At a Crossroads: The Future of ESPN

The year was 1998. The Entertainment and Sports Programming Network (ESPN) was trying to close a landmark deal with the National Football League. The goal was to finally bring the crown jewel of sports content, professional football, over to ESPN for weekly primetime scheduling. To close this deal, ESPN had to ask its parent company, Disney, and their CEO Michael Eisner for permission to pay the NFL’s exorbitant rights fee. Eisner agreed, on one condition: ESPN would have to divert the cost to cable companies in the form of annually increasing subscription fees. The head of sales, George Bodenheimer who would later become the longest tenured President in company history, had to do the impossible.

Bodenheimer had to convince various cable affiliates to a new seven-year deal with a compounded 20% annual increase in subscription fees. By the stroke of unparalleled salesmanship, and a fair amount of luck, Bodenheimer secured the agreement from the major cable players across the country. Thus, ESPN, only nineteen years old at the time, finally had professional football in primetime. They would soon discover that the landmark seven-year deal, and not football, was the true jet fuel for ESPN’s meteoric rise in revenue and spending power.

This seminal moment in ESPN’s ascent to supremacy in the world of sports television is recounted in deep detail in James Andrew Miller’s oral history of the company, “Those Guys Have All the Fun.” In the book, Miller quotes Hearst CEO Vic Ganzi who estimated “that single stroke of genius sent ESPN’s carriage fees from 40 cents to $3.20.”

The deal reverberated around the entire cable ecosystem because of its shocking potential. To put the deal into perspective, achieving a 20% return annually over seven years would yield a return of 358%. This growth in revenue was so tantalizing and surprising that even Eisner didn’t believe it was possible. Bodenheimer recounts in his memoir the task of relaying the news to his boss. ‘“Impossible!” said Eisner. “Nobody will pay that.”’ Yet they did, and ESPN reaped the rewards.

One of ESPN’s most popular shows with its longtime host Chris Berman

This deal speaks to ESPN’s true competitive advantage as a network. ESPN has the highest subscription fee of any cable network, which is how much cable and satellite TV providers charge per month to users for access to the channel. This tremendous influx of cash flow allows ESPN to outbid other networks with lower subscription fees that are more reliant on advertising as a form of revenue. ESPN also can command exceptionally high advertising rates because they reach the adult male demographic, a prized catch among advertisers.

This potent dual revenue stream is what positioned ESPN as the market leader for rights deals over the last twenty years. As they became the place to find any sort of sporting event, their ratings and popularity exploded further, and their fees and advertising rates climbed even higher. It seemed nothing could stop this blockbuster business in the first decade of the 21st century. However, recently ESPN has found itself in a business quagmire of epic proportions.

The reason: the technological disruption of the cable industry. Over the last five years, television has been turned on its head. The way individuals consume media has shifted dramatically, and spending preferences have followed accordingly. With options like Netflix, Amazon, and Hulu the new generation of content consumers have more mediums to choose from than ever before. Additionally, DVR and Tivo, mechanisms to record shows, have rendered live television obsolete for the most part. Thus, “cord cutters” can pick and choose their favorite shows and avoid cable altogether.

For those loyalists who want a basic cable package, there is now the “skinny bundle,” a slim selection of channels that provides the necessities. Six months from now there will probably be even more options. In turn, ESPN’s revenue from subscriber fees has declined precipitously and it appears that trend is not stopping anytime soon.

According to Business Insider Intelligence, in October of 2016 ESPN “lost 621,000 cable subscribers, the most it has ever lost in a single month.” While that number, provided by Nielsen, has been disputed inside the kingdom of ESPN, the fact remains that the company is contracting. According to Nielsen estimates, ESPN has dropped below 89 million subscribers for the first time in a decade. Even more alarming is the fact that the company will lose close to three million subscribers in this calendar year alone. 60% of ESPN’s revenue comes from subscriber fees alone. 

The dominance of ESPN has always been its robust dual revenue stream. As of now, just ESPN, without the other companion networks like ESPN 2 and ESPNU, commands a staggering $7.04 monthly subscription fee. Losing three million paying customers over the course of the year translates to a decrease in revenue of close to 250 million dollars annually. In the world of ESPN, where double digit growth is the norm, stagnation is unacceptable. One can only imagine what contraction means for the company.

