Papa John’s Down, NFL Ratings Up

by Rick Johnson

And yet another Domino has fallen (cheap pun), in the latest saga of Papa John’s and its outspoken founder John Schnatter. It all started last November 2017, when the CEO commented that the NFL was to blame for its sluggish sales due to declining ratings and its failure to punish “those” protesting players. Within four weeks amongst a public relations nightmare, the stock dropped a whopping 20%.

By December John Schnatter was forced to step down as CEO, to be replaced by Steve Ritchie, the former COO. Apparently Papa John’s board wasn’t too pleased when his conflict with the NFL sparked a new sponsor, a white supremacist publication called The Daily Stormer. And now we’ve come to find, the NFL has cut all ties with Papa John’s as a sponsor and partnered with its closest competitor Pizza Hut, just in time for the 2018 NFL Draft.

The NFL making such a move has been a great PR move, as the perception of distancing itself from the outspoken right wing CEO’s is seen as “one for the people and players.” But it gets better – now it appears the NFL ratings were really not that bad after all, relatively speaking. This further underscores the truth that Papa John’s was way out of bounds and deserved the flag thrown by the NFL via ending the 10 year relationship.

Last year the news media published that NFL Ratings were down attributing it to player protest fatigue. Adding to these assumptions was the fact many fans were not pleased with NFL Commissioner Roger Goodell’s handling of the Ezekiel Elliott situation. A process that made Goodell judge, juror, and executioner. But how many fans were really tuning out the NFL in places like Chicago?  What else is there to do in Chicago, in November, on a cold Sunday afternoon? Da Bears.

In the age of overly social media, once we hear news stories , we tend not to sweat the little details. The tweet on the NFL’s declining ratings was all that we needed to hear. Any additional information that can’t fit into our little Facebook message box is simply fluff. But as the saying goes, the devil is truly in the detail.  You see, it takes a while for the official Nielsen data to be compiled. This is used to paint a clearer picture for advertisers and media professionals prior to what is called the “upfronts”, an annual media buying conference held in the springtime.

Nielsen provided a quick reality check once the data was in with a brief statement that.. “while NFL ratings are down, they are still top dog…by a long shot”. The following was reported in the January edition of Ad Age following Nielsen’s annual report to the industry-

“Despite losing 9 percent of its year-ago audience and coming under attack from both sides of the political spectrum, the NFL in 2017 continued to cast a long shadow over the media landscape.

According to Nielsen live-plus-same-day data, NFL games accounted for 37 of the year’s top 50 broadcasts, or nearly three-quarters (74 percent) of the most-watched programs on TV. That marked a 32 percent increase compared to 2016, when the NFL laid claim to 28 of the top 50 most-watched programs, and was flat versus the 37 top airings the league chalked up in the previous year.

(That the NFL’s dominance appeared to wilt somewhat in 2016 had much to do with the fact that 11 of that year’s most-viewed broadcasts were notched by NBC’s coverage of the Rio Summer Olympics.)

“NBC’s “Sunday Night Football,” which remained the No. 2 NFL window with an average delivery of 18.2 million viewers and a 10.3 household rating, accounted for six of 2017’s top 50 broadcasts. And while that marked an 11 percent drop from the year-ago 20.4 million viewers and 11.4 rating, the margin separating “Sunday Night Football” from its general-entertainment competition is only widening. In eight head-to-head fall matchups, NBC’s premiere NFL showcase averaged a 6.5 rating in the target demo, which works out to 8.38 million adults 18-49; by comparison, AMC‘s “The Walking Dead” drew a 3.8, or around 4.9 million members of the dollar demo”. – Ad Age January 2018 Nielsen Report

 

So what does all this mean? It means the NFL is getting 700 large ($700k) for a 3o second spot from advertisers.  Does the NFL have issues, absolutely. It goes without saying the Roger Goodell needs to get his house in order, which is why the Papa John’s situation was perceived as a step in the right direction by many. He also needs to take on a leadership role versus that of an enforcer or lieutenant of the player police. Let’s not leave out the refs, whose calls at times can be a little suspicious to say the least.

