Los Angeles is many things, but in recent years, one thing it is not is the hub for NBA teams to prosper. People love the Hollywood glamour that is associated with LA, making it a must-see tourist location. For a long time, one thing it lacked was proof to a claim as a basketball city. The Lakers haven’t won a championship in the past decade while the Clippers have never even won a league or conference title. The rivalry between the two teams was just not exciting enough to coin Los Angeles a basketball city. This was true until July 2018, when LeBron James officially signed a 4-year $154 million deal to become a Los Angeles Laker. This contract is much more than a shift in NBA power rankings. LeBron’s decision transformed the perception of Los Angeles all while redefining the image of the modern superstar.

LeBron James is not just a basketball player. He is not just a four-time NBA MVP, three-time NBA finals MVP, fourteen-time NBA All-Star, and two-time Olympic gold medalist. LeBron is an icon in industries that far transcend the talents required to qualify as one of the best basketball players of all time. He is more than an athlete. Today, it is almost foolish to think of LeBron as an athlete and not as a businessman. His athletic capabilities are just a lever to propel his many other ventures.

At the start of his career, it was not unreasonable to view LeBron as just a great athlete, but the moment he signed his first contract with Nike, the sense people gained of his true brand and character shifted. LeBron was drafted first overall in the 2003 NBA Draft straight from high school. Shoe companies were vying for his loyalty and he strategically signed with Nike, giving up the extra $28 million Reebok offered. This monetary sacrifice early on in his career proved his loyalty to brands he believed in. The dream of wearing the iconic swoosh overpowered the monetary gain of signing with Reebok. 2003 LeBron could not have even predicted the eventual outcome of this decision. In December 2015, LeBron signed a lifetime contract worth over $1 billion with Nike. This deal is the largest single athlete guarantee in the sports apparel company’s history. Young LeBron’s sweet and naïve faith in Nike showed his true character and proved to have a huge payoff in the end. Now, there is no end to the team of LeBron and Nike. LeBron’s athleticism led him to peak success in the apparel and shoe industry. He dominates this market that falls in the realm of basketball as Nike sells the shoes he wears on the court, but apparel and shoes are not the expertise LeBron trained for throughout his life. LeBron expands his market by expanding his fan base. Although his fans fall all over the nation, coming to Los Angeles strengthens and grows a huge market of potential Nike customers. Why wouldn’t he go to a city with a population of over 4 million? That’s a lot of potential new customers. The Lakers offered him the opportunity to be in one of the largest markets by population in the United States.

In 2012, this businessman again deliberately leveraged his talent in basketball to branch out of the NBA. Fast food brands have traditionally endorsed athletes for decades but LeBron discovered he’s better off owning a chain instead of just taking on endorsements. He rejected a $15 million commitment to McDonald’s to invest in the pizza start-up Blaze Pizza. He bought into the company at a highly discounted rate in exchange for his influence. The initial investment amount is unknown, but per contract, he received two franchise locations. He now owns 21 Blaze Pizza franchise locations. Just like his faith in Nike, this early investment in the chain pays off huge for LeBron financially. Blaze Pizza is the fastest-growing restaurant chain of all time. As of 2017, James’ investment in Blaze Pizza was reportedly worth at least $40 million. As LeBron simply puts it, “Who doesn’t like pizza?” The tactical decision to branch out of the norm, in this case extending far past just signing an endorsement deal, proves LeBron is not the traditional athlete. Although these decisions are backed by a team of strategists, LeBron is the ultimate decision-maker and therefore the one to claim the credit. This start-up, based in Southern California, utilizes his fame and influence to develop campaigns around LeBron’s friendly and personable character. His presence in Los Angeles allows the company to utilize his persona more strategically because he is now regularly present in the company’s city of operations. When needed for a commercial shoot, it is now likelier LeBron will already be in Los Angeles. A new challenge Blaze Pizza faces in LeBron’s schedule is that because he is now in the central city of entertainment, it is inevitable his superstar image branches from just NBA All-Star and strategic businessman to Hollywood actor.