Some experts and executives in the media industry think that ESPN creating a standalone service similar to HBO NOW is the magic antidote to all of their problems. The issue with this is that unlike content on HBO that is watchable at any time, the market has not shown a propensity to watch delayed live sports events. While it is perfectly acceptable and enjoyable to watch Game of Thrones a week late, the same cannot be said of watching a week old showdown between the Lakers and the Thunder. Additionally, this would violate current contracts on their deals and there is no incentive for individual professional leagues to use ESPN as their middleman when they can air direct to consumer. 

Even more than that issue is the fact that to match ESPN’s current revenue with the standalone model, the company would need to charge an exorbitant rate per user of the service. The reason the cable model is failing is precisely why ESPN is succeeding. Millions of cable subscribers pay ESPN’s monthly fee without ever turning on the channel. With the new consumer driven economy, this inefficiency is slowly evaporating, and ESPN’s bottom line is feeling the brunt of that damage.

To compound this problem, ESPN is losing a lot of its signature talent while facing stiff competition as well as stagnant ratings on its two marquee programs: Monday Night Football and Sportscenter.

Over the last two years, ESPN has lost its most popular columnist, one of its most prominent radio hosts, and the most polarizing and talked about morning sports show TV host. The three: Bill Simmons, Colin Cowherd, and Skip Bayless all left because of friction with management and for more money. Fox Sports 1, the well-funded and fairly new competitor, flexed its financial might to pick up both Bayless and Cowherd. While Fox may have overpaid, the signings and other marquee additions like Erin Andrews, have put the TV network on the map. These were the types of moves ESPN would make in the past. As a result of its growing popularity, and a historic Chicago Cubs playoff run, Fox Sports 1 actually topped ESPN in ratings over the course of the October 13th to October 20th week for the first time since FS1 launched in August of 2013.

An FS1 show taking market share away from ESPN

The ratings drop affects ESPN’s other revenue driver: advertising. Since the advent of ESPN, the reason it has always commanded such high rates is because of its hard to reach demographic. For years, adult men have been the white whale and ESPN has been the bait to lure them in. Unfortunately for the company, ratings are down. Sportscenter, which rose to prominence in the 1990’s with transcendent hosts Keith Olbermann and Dan Patrick, has seen its ratings decline 27% since 2010. According to Sports Business Daily, the coveted 18-34 year old demographic has been hit even harder, with a 36% drop.

The two most popular hosts ever

The reasons for this are twofold. First, Sportscenter has failed to groom and create on air personalities that drive viewers the way Olbermann, Patrick, and many others did in the past. Second, highlights are now ubiquitous. One can access every highlight they want from the palm of one’s hand, without turning on Sportscenter. In a sense, the utility of the show is now obsolete. The only reason to tune in is because of the on air talent as well as the packaging. The company has tried to fix this problem by bringing in well liked Scott Van Pelt to host his own hour. This has created a brief resurgence, but there is a problem that still remains.

The new era with Scott Van Pelt

Sportscenter was the wagon that ESPN hitched itself it prior to signing the NFL. It is central to the ESPN ethos, and it represents more than just sagging ratings. In a way, Sportscenter has to work for ESPN to succeed. USC professor and sports media consultant Jeff Fellenzer says that “Sportscenter is so central to the ESPN brand and what they do that the company has to figure out some way to make it work.”

In addition to Sportscenter, Monday Night Football has also been an issue for the company. When ESPN inked the deal for the crown jewel of sports programming last decade, it unfortunately got stuck with the “B” schedule of games. The NFL moved their highest quality games to Sunday Night Football on NBC, and gave ESPN the former Sunday Night schedule. This dramatically diminished the quality of games on Monday night, and has led to less than primetime matchups. In turn, fewer people have tuned in. Since ESPN pays close to two billion dollars a year for Monday Night Football, in addition to the right to broadcast NFL highlights all week, losing viewers is not an optimal situation for the network.

This decrease in revenue puts the network in a precarious position, with rights deals for sports programming growing more expensive each round. According to Business Insider, ESPN literally will not be able to afford their league contracts if the number of subscribers continues to decrease. 

The capital markets have taken notice. ESPN, which was valued by Forbes at 40 billion dollars, only a few years ago, has dragged down the price of Disney’s stock almost single handedly over the last year. In their last earnings report, Disney missed significantly on revenue numbers because of ESPN’s shortcomings. 