Yet despite all the room for improvement it’s a simple reminder of just how resilient mega brands can be- and the NFL is a 500 lb. gorilla mega brand.  The NFL is no different than a Nike, or Amazon, or a Disney whom have all faced their own uphill battles. Imagine how the folks at Disney felt when this small company called Pixar upstaged them at their own game of animation. The pain was so bad that McDonald’s did an NFL type of move, and kicked Disney out the door and signed Pixar.

But the game of marketing is not unlike football, where comebacks and interceptions are common. Speaking of which McDonald’s just announced it’s reunion back with Disney after a 10 year hiatus. Now that’s a comeback Tom Brady could certainly appreciate I’m sure.

 

Black Panther Review

 

Marvel Salutes Black Panther

by Rick Johnson

 

First let’s give it up to Stan Lee and Jack Kirby for giving black folks a seat at the super hero table with The Black Panther. Second let’s give it up to young director Ryan Coogler’s directorial performance, whom at the age of 31 displayed chops of a far more experienced filmmaker.

The Black Panther produces a wide range of Afrocentric imagery and characters presented in a way that balances fantasy with cultural authenticity. The look of Africa and the characters make it difficult to take your eyes off the screen even for a moment, which is to be expected from Marvel.

Stan Lee and Jack Kirby

When these guys embarked on creating a black super hero over fifty years ago, black people had yet to know Richard Pryor, Oprah, or Eddie Murphy.  So clearly this was a bold and risky move for its time by Marvel. To this fact, the Black Panther should be expected to contain subtle elements of political correctness that insures even the most conservative movie goer, walks away feeling, “comfortable”.     The Black Panther is a non-traditional comic book super hero as his main agenda is never to rescue “America”,  but to preserve Wakanda. This is a key element which ultimately must feel less threatening to those attached to more “traditional” images of American super heroes.

While comic book super heroes are not all created equal, Black Panther has carried so much baggage over his 50 year development that his identity seems not as grounded as other Marvel Characters. Perhaps it’s his classification as a  “super hero” that teases expectations of fighting the usual suspects of criminals and terrorists.  In this category The Black Panther would be “super-hero light” as his character is challenged with upholding and maintaining his legacy, while protecting the nations extraterrestrial mineral, vibranium.

At the end of the day two talented guys writing a character called Black Panther should require some input by black creatives, and Coogler and Joe Robert Cole certainly deliver. The nemesis Erik Killmonger played by Michael B. Jordan provides the contemporary voice to make the story relevant while not being too preachy.

 

T’ Challa

While we all appreciate Lee and Kirby for The Black Panther, it should have been a given. After all some of the world’s best athletes are men of color, so in my humble opinion a black super hero is, well, a no-brainer. In addition research has shown comic books are enjoyed by kids of all races.  Ok, so you sit down and create a black super hero, and the first question is -what powers should he have right? After  all, at the core of any super hero are his powers. Superman needs to fly, Spiderman needs to hang, and Iron Man can do damn near everything. But somewhere in the super hero writer’s room, The Black Panther did not come out with any specific powers, other than those provided by the mineral vibranium.

Photo by Matt Kennedy / Marvel Studios

To that purpose, the Black Panther’s suit absorbs sound and energy. From a physics standpoint that’s an interesting play on the color black, as dark objects “absorb” light while white objects “reflect” light. And while most Marvel Super Heroes are constantly fiddling with their powers and abilities, Black Panther is not so much defined by his Panther powers alone. The important distinction here is that Black Panther is a leader of men, responsible for maintaining the wealth and independence of his nation, Wakanda.