LeBron’s move to Los Angeles changes the trajectory of his career in the spotlight. Even though he may one day out-age professional basketball, he will never be too old to act. We will see LeBron James on our TV screens far beyond his NBA career. On July 16, 2021, we’ll see LeBron James and the Looney Tunes defeating a team of Monstars on the big screen. LeBron is set to play the starring role in the upcoming live action/animation movie “Space Jam 2.” The film is shooting in Los Angeles soon. What a convenient coincidence for LeBron. The talks of this movie began in 2015, so it is safe to assume LeBron knew moving to Los Angeles would make a lead role in a movie a more doable task if he was already playing in the city the movie is shot in. LeBron’s talent in basketball allowed him to trust that he would receive an offer from the Lakers to pursue a career path very different but in tandem to his current one. Now familiar with his smart and risk-taking business decisions, it seems reasonable that he would choose to leave his hometown team for the potential of Hollywood stardom. “Space Jam 2” will not be the first time we see LeBron’s untrained acting skills. He played himself in the movie “Trainwreck,” starring Bill Hader and Amy Schumer. This movie was released in 2015 before he decided to join the Lakers. Maybe it was a test run for LeBron. Maybe he was gauging whether Hollywood is a reasonable pursuit for his skills. If that’s the case, he clearly saw the potential benefits. LeBron can now indisputably claim he is an actor, but he has entered the entertainment industry in more ways than just one.

“I am more than an athlete” is a phrase he and Maverick Carter, LeBron’s longtime friend and business partner, coined and have implemented into a content-led athlete empowerment brand and media group called Uninterrupted. The group produces documentaries, podcasts and a multitude of short series to expose the real lives of athletes. An iconic moment that Uninterrupted documented was Mayor Gavin Newsom, the California mayor, signed a first-in-the-nation bill that allows college athletes to sign endorsement deals. This finally allows college athletes to see a monetary return for their talents. Uninterrupted has taken over a previously non-infiltrated industry. A media group that exclusively works to show the truest identity of athletes we know and love succeeds because LeBron and Mav Carter’s reputation encourages the development of historic moments on their platform. It is transforming the world of sports by working with athletes to tell unique stories, ultimately humanizing people we perceive as heroes. Uninterrupted is a name many young LeBron fans are familiar with because it has strategically garnered huge success via social media. Uninterrupted offices, as well as production, are conveniently located in Los Angeles, allowing LeBron to be more present in the content-led platform. He is no longer just the hidden figure behind it, but now an active member in the content. LeBron’s name attached to the brand is enough to produce success, but his regular appearances will just allow it to dominate even more in the very niche portion of the entertainment industry Uninterrupted has entered.

This is just the start of LeBron’s long-lasting presence and career. It is impossible to determine where these ambitious ventures will take him one day. All that is a guarantee is that no one will forget his name anytime soon. It is seemingly a consensus that if LeBron wants to surpass Michael Jordan as the greatest player of all time, James needs to win more rings. His judgment in choosing an NBA team based on business or personal motives, and not championship capabilities, proves he prioritizes the development of his career outside of the NBA and not the title of the greatest player of all time. We must redefine the word player to encompass LeBron’s plays in industries outside of basketball. Even without the additional championship rings, LeBron is undeniably one of the greatest athletes of all time because he is a dominant player in every industry he has entered. Even though the decision to move to LA was made for his selfish desire to succeed in a variety of industries, LeBron fans all over the country reap the benefits. LeBron is continuing to prove he is a superstar and of course, sees huge monetary benefits. He persistently builds his hero persona. He not only defines what a great basketball player looks like but also establishes the variety of talents that determine the image of a name not worth forgetting. LeBron prevails in all industries he penetrates and has given LA a valid claim to a title as a basketball city. Los Angeles is LeBron James’ city, and I just feel lucky enough to be living in it.

Sources:

https://www.nbcsports.com/washington/wizards/lebron-james-signs-4-year-deal-los-angeles-lakers

https://www.marketwatch.com/story/when-lebron-james-chose-nike-in-2003-he-gave-up-28-million-it-could-end-up-making-him-1-billion-2019-08-29

https://www.si.com/nba/2016/05/17/lebron-james-nike-deal-contract-one-billion

Boutique fitness studios pop up on every street in every city as if they are the first to revolutionize a workout. The highly concentrated market of fitness studios challenges a multitude of these businesses from staying afloat. They offer promises of a fun and efficient workout and give their clients a sense of feeling healthy for a week for the one hour they spend in a workout class. As more and more studios open, the number of competitors increases, forcing changes in pricing. As an avid studio attendee myself, I always question how much I’m willing to pay for a certain workout. This is impossible to answer because of the tradeoff I see in getting in my workout. I will always crave a workout where I am surrounded by others who are doing the exact same moves I am doing, all while feeling a sense of community every time I walk into my favorite studio, Sync Yoga and Cycle. Clearly, prices have not reached my peak point where I must walk away from the workout studio experience, and I am not alone.