Overall investors and spectators are concerned about ESPN’s future, and they wonder if the company can somehow find a new deal that rivals the earning potential of Bodenheimer’s signature achievement. Whether that is feasible remains to be seen. What is clear however is ESPN’s need to innovate in some capacity, to avoid the fate of fallen media giants before them.

The company has an array of options to choose from, and the strategy they take moving forward will be interesting. In terms of rights deals, the company can collaborate with other companies to split the monumental asking price of the various leagues. They have done this already, working with Fox on a deal for the PAC 12 and there will be more of these to come in the future. Fellenzer believes this is an absolute necessity as they won’t be able to afford as many rights deals on their own. “You will definitely start to see more of the PAC 12 deal type collaborations, I think it is the way to structure it moving forward,” Fellenzer said.

On the subscription front, the company may be able to work out deals with individual providers and other streaming services. They have started this process, offering ESPN on sling TV, a skinny bundle provider.

At the end of the day, the company is undoubtedly at a crossroads. However, they have the benefit of practically every league deal for the next decade. Live sports is still the one holdout for the rapidly shifting media landscape, and ESPN can use this decade of practically guaranteed viewers to innovate and figure out its next landmark move for the future. The company has been skilled enough to build one of the biggest media brands ever, so betting against them moving forward should be done with caution. There is a reason they are the worldwide leader in sports.


NBA Franchises: 30 brick and mortar unicorns

On August 12, 2014 a California Court ruled that it was legal for the ex-Microsoft CEO and billionaire Steve Ballmer to purchase the Los Angeles Clippers for two Billion Dollars. This astronomical purchase price reverberated across the entire sports landscape as the figure was unprecedented for an NBA franchise.

The shock was further intensified because of the team being purchased. The Clippers were not a jewel franchise or a perennial powerhouse with a long tradition and sterling reputation. At best, Ballmer was investing in potential, as analysts agreed that the Clippers were woefully mismanaged with untapped revenue streams waiting to be exploited. Still, a two billion dollar purchase price was almost four times the highest recorded sale for an NBA franchise up to that point, when the Milwaukee Bucks sold for 550 million dollars earlier in 2014.  Based on those figures, the general consensus was, and still is, that it was an expensive premium to pay for upside.

Ballmer is enjoying his purchase

Ballmer is enjoying his purchase

So, how did the NBA achieve such rapid economic development? Just four years prior, the mere thought of a two billion dollar sale would have been laughable. In 2010, the economy was in the nascent stages of its recovery from the Great Recession. The NBA was not immune from the aftershocks of the economic turbulence, and many teams reportedly were losing money each year. With NBA owners suffering stagnant growth in other business interests, franchise ownership was ceasing to offer the benefits of a vanity asset and only serving as a money pit. The reversal in economic fortunes dimmed the allure of commanding an NBA franchise, and in turn both the perception and value of franchises stumbled.

According to Forbes magazine, audited financial documents show that in the 2009-2010 season, 23 of the 30 NBA franchises were unprofitable with an aggregate loss of 340 million dollars. This represented a slight improvement from the prior year when 24 teams were in the red and total losses were closer to 370 million dollars.

Admittedly, the NBA themselves painted a dire image of the league’s financial stability in order to better position themselves for the 2011 Collective Bargaining Agreement negotiations. However, Forbes was aware of this maneuver by the NBA and still presented their own estimates, which are acknowledged as unbiased and third party. Some of the figures and the accounting measures used are up for debate by Forbes competitors. For instance, founder Nate Silver has favored operating margin over operating income as the best indicator of an NBA franchise’s economic health.

Even with some debate over the specific valuations, as of 2010 there was a general consensus that the NBA as was struggling to keep pace with the growth of its bigger and more popular, domestically at least, competitor: the NFL.

Fast forward to the present day and the NBA is experiencing valuation growth unheard of outside of Silicon Valley. What makes this even more unique is the fact that the NBA is a relatively mature industry, yet valuations have increased six-fold for some franchises. The Clippers who in 2011 were valued at 302 million dollars sold for six and a half times that only three years later. The Knicks in 2016 are now valued at 3 billion dollars, the Lakers at 2.7 billion dollars, and the Bulls at 2.3, close to 500% increases respectively. The average NBA team is now worth over one and quarter billion dollars when only five years ago the teams were at around 340 million.

So what drives this exponential and incomparable growth? It’s an array of factors: an ever changing entertainment landscape, the popularity of individual players, a favorable collective bargaining agreement, and scarcity of options with only 30 teams. All of these factors, and many more, are playing their part in this contemporary NBA economic renaissance.

