Monday, 30 January 2012

The Business LA Friday Feb 10th 2012: Kinane & Katz!

Sup LA? How you been, girl? See you missed us real bad. Well, dry those eyes Shygirl because The Business LA is back Friday February 10th at 8pm! We're starting this year off right: a month and ten days after it started! Helping us usher in this year of Dragons and Mezo-Apocalyptic Mysteries is none other than Kyle Kinane and Louis Katz!

Tickets are $10 at the door BUT...
They are only $8 online with NO SERVICE FEE!


The show is at 8pm at Meldown Comic's Nerdist Theater in Hollywood.

As you may remember, we had a rendezvous with Kyle Kinane way back in of 2011, but he caught the Demon Flu and disappeared into a fever dream of Dorrito farts. But we're cashing in our rain-check (Kinane-check, if you will) and using hand sanitizer to ensure he'll come give you the laughfluenza (ok, I'll stop). You should know take the time to know Kinnae if you don't but here is a starting point: Last year he was named one of Paste Magazine’s 10 Best Comedians of 2011 & he took a limo full of Coors Light to a Bob Seger show. Now go Google the rest.

Louis Katz joins us from New York to talk dirty flavor in your ear. Louis triumphantly returns to SoCal, the place of his dirty birth, to make everyone laugh at animal farts and show off his pointy shoes. He has a new album out on Comedy Central records and can't be stopped. He is also a cast member of the web series Elevator To: Space, and his evening will mark his reunion with other cast members Alex, Chris and Sean. One small step backwards for mankind.

What are you waiting for? GET IT GIRL!

The Business February 1st 2012, "Sheng Wang Time!" Edition

Surprise! Sheng Wang is on The Business this week. Fresh off a weekend of dominant performances at Sketchfest, Sheng Wang returns to The Business this week. You may have seen him at the Punch Line, at Kevin Allison's RISK! storytelling show, or in line at Arinell's Pizza. Mr. Wang is a native of Houston, Texas, but came of comedy age in the Bay. His Comedy Central half-hour special premiered last year, and he's also appeared on Live At Gotham and toured with the Comedians of Comedy. He's a frequent guest to the Business, where he has also exhibited his photography. Is there anything this dude can't do?

We've also got Chris Garcia, Caitlin Gill, Sean Keane, and Bucky Sinister rounding out the lineup. Admission is still five dollars, and you can bring in your own burrito if you like - I'm pretty sure Sheng will be bringing in his.

Tuesday, 17 January 2012

The Business January 18th 2012, "Attack of the Killer Tobe-Natos!" Edition

I say Tobe-Nato, you say Tobe-Nahto. Well, you're wrong, because it's Nato! As in Nato Green, doing a hot six minutes at The Business this Wednesday, along with Joe "Smokey Joe" Tobin doing an extended feature set. This show was certified 96% fresh on Rotten Tobe-Natos, and the National Weather Service issued a Tobe-Nato warning for most of Northern California! Are we mixing up our puns? Maybe!

Joe Tobin is a writer, comedian, and Flyers enthusiast. He performs at comedy clubs all over the land, and he's received critical acclaim for his work with The Joe Tobin Orchestra. He's never booed Santa Claus at a sporting event, but he would understand if you did.

Nato Green is a co-founder of Laughter Against The Machine, the creator of Iron Comic, and was recently voted San Francisco's Foodiest Dad!

We've also got Chris Thayer, Caitlin Gill, Sean
Keane, and fresh off a sold-out tour of Los Angeles, Chris Garcia! As always, admission is just five dollars. Bring your own burrito! Or, if you're Nato, your own home-cured bacon. See you there!

Advance tickets:

Monday, 9 January 2012

Newspapers increase use of co-opetition practices

U.S. newspapers are increasing their use of co-opetition practices, that is, cooperating with competitors to reduce costs, create synergies, or reduce risk in new markets. Such activities are permissible if they are not designed to create cartels or control prices for advertising or circulation.

The latest example occurred this week when the Boston Herald announced an agreement with the Boston Globe for its competitor to print and deliver the Herald. The move creates cost savings for the Herald by allow it to cut printing, trucks, and delivery personnel, while simultaneously creating production and distribution economies and an additional revenue stream for the Globe--a win-win for both companies.