The Black Panther’s identity is not a secret the way most traditional super heroes are, which given its socio-cultural foundation insures he is not a black man in hiding. These are interesting aspects where race and fiction are handled to protect us from the proverbial stereotyping.  In other words, race is handled to project his individuality rather than a generic form of representation.  So Marvel did their best to insure we don’t get just another black man in a cape.

That said, Black Panther does not identify with a specific set of skills or professional background. Are these important? Well they seem awfully important to other super hero profiles. We know Spider Man is a smart student, Iron Man a rich brilliant scientist, Bruce Banner is also a scientist, even Batman is a rich philanthropist. So again, in the super hero writers room someone decided that he would have no expertise or profession? I’m just sayin’.

I also hoped for more Black Panther feats of amazement and superior fighting agility. The hand to hand combat was realistic and worked well, yet not typical super hero gravity defying acts of acrobatics.  While I enjoyed the fight scenes, Panther needs more super hero tools at his disposal-like Jason Statham, what you say?

In Mechanic 2 Statham fights off 10 armed bad guys, kills half of them, escapes to the roof of a ski gondola, survives bullets coming through the roof, and jumps from the gondola onto the “top of a flying hang glider in mid air”. And he’s not even a super hero.

Special Effects

The film is beautiful to look at and Director of Photography Rachel Morrison deserves some accolades here. The city of Wakanda is a magical hidden metropolis powered on vibranium- a Star Trekien Egypt-like environment.  Overall the special effects were somewhat conservative, but worked well considering the fact the film is positioned as more of an action drama, versus a lot of gratuitous computer generated eye candy.

Conclusion

My overall rating of this movie is 4.7 out of 5 stars as the high action Marvel formula of special effects felt light on screen time. The fight scenes were more realistic, which worked great as an action drama, but less exciting for a genuine bonafide super hero movie. Clearly the outcome of budgetary limitations compared to other Marvel franchise productions.

But Marvel knows exactly what it’s doing with Black Panther. All of these elements contribute to the overall strategy to present Black Panther as outside the world of traditional superheros. While rooting him in Africa was a profound idea, it also seems a bit confining and territorial for a super hero.

My point is simply this, Marvel is not going to produce a film without insuring the general market audience is “comfortable”.  At some point in the distant past, Marvel must have believed producing an American black super hero named Black Panther, was going to “intimidate” some folk. Clearly, the African backdrop removes this association, while also removing the American equivalent, Killmonger.  As the  drama continues, there are many recognizing Killmonger as a hero in his own right. As Batman used to say “perhaps it’s not the last we hear from” Killmonger again.

First Black Bond Trader

 

Pursuit of a Financial Genius -Remembering Travers Bell Jr.

by Rick W. Johnson

 

Martin Luther King’s birthday not only represents a time to pay tribute to his legacy, but to those who followed him through doors formerly never opened to Black people.  While most of us are familiar with the Chris Gardner story as told in the movie Pursuit of Happiness, many don’t know the story of Travers Bell Jr. Bell was the founder of the first and only black-owned member firm of the New York Stock Exchange.  While his tragic death at the young age of 46 was a great loss, his achievements on Wall Street as a successful entrepreneur and global business icon represented the realization of black genius.

In 1970 with $175,000 in capital, Mr. Bell with co-founder Willie E. Daniels opened Daniels & Bell Inc.  the first black securities bond firm on Wall Street. Under Bell’s leadership the firm focused on underwriting municipal products but the real achievement begins with being able to acquire a seat on the New York Stock Exchange. In recent times the cost of a seat on the New York Stock Exchange easily runs into the millions of dollars.

Mr. Bell was raised on the south side of Chicago, and like MLK, had a dream.  His dream was starting his own investment firm after becoming exposed to the business from his own father, Travers Bell Sr. Equipped with a degree from Washington University in St. Louis and the New York Institute of Finance, his career rose quickly and soon found himself as a VP at Dempsey Tegler and Company.

Travers Bell Jr. launched Daniels and Bell, the first black owned bond trading firm in 1971.