First, and probably most significant, is the rapidly increasing premium content providers place on live sports entertainment. With recorded television, streaming services, and unconventional multimedia platforms battling for consumers attention, traditional cable and television providers are doing their best to hold onto the crown jewel of live television, sports. The scarcity of content worthy of placing viewers in their seats and holding their attention for ad dollars has driven up the future value of television contracts for sports in general. As a fast paced game that connects with millennials, basketball is in a prime position to cash in on the lucrative TV rights deals. As Ben Thompson of the blog Stratchery points out, sports in general are signing such rich deals because “advertisers have nowhere else to go.”

This phenomenon is playing out at the local and national level. One of the driving factors in Balmer’s decision to purchase a franchise was the looming Clippers’ television deal. After the Lakers signed the largest regional TV rights deal in 2011, valued at four billion dollars over twenty years, Balmer felt he was in a great position to increase the Clippers revenue. As of September 2016, Balmer accomplished that goal by more than doubling his annual television deal with Fox Sports, bringing in over fifty million dollars annually while also including clauses for innovative and interactive services. At the regional level, these deals are taking place all over the country, with teams dramatically increasing their television revenue as content starved networks fork over immense amounts of cash for broadcast rights and in turn ratchet up the cost for advertisers.

At the league level, the NBA is mirroring each team’s strategy but achieving it through economies of scale. Since the league can offer a greater breadth and depth of offerings, and is able to negotiate with national networks, their new TV deal is landmark in scope. The strength of negotiating on behalf of a collective was in full effect as the NBA inked a deal in 2014 that will pay the league close to 2.6 billion annually. The deal, which is slated to start at the beginning of the 2016 season, represented an incredible 180 percent increase from the previous agreement struck with Turner Sports and ESPN in 2007. The NBA was a recipient of good fortune and timing on this deal, as they were the only major sports media deal up for negotiation until 2020. The league wide revenue sharing ensures that this deal contributes to each team’s top line growth in a significant fashion.

While TV rights are certainly driving healthy annualized revenue growth, there are other factors at play that also put the NBA in a unique position for this tremendous evolution. If it was just about live content for TV, Major League Baseball’s absolute advantage in games played would be the primary beneficiary of the paradigm shift within entertainment. Instead, it is lagging behind both the NBA and NFL across a wide array of metrics. What also is contributing to the NBA’s growth is the personality and value of its players. Social media has eliminated the middleman between players and their fans, allowing more athletes to build personal brands and connections with fans. This exposure to a wider demographic helps broaden the NBA’s audience and bring in more fans, and with them more revenue from ticket sales and merchandise.

The reason the brand appeal of these players is so significant is the favorable Collective Bargaining Agreement the NBA owners got after the 2011 lockout. The combination of posturing about losses and an incompetent union head placed owners in a prime position to lower wages and cut major cost drivers. NBA teams were able to lower salaries by an average of 280 million dollars per year across the league, which is a little bit more than 9 million dollars per year for the salary cap until the current CBA ends or is renegotiated. (LA Times)

Although NBA salaries skyrocketed this past summer because of the new TV deal, they could have been even higher had the NBA Players Union stood their ground on their share of the revenue instead of decreasing their cut by more than two percent. (LA Times) Couple this with the fact that many superstars are actually paid below their free market value and owners are getting a bargain across the board. For instance, Kevin Pelton of ESPN estimates through his formula that Lebron James production is actually worth close to 100 million dollars annually to the Cleveland Cavaliers, which is more than three times his salary of 31 million dollars next year.

More money should be flying down for Lebron James according to economists

More money should be flying down for Lebron James according to economists

This type of bargain for a major asset is a steal in any business, and it is obvious why NBA franchises are increasing in value so rapidly. They have incredible cost controls, domain over a scarce resource, and have a competitive edge in developing off the court recognition. This is not to mention the vanity aspect of the purchase as well as the fact that the NBA is leading the major American sports in their outreach to China and other global markets.

In times of economic success, scarcity also comes into play. This is variable depending on the economy as a whole, but it is a trend that shouldn’t be ignored. With only 30 NBA teams, and a bevy of egotistical billionaires, pure fundamentals don’t matter as much as having a rare and unique asset like an NBA franchise. It is hard to quantify the economic impact of an NBA team on an owner’s ego, but there is no question that it should be factored into this unrivaled growth. In terms of pure supply and demand, there is an incredible shortage and imbalance with countless billionaires waiting in the wings for an NBA team to fall into their lap.