Such service agreements do not violate antitrust laws because the papers remain independent, set their own prices, and create their own content. If papers were to engage in such actions they would have to apply for an antitrust exemption under the Newspaper Preservation Act (see John C. Busterna and Robert G. Picard, Joint Operating Agreements: The Newspaper Preservation Act and its Application. Ablex, 1993), but those agreements have not proven successful in the long run.

The Boston agreement comes on the heels of numerous printing agreements, including that of the Chicago Tribune and Chicago Sun-Times, that have been made among publishers in the last couple of years.

Another example of co-opetition is seen in the 59 newspaper and information companies—including New York Times Co., McClatchy Co., Washington Post Co., E.W. Scripps Co., A.H. Belo, and Associated Press—that have now banded together to create NewsRight to track use of digital content and ease its licensing. By cooperating with each other, the companies have brought more than 800 content sites into the operation and created a significant player in the digital industry.

Daily newspaper companies have historically disliked cooperation unless it was absolutely necessary—as in the case of news services. The new types of cooperation emerging show that the preference to go it alone is being eroded by contemporary financial conditions and the difficulties of operating independently in the digital environment.

The Business January 11th 2012, "Featuring Clare O'Kane & George Chen" Edition

The Business welcomes two first-time guests to the show, and welcomes two new Businessmen to our regular lineup. Or should we say - BusinessWOMEN. Well, a Businessman and a Businesswoman - Caitlin Gill and Chris Thayer! And our two guests are Clare O'Kane and George Chen.

Clare O'Kane is a rising comedian and actress making her way on the scene. She often performs with the infamous Sylvan Collective, and has acted at the Edinburgh Festival. She starred in the film "Bloodrape" as "Evelyn," and IMDB credits her as a Researcher for "An Audience With Elton John," a TV special produced when she was eight years old.

George Chen is a Bay Area bred writer and musician. His credits for talking at you include Porchlight Storytelling Series and the Living Room Salon at SF MOMA. He organized a comedy show on a bus and in a comic book store. He's writing this while watching a Species marathon.

Chris and Caitlin have performed on The Business many times in the past, and we're excited to have them on board from now on. Chris has performed at SF Sketchfest and the Bridgetown Comedy Festival, and produced his own show NERVES! Caitlin founded the Ladies Room comedy showcase, remains the longtime dirty haiku champion of Tourette's Without Regrets, and has performed at poetry slams and inside boxing rings.

They've been guests, but come Wednesday, we'll see how they hold up to the pressure of being a regular. Heavy is the hand that holds the microphone, though light is the finger that administers the Facebook invite. And heavy is the tummy that orders the super burrito from Cancun, available just across the street. 8 PM. Five bucks. No Chris and Alex, but we'll have memories that will last a lifetime.


Wednesday, 4 January 2012

There He Goes Again: Stronach's $10 a Share Scheme

Frank (center) and friends

As readers of this blog know, I have no love for Frank Stronach, or for what he's done to racing. I've discussed some of his more egregious conduct here, here, here and here, just for starters.

Stronach is already the highest-paid executive in his adopted country of Canada, where he emigrated from his native Osterreich. Now Frank has come up with yet another approach to separating racing fans and would-be thoroughbred owners from their money. On December 28, 2011, companies controlled by Stronach filed six registration statements with the US Securities and Exchange Commission; each registration was for a separate corporation, each named for successful Stronach horses: Awesome Again, Red Bullet, Ghostzapper, Macho Uno, Perfect Sting and Ginger Punch. Each of the corporations proposes to sell $4,050,000 worth of $10 shares to the public. The balance of each corporation's total capitalization of $4,500,000 will be held by another Stronach entity called Golden Pegasus, giving Frank effective control of each company.

Each of the corporations will own 20 brand-new two-year-olds, which were purchased at auction last year by yet another Stronach company. The new corporations will have racing rights to the horses only for their two-year-old seasons and for their three-year-old year up until November, 2013, when the horses will be sold and the proceeds, if any, distributed to the shareholders. That's a very strange provision, since it puts enormous pressure on the trainers to produce early results, possibly at the expense of a horse's longer-term career. Also, a significant portion of good horses' earning come in their fourth and subsequent years, so shareholders won't get the full benefit of those earnings.

[All six registration statements are substantially the same, except for the identity of the horses. The one that I've reviewed thoroughly, and that I discuss in detail in this post, is for the Awesome Again Racing Corp. and is on file here.]