Upon seeing his dream come to fruition in the founding of his own company, Travis reached out to black leaders and mayors to originate community financing and development deals. With a unique ability to identify underserved markets, he would use his urban background to develop relationships in the US as well as abroad.  Yet he also stresses:

“that while being a unique black owned business opens some doors, in the world of money its performance that ultimately counts”

Travers Bell’s firm which became known as the Dan Bell Group, would execute deals in Africa, had a majority ownership stake in a bank,  its own investment advisory firm, a commodity trading business, and its flagship muni bond business. Bells interest in commodities and cocoa would even steer him into acquiring Chocoline, a chocolate company.

African American pioneers can get lost in history, so upon MLK day it is fitting to pay our respects to an unsung hero from the financial world, Travers Bell Jr.

He is one of two investors I can think of who possessed the keen vision to foresee the opportunity in chocolate.  Warren Buffet would purchase See’s Candies in 1972.

 

 

 

 

 

The Bitcoin Groupie

The Bitcoin Groupie

 

by Rick Johnson

 

Stealing a lyric from the band Journey, Bitcoin worshipers pray we  “Don’t Stop Believing”. After the   fifty percent drop in price over the past few months, not everybody is worried.  Bitcoin followers fall into many types, but some are just plain old school groupies.

When we think of the term groupie, it drums up all types of music folklore about the fanatics of music and the bands they worship. Whether they waited in the rain for hours to get front row seats, or followed the band around on tour, it represents a certain kind of obsession. Before you get judgemental, following a band can be a rewarding social activity for anybody. A “groupie” does not have to be somebody waiting backstage for a hookup, but can also be a person simply supporting a local band seeking fame, fortune, and a cover on the Rolling Stone.

We develop genuine relationships with these bands and provide that initial fan base which fuels their rise to the top. Heaven forbid they actually make it big, we feel validated knowing we played some small part in their success. After all “we were there” when they were just a garage band. And “we were there” when no one showed up to their gigs.  And yes it’s a very personal thing. And so I’ve come to find many similarities in the rise of Bitcoin which indeed comes with its own devoit screaming groupies.  And like a any hot band, faces the inevitable possibility of ” here today-gone tomorrow”.

Using our garage band analogy, we can rant to the new Bitcoin followers, where were you when the price was under $5000?  Fact is Bitcoin didn’t seem to generate any media attention until it was at nose bleed bubble levels. And it doesn’t take a genius to call that top. While Bitcoin has left a lot of recent speculators underwater, many are still keeping hope alive with a religious like dedication to change the world. Like many religions, the proliferation of Bitcoin worshipers are vast and wide.

2017 must have taken the most devout believers by surprise when in a brief period of time Bitcoin rose 1000% in value. Like a garage band that just got its first record deal, the rebellious underground garage nature of Bitcoin found itself with a big top 40 hit. Bitcoin is now a daily topic in all the news media, which must seem overwhelming to the early adopters. After all, whom would expect that in just one year so much would happen in the cryptocurrency universe.

Major events such as the creation of Bitcoin futures, provided some serious validation that this currency was too legit to quit. The old school Bitcoin groupies now had to watch their favorite crypto  rise from the chat rooms to daily CNBC coverage. Keeping it real the promotion of Bitcoin was always the strategy, but nobody wanted a shooting star. If Bitcoin were a band, the 2017 rise must have felt like playing a seedy club one weekend, and playing the Super Bowl half-time show the next.

We’ve finally learned from the countless episodes of Behind The Music, that life at the top is a short stay at a Motel 6 with a continental breakfast. Who wouldn’t feel a bit jittery perched at the top of Mt. Everest under perfect blue skies? The hard part about Bitcoin is who can really say where the top is? Historians and market technicians appreciate the fact that cycles are unavoidable, where empires and assets must eventually fall back to earth. But who needs to have a doctorate in history or physics when all you need to know is the story of a few legendary musical groups. Stories that seem to always end the same way.