NBA owner Mark Cuban enjoying one of the rarest assets of all: an NBA title

NBA owner Mark Cuban enjoying one of the rarest assets of all: an NBA title

Overall, the two major internal changes that have served as the catalyst for this furious growth are the shift in compensation formulas and technological adeptness in marketing and branding players. Combine this with an ever changing media landscape, and that is the fuel for a thriving business and exponential growth. That is what the NBA is experiencing, the only question is how long will it sustain this dramatic increase?

Arbitrage in trade: small fortunes made by savvy Entreprenuers

When most people hear the terms, “China” and “trade,” they think of the billions of dollars in merchandise moving back and forth between multi national conglomerates, or more recently some may think of Donald Trump. While China and trade are intimately connected to both of these notions, there is another fascinating arena in which China and trade are opening up incredible opportunities for savvy entrepreneurs at a micro-level. Due to tariffs, pricing laws, and other multi national rules, certain items in China cost significantly more than they do in America and other countries. While many think of luxury goods like Louis Vuitton and Apple, the wide schism in pricing creates arbitrage opportunities in healthcare, mid level clothing apparel, and custom goods.

In the early 2000’s, this trend was diametrically opposed. Smart Americans with the use of the internet could navigate early iterations of websites like Dhgate and Alibaba, two major Chinese online retailers, and buy items in bulk. They would then resell these items, like headphones, batteries, knockoff jerseys and toys, on American websites and capture profit in the difference in pricing. While these opportunities are still there, the more profitable move is now for individuals, usually Chinese nationals, to buy items in America and sell them back to China.

One of the reasons that there is a market for smaller entrepreneurs is that many of these items that are sent are considered gray market or even black market, meaning there is a legal risk to partaking in a venture. Since larger, more established companies don’t want to assume this risk and potentially clash with the Chinese government, brave and risk-seeking businessmen seek to exploit this opportunity. The market dynamics are such that no one can truly scale, as size would be a deterrent to profit. Eventually, if a person or company gets too large they will attract the scrutiny of retailers or the Chinese government.

One of the most notorious areas where this exists is the luxury car market. Cars like the “Jaguar F-type S convertible parked in front of a Pasadena, California, dealership sells for $89,000—but it can go for quadruple the price in China thanks to high demand for everything luxury, especially cars,” according to the Daily Beast. In order to  derive a profit, individuals in America and abroad will recruit straw men and women to go into dealerships and buy cars, or lease them and immediately sell the lease to a third party. After this, they will collect a commission for purchasing the car ranging from low four figures to low five figures, and put it onto a shipping container. There, the true business mastermind figures out a way to navigate the murky shipping laws and somehow get the car into China. This will either be sold to a dealer or an individual at an incredible markup, but still well below the market price that the same Jaguar or Range Rover would sell for in China.

Luxury Cars in China

This practice was especially popular in the early 2010’s, but as of late car dealers have caught on to this and put safeguards in place to prevent such actions. Now, depending on the dealer, especially those in states with no sales tax, some individuals who purchase cars will have to sign agreements not to ship their cars overseas. This is just one area where business people have figured out a way to derive profit from mismatches in pricing.

Since cars represent such a large dollar amount in one transaction they were a favored product to bring over as the payout on the effort per individual item sold was so high. Other cottage industries like vitamins, powdered milk, and athletic gear have all given rise to individuals setting up as middlemen between America and China. The problem with this strategy’s viability as a long term business is that the inefficiencies are either solved by better government relations or China cracks down on such sales by regulating transactions more intensely.

Currently, another booming trade area between individuals in America and end users in China is personal shopping for luxury goods. This is also taking place in England, due to the fall of the pound, but China is predominantly trying to crack down in the United States first. These shoppers are called, “haiwai daigou,” which can be translated to personal shopper. Since there is a major price discrepancy between America and China in terms of luxury brands, the members of the wealthy Chinese class will pay Chinese Americans to purchase items and ship them back.

This is another area that the Chinese government is trying to slow down as it hurts native sales within the country. According to CNN,  China’s “General Administration of Customs has stipulated that all individuals engaged in ‘cross-border e-commerce’ must provide a list of imported and exported items to customs.”

