. SoftBank also thinks WeWork should leave cities where SoftBank does not see a path to profits within three years and double down on cities, like New York and London, where it is already doing well.

The plan to leave cities where it is struggling to earn profits makes sense. But that would mean walking away from leases, which would anger landlords who might refuse to do business with the company in the future or demand tougher terms.

SoftBank could also cut the lavish commissions it has paid to brokers and seek to raise prices on the space it offers to bring in more revenue. But that could prompt corporate customers who have become accustomed to cheap rents to shop around for other spaces.

WeWork’s main pitch to customers has been that it offers a more flexible way to rent office space than traditional landlords who required long-term leases. And there is plenty of demand for such space. The problem is that in the big cities that SoftBank seems to be focused on, many other companies, and building owners themselves, have gotten into the business, too.

“The fundamental concept is there,” said Bill Aulet, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “But it went too far too fast.”

Whatever happens to WeWork, SoftBank has already assured that Mr. Neumann will land on his feet.

In an unusual move, SoftBank plans to give him a three-year loan of about $425 million to repay a credit line from JPMorgan, Credit Suisse and UBS that is secured by his shares in WeWork, which have dropped significantly in value.

Mr. Neumann owns about 30 percent of the company and could sell up to $1 billion in shares to SoftBank. He is required to use at least $100 million of the proceeds to pay down his loan, the people said. Mr. Neumann will also give up special shares that have 10 votes each, back the deal, leave the WeWork board and become a consultant to SoftBank for four years, these people said. SoftBank will pay him $185 million for his advice, and Mr. Neumann will be barred from starting another company or poaching employees from WeWork.

#SoftBank #WeWork

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biofunmy · 5 years ago