Nevertheless, the early believers, the true followers can feel some pride in the fact “they were there” when Bitcoin was a garage band currency. Maybe they made some money maybe not. But rest assured if there is one thing we can say about Bitcoin and the cryptocurrency market, the hits will keep on coming.

The Bitcoin Price Dilemma

by Rick Johnson

By December 2017 Bitcoin had dropped a whopping 21% from its yearly highs – reached only four weeks ago.  But an asset still worth around $15,000 may not be the end of the world, or is it?

Everyday the forces of supply and demand drive markets of all types, where economic theory suggests that elasticity is directly proportional to the perceived value of that asset.  In other words, a merchant may decide to charge $20 for a Snickers Bar, but he may find sales weak as buyers reject that asking price.  For goods and services, price ultimately seeks that equilibrium determined by a wide number of factors giving the buyer “shopping power”. However in the financial markets, the issue of pricing   is a bit more complex, especially in the case of Bitcoin and other cryptocurrencies.

While we are being sold that perhaps our government may be too dependent on regulation, some of these regulations or protections are actually effective and important.   To be specific, it was discovered long ago that market assets such as stocks, could be susceptible to price manipulation. Most people don’t fully grasp the concept of “shorting” a stock, let alone the mechanics of price manipulation. Not to imply the price of Bitcoin is being manipulated, but to drive home the point that fair value and market driven asset prices are at the core of why “regulated exchanges” exist.

Here’s a basic example:  If I owned 50,000 shares in XYZ Widget Company purchased at $10 per share, what is to prevent me from offering to buy 10 additional shares of XYZ stock at $12 per share? If another person sells me 1o shares at $12 per share, then it could be factually reported that the price is now $12 per share. No harm no foul right?  Well, let’s say the person who offered to pay $12 per share also had 50,000 shares of XYZ Widget Company.  Now let’s say these were the only two trades made the entire day. Clearly, a potential conflict of interest arises whereby these two large shareholders could be  “bidding up” the stock of XYZ Widget company to drive up the value of their own portfolios.

How could such a thing be prevented in a massive global stock market?  It’s called “transparency”.

Within our regulatory structure, a record of stock purchasers and sellers are recorded at what are called  “exchanges” and “broker-dealers”.  It is this record that publishes all of the transaction information for the entire world to see. If two large shareholders of a small stock started posting higher prices, it wouldn’t take Sherlock Holmes to conclude there may be games afoot. Now for arguments sake, let’s create another scenario whereby instead of just two large shareholders bidding up prices, there are hundreds or thousands of buyers bidding up prices.

This quantity is known as “volume” which logically we can conclude represents a more reliable market  to represent fair value of the stock. While large shareholders still stand to gain, rising prices derived  from market volume carries far more legitimacy. Further, all of these purchases would be on-the-record  by exchanges and broker-dealers as a proven deterrent against manipulation and fraud.

So what does all of this have to do with Bitcoin? Some of you have already figured it out. Bitcoin is NOT  a transparent asset. While the romanticism of a rogue asset created outside of our economic regulations  may seem pretty darn cool, the trade off is the opaqueness, or lack of transparency. The lack of transparency can be assumed to be directly proportional to risk and asset volatility.  One can argue      the point that Bitcoin is acquired and traded all over the world and thus significant volume must exist. Again these are assumptions which at the end of the day are all relative to other global assets.

If size matters we could compare the one-day volume of  Tesla stock option contracts traded, to Bitcoin futures contracts traded at the CBOE and the CME combined.  Survey says… the ONE DAY volume of Tesla stock options contracts traded is at least 20x times the number of Bitcoin futures contracts traded at the CME and CBOE combined.  Thus despite all of the news hype,  that’s not a whole lot of volume by any stretch of the imagination.

Is Bitcoin and the cryptocurrency revolution an advancement in science…absolutely! Is it a glimpse into the future of a new alternative to commerce and trade…only time-and volume, will tell.