Enjoying Luxury Goods

As the government and brands figure out new ways to stop the import, savvy entrepreneurs will continue to find new areas to exploit on a micro level of trade. The question is how long will this game of cat and mouse last, and whether or not any one individual will figure out a way to consolidate market share.

The 20th Century Gold Rush: Real Estate in California

Most Americans know that to live on the coast, either East or West, is generally more expensive than the middle of the country. While admittedly a generalization, this discrepancy is even more pronounced when looking at prime locations like Los Angeles, Manhattan, and San Francisco. The difference is also apparent in other expensive territories like San Diego and Orange County. However, it hasn’t always been this way.

While California generally outpaced the market, the difference became more pronounced in the 1970’s, and since then the schism has grown tremendously. According to the California Legislative Analyst’s office, between 1970 and 1980 California’s prices went from outpacing the market by 30% to 80%. This tremendous jump in just 10 years has been followed up by even more extensive growth. According to the office, “today an average California home costs $440,000, about two–and–a–half times the average national home price ($180,000). Also, California’s average monthly rent is about $1,240, 50 percent higher than the rest of the country ($840 per month).”

These numbers are propped up by a meteoric climb in real estate values in Northern California as the tech boom continues, but the rest of the state also contributes to the sizable difference.

There are a lot of competing theories regarding the reasons for the high prices. For one, demand outpaces supply. While an incredible amount of people want to live in California, the amount of building that is taking place cannot keep pace.

The catalyst is that living on the coast means living in an incredibly desirable location. With geographic and physical limits on how much one can build, people then look to the interior of California. An influx of individuals to the inland, props up prices to higher levels than that of similar terrain makeups in other parts of the country. The proximity to the coast contributes to this significantly.

California’s meteoric rise in a chart

The weather is another contributing factor. Some deem this the Rose Bowl effect, individuals all across the country tune into the Rose Bowl on New Years Day and see sunny Los Angeles poking out from behind the stadium in Pasadena. Compared to relatively dreary surroundings in inclement areas of the United States, California looks even more appealing in the middle of winter. Studies on this phenomenon lack, and it might be more anecdotal and urban legend than statistically valid, but it encapsulates the feeling regarding California.

The lore is further built up by Hollywood and the movie and music industry as well as Northern California’s incredible technology hub. All of these features are added perks of living in California and such traits help drive up prices and demand. No one individual factor may be the reason, but combining beachfront property and years of reverence for “California Dreamin,” seems to be a potent recipe for sky high prices.

This begs the question if California real estate will ever fall back to earth. By simple supply and demand, it doesn’t seem to be the case. Of course, individuals’ tastes and preferences may always change, but it doesn’t seem that this type of house will go out of style anytime soon.

Mosquito Bites: Painful For The Economy as Well

No one likes mosquitoes. They act as irritants and leaches, using individuals and animals to survive. Now, there might be an even greater reason to dislike them; they also hurt the bottom line. Recent studies have indicated a correlation between the incidences of mosquito bites and a straggling economy. The greater number of mosquito bites, the worse shape the economy is in.

The theory behind this concept is exemplified in the great recession. Since real estate was at the forefront of the economic plunge, many individuals lost their homes or failed to maintain them. All of these foreclosures left thousands and thousands of abandoned or ill maintained properties. Without anyone to maintain the homes, and more importantly the pools,  the water turned stagnant in various locations. Combine that with certain humid climates, and these pools became nesting sites for mosquito breeding.

A Green Pool in Las Vegas

For instance, in Maricopa County, Arizona the unattended ponds and pools have become “green pools, according to authorities.” These pools are the ones where water has gone stagnant due to various levels of negligence, a lack of care driven by market forces. In 2009, 4,000 “green” pools were attended to by crews treating the stagnation. By comparison, only two years earlier the number was closer to 2500. This almost 60% jump correlated closely with an area that was hit extremely hard during the recession.

In areas where building was in a boom, many new developments placed pools in the backyards of individual homes. When people could no longer afford to maintain these pools, and for some, even live in the homes, mosquitoes swarmed.

In short, when the economy is bad, and people have to make hard financial choices, giving up pool maintenance is a necessary cut. The more pools across the country that go untreated, the worst shape the economy is in and the more homes mosquitoes find. So, if you hear more buzzing and see more bites, it is not just those small red dots you have to worry about. It could be a sign of great economic struggle on the way.


Cleaning up the mess



Unexpected Indicators