Frank's last ride in the market

Announcement of the Stronach offerings has drawn a bit of press interest, and was welcomed by industry chronicler Ray Paulick on his web site, which also quotes West Point Thoroughbreds chief Terry Finley as saying that Stronach's plan is good for racing. There's been a vigorous debate in the comments section of the Paulick piece.

I've read all the comments, and I've applied my law-trained eye to the SEC registration statement. Alas, there's only one conclusion I can draw: this is just one more Stronach scheme to separate those in the racing industry from their money and add that money to Frank's own obscene hoard.

Before turning to the specifics revealed by the SEC filings, a bit of disclosure. I'm racing manager of Castle Village Farm, a modest thoroughbred partnership operation based in New York. We communicate regularly with our partners by email, we host them at the barn and the training track every week, they're all welcome in the paddock and the winners circle on race days, we provide detailed monthly financial reports on our modest expenses, and we don't mark the horses up much when we buy them for resale to the partners. In other words, we, and some other small partnership operations, offer a real racetrack experience, at an affordable price, for someone who might want to get in the game with only $1,000 or so. But if heavy advertising and misguided press enthusiasm steer prospective owners to bottomless pits like Stronach's corporations, that'll deprive those of us who do offer real ownership experience the chance to introduce new partners to the game in a way that will encourage them to stay involved. Enough said.

Now for the details of the Stronach offering.

Each of the six new corporations is offering $4,050,000 at $10 a share, with a total target investment for each of $4,050,000. The offering is initially open for only 90 days from December 28, 2011, but each corporation has the option of extending the offering for another 90 days, into late June, 2012. If the target investment isn't subscribed by then, so the SEC filing states, all money will be returned to the prospective investors.

Each corporation owns 20 new two-year-olds, purchased last year at an average of $60,000 or so each. If the full amount of $4,500,000 is subscribed (including Stronach's own 10%), the $1.2 million or so in purchase prices will be paid back to a Stronach corporation.

The horses are currently in training at Stronach's Adena Springs complex in Florida. As of December 23, 2011, each new corporation is paying a Stronach entity some $150 a day for training and routine vet costs (there's a $100,000 reserve for "emergency" vet bills). That sounds way too high for training-center costs; $60-75 a day would be much more reasonable, even including routine vet work and farriers. Even when the horses move to trainers' barns at various racetracks, that sounds high, at least compared to what I know to be the actual trainer and vet charges in New York, which must be the most expensive locale in the US to train at. That $150 a day will be charged every day except when horses are on injury layups; then the charge drops to $60 a day, somewhat closer to reality. Although the SEC registration statement says that Golden Pegasus, the Stronach entity that collects the $150 a day, will return any profit above 10% to the shareholders, Golden Pegasus itself will be paying training bills to Adena Springs, another Stronach entity. That's called transfer pricing, hiding the profit in deals between various corporate subsidiaries. Shareholders shouldn't expect to see much in the way of a profit rebate from Golden Pegasus.

Initial expenses of the stock offering are estimated at about $200,000; naturally, one has to engage a big national law firm to do stuff like this. In Frank's case, that firm is Akerman Senterfitt, a politically-connected Florida-based operation. So, six times $200,000 equals well over a million. Not a bad few days' work for the lawyers and accountants.

Overall, the SEC filings estimate that $1.2 million of the $4.05 million initial capital in each corporation will be used to pay for the horses, $1.8 million will go for the (inflated) training and vet costs, and $1.1 million for "administrative and legal" expenses. Good deal, apparently for the lawyers, since administrative expenses are minimal. The corporations' only employees are longtime Stronach horseman Jack Brothers, CEO of each of the six corporations, and CFO Lyle Strachan. Brothers is supposed to get $25,000 a year from each corporation, for a total of $150,000, and Strachan $16,667, for a total of $100,000. Mysteriously, the registration statements report that the corporations have begun charging $1,150 a day -- an annual total of $420,000 for each corporation. Care to explain the discrepancy, Frank?

Brothers, Strachan and others in the deal are already on a Stronach payroll, somewhere in the labyrinth of interlocking companies that Stronach controls. In addition, the horses assigned to the corporations were initially chosen by a "selection team" that included Adena Springs' house vet, Dr. Peter Kazakevicius, as well as two principals in the Kentucky-based Hidden Brook Farm. Interestingly, Jack Brothers and others associated with the new Stronach venture are also listed on Hidden Brook's web site. Conflict of interest anyone? And each corporation's Board of Directors is composed -- surprise! --almost entirely of veteran Stronach employees and cronies

The offering statements also say that the horses will race primarily at Stronach-owned tracks -- Santa Anita, Gulfstream and Maryland -- assuming that Stronach hasn't destroyed Maryland racing before the horses reach the starting gate. Is that the best way to maximize shareholder value, when the most prestigious, value-enhancing races are in New York and Kentucky?