Additional Information:

Bitcoin Basic Facts

More on Bitcoin Futures

Bitcoin and Ethereum Prices

Motley Fool on Futures

What exactly is a Bitcoin Future?

With all of the talk surrounding Bitcoin futures, this might be the perfect time to explain exactly what futures are in plain english.

The financial instrument known as “futures” were developed to help farmers. While futures are tied to all sorts of financial assets and commodities, there primary purpose was to aid the volatile business of agricultural production. Volatility in this context is defined as an unpredictable range of price swings. These price swings to an American farmer can be the difference between feeding your family and going broke.

The average midwest farmer had to guess on how successful his crops, or yield, was going to be in order to calculate revenue and profit. The problem is the farmer’s forecast is going to be high or low depending on factors such as weather.  Not knowing whether you were going to make a profit, let alone break-even, is a risky way to operate any business. Farmer’s needed a way to lock in prices to remove some of the unpredictable nature of agriculture and price volatility.  “Futures” contracts revolutionized the food industry as it allowed farmers to lock in a selling price at some point in the future-hence the name.  Not only did it allow sellers of crops to lock in prices, it also helped buyers lock in prices whom are on the other side of the deal. As no one had a crystal ball to how good or bad the crop season was going to be, these contracts acted as a “hedge” against the unpredictable nature of prices in agriculture. A wide range of raw materials and foods use futures contracts to manage prices, from crude oil to pork bellies.

For example, if bad weather created less yield for soybeans this would typically create less supply and thus higher prices. If the farmer “or seller of the crops” used futures or forward contracts to lock in a price, they risk not being able to benefit if the price of these crops suddenly start to rise.  This method    of doing business dates back centuries, and the introduction of contracts simply made these agreements legal obligations.

Today there are hundreds of futures products that represent or “derive” their pricing from all different types of securities which go by another name , “derivatives“. While this word causes some people to cringe for being the root cause of the subprime mortgage crisis, derivatives themselves are only as stable as the underlying asset it represents. Company stock options are another example of derivatives, where the value is “derived” from the price of the company stock.  I don’t imagine Mark Zuckerberg  would have anything negative to say about the derivatives that represent Facebook’s stock price.

In essence Bitcoin futures are just like any other futures or derivatives contract, where it is a contract to purchase the underlying asset at a specific price.  An important point however is that the Chicago Mercantile Exchange  (CME), nor the Chicago Board Options Exchange (CBOE) will deliver any Bitcoins to buyers or seller. These contracts will be settled in cash, similar to the S&P 500 futures contracts.  Futures contracts are created with a monthly expiration. A speculator has to make sure she has locked in a better price lower than the current market price to make money prior to this expiration date. Since Bitcoin futures are settled in cash, any price advantage is paid directly to her account without the exchange or delivering of actual Bitcoin.

The CME futures contract is based on five bitcoins (Bitcoin Price x 5), where the CBOE futures contract is based on 1 Bitcoin (Bitcoin Price x 1).  Commodity futures contracts all represent a specific quantity per contract such as bushels, tonnage, or barrels. For example an oil futures contract represents 1000 barrels of oil, or 42,000 gallons.  While bitcoin futures are settled in cash, meaning no actual delivery of bitcoin is involved,  most commodity futures contracts support delivery of the commodity.

A very dangerous element exists where a buyer is obligated to cash settle or purchase the commodity. Forgetting about this obligation may cause several oil tankers to arrive one day seeking to delivery your 1000 barrels of fresh crude oil. For this reason, futures are not anything to play around with like day trading stocks, as they represent legal contractual obligations to buy or sell bulk commodities.

To weed out non-professional traders, the CME requires a large 50% down payment for Bitcoin futures contracts, which based on today’s closing price represents a $32,000 deposit for five Bitcoins. The US exchanges do not openly support or refute Bitcoin, but provide futures contracts as a service to financial firms, or crazy individuals looking for to play with a $32,000 slot machine.