As it must, the SEC registration statement cites a long list of risk factors. It starts off the list with the following instructive statement, which is actually a pretty good model for any racing partnership to adopt:

"Investing in thoroughbred racehorses is a speculative activity, and the most frequent financial outcome from ownership of a thoroughbred racehorse or an equity interest in a thoughbred racehorse is the partial or total loss of invested capital."

That's certainly true. On average, a racehorse in the US earns about half as much as its annual training, vet and other maintenance costs. And well over 90% of all racehorses lose money for their owners, even before taking into account the amount the owner paid to acquire the horse. The last time I looked, some two years ago, a horse racing in New York had to earn about $50,000 to break even. And that's without the high fees, administrative charges and other burdens that Stronach proposes to impose on his investors. Just the administrative costs alone would raise that number to something like $75,000 -- before taking into account the amounts paid initially for the horses. And since the investor gets only the horse's (usually abbreviated) two-year-old season and perhaps 80% of its three-year-old year, I'd be astonished if more than two or three at most of the 20 horses in each corporation end up paying their way.

Nothing in the offering document offers investors much of a racetrack experience, either. And Stronach has a track record here. Comments from embittered veterans of his previous partnership vehicle, Adena Springs Joint Ventures, complained in their comments on the Paulick Report that they had virtually no hands-on involvement with their horses. That stands in sharp contrast to the situation with most successful racing partnerships, that offer their partners much more of an up close and personal experience, including barn visits, hospitality at the track, regular updates on their horses, etc. So let's see: a near-guaranteed loss of money, plus no direct involvement with your horse: sure sounds like a winning formula to me. But presumably the shareholders can get win photos, if they pay for them.

Supporters of the Stronach proposal have compared it to racing clubs in Japan, which are structured along similar, if not quite so rapacious, lines, or to the fan ownership of shares in the effectively not-for-profit Green Bay Packers. But there are key differences. Japanese purses are far higher than in the US, costs are lower, and a greater percentage of horses actually pay for themselves. And the Packers are the kind of community institution that inspires fan loyalty; can anyone say that about Frank Stronach and a group of 20 anonymous horses?

Speaking of those horses, I had a quick look through the list of yearlings attached to the Awesome Again Racing Corp. offering statement. Looks like the list is heavy with precociousness and speed orientation, which at least is consistent with the emphasis on racing at two and three. And not too many of Stronach's own sires are represented. Of the 20 horses, whose purchase price averaged just over $60,000, three were bought for more than $100,000 each, and a majority cost less than $50,000. That's not generally regarded as the most likely point in the market to find a big horse.

Lots more detail available in the SEC files, but that's enough to scare me off. And I'm even one of the few who made a profit vis-a-vis Stronach; I got in and out of his now-worthless Magna Entertainment Corp. stock a few years ago with a profit of all of $100. Thanks for small favors, Frank, but, as George Bush once lamentably tried to say, fool me once, shame on you; fool me twice, shame on me.

Does the Queen want to buy a few shares?

Tuesday, 3 January 2012

The Business January 4th 2012, "Kirshen and The Gill" Edition

HAPPY NEW YEAR EVERYBODY! As we charge into 2012, great and mighty changes approach from all directions. Come meet them head on with us this Wednesday for the first Business of the new year.

Joining us this week will be visiting comedian Matt Kirshen and Business regular Caitlin Gill!

You may have also seen Matt on Last Comic Standing, The World Stands Up, Ferguson or Fallon. You may have. But have you seen one of his many solo shows at the Edinburgh Fringe Festival? You may have. But have you seen him bring his wit to our stage? No, you have not. Well, here is your chance.

There is good reason Caitlin Gill is a Business favorite, having graced our stage many, many times. She's funny and smart and you love her. We do too. In fact, we're thinking of just absorbing her into the organization outright...

...BTW, this will be the last Business featuring original businessman Alex Koll for quite a while, so get your fill of him at this show. It'll have to last you a bit.

Also on hand will be Sean, Bucky and Chris, of course. Only $5 for all that! And burritos and drinks so close near by! Let's do this 2012!