The emphasis on what we love to call “wellness” encourages high spending on workouts. Wellness is the rechristening of the word vanity. Our physical and mental health is a result of a societal need to advertise what we do to work on our personal wellness. A workout becomes an excuse to show your followers that you care about your health, but only a few hours later, the same person that spent $35 on a Soulcyle class can be seen posting their brunch photos of an unquestionably unhealthy meal. I then explore the true intent our Soulcycle lover has in advertising the morning workout. Is it truly for personal wellness or just to make sure everyone knows you’re on par with current trends? Every time someone chooses to post their workout, the true winner is the studio. Soulcylce will get the client’s $35 as well as a free advertisement with every post. This encourages a faulted system as studio owners begin to focus more on creating an Instagrammable studio instead of a product that is worth what a client is spending.

A growing number of Americans are joining fitness centers. In the past 10 years, visits to fitness centers are up 42%. This jump in people who seek out fitness through outside-of-the-home means seems to be an appealing business opportunity for those in the industry. Many of the boutique studio owners who took advantage of this opportunity may now see the consequences of pursuing a business that many others were inspired to create. There are only so many hours in a day, allowing a limited number of classes and, based on the size of the studio, a limited number of students per class. To maximize productivity is nearly impossible, so studios seek out other means for revenue generators, potentially compromising the workout.

What Soulycle has achieved is what many strive to match. They have developed a brand outside of the workout. They sell an endless amount of workout clothes, all branded with the Soulcycle logo, and more recently have strangely entered the home goods market. A workout studio has somehow developed so much trust with its clients that they can confidently enter an entirely different market. Soulcycle continually loses its top teachers, like Angela Davis, famously known as Beyonce’s favorite spin instructor, to more workout-focused companies. Those who value a workout over a brand are making it obvious that Soulcycle is no longer the peak of an instructor’s career, but now a stepping stone. Similarly, Soulcycle recognizes that the brand and products are the catalysts for success, not the workout class itself. Soulcycle will stay alive in this oversaturated industry because of its ability to create a brand-obsessed client base, while other boutique studios who may have the greatest workout but not the same cult-based following or picture-perfect decor cannot compete and will ultimately suffer.

https://www.bloomberg.com/opinion/articles/2019-09-17/more-than-30-for-a-soulcycle-class-not-when-a-recession-hits

A growing number of people seek freedom from the limitations of cable television, leading to an inevitable epidemic – cord cutting. In 2018, nearly 2.9 million cable subscribers “cut their cord.” As more and more people cancel their cable television subscriptions, the growth of streaming services allows a recently discovered freedom to customize the personal viewer experience. As the want to subscribe to streaming service as the primary source of digital entertainment increases in popularity, media conglomerates are encouraged to explore the possibility of developing their own online service, perhaps eventually leading to an oversaturated market. With so many services to subscribe to, consumers re-evaluate their television needs and customize their watching experience by choosing to subscribe only to the services that offer the content they enjoy most. With this newly found freedom in viewership experience comes a growing sense of responsibility. As consumers piece together their own media and entertainment experience from a variety of options, they face unavoidable frustrations.

            The initial release of Netflix’s online platform, which allowed the streaming of movies and TV shows online, felt like a gift from our favorite media conglomerates. Netflix replaced the discomfort of driving to a nearby Blockbuster, spending too long figuring out what to rent, and the eventual need to drive back to drop off the movie after your allotted number of rental days. Consumers were infatuated with online streaming, which allowed Netflix to rapidly grow and eventually begin to release original content. Just a few years later, the consumption of online streaming has massively grown but with it comes a series of consequences that may not make the streaming as convenient as it was during Netflix’s early online days.

The convenience of a la carte subscriptions carries with it a multitude of potential issues for the consumer, the most prevalent one being cost. For all cable companies, the high-end options that have hundreds of channels and premium stations, cost over $100 per month. This monthly bill can add up quite quickly. This cost for cable may seem high, until compared to the cost of streaming. If one family chooses to subscribe to every streaming service (Netflix, Hulu, Prime Video, Disney+, Apple TV+, HBO Max, Peacock, Discovery Streaming, and Quibi) soon to be offered, it would total close to $360 per month. Customers not only question whether to keep their cable subscriptions, but also which streaming services to keep, cancel and add. The combination of the costs of cable and streaming understandably leads to consumers choosing one over the other, the choice often being a combination of some of the streaming options. The creation of online streaming eliminates a need for cable as it offers almost all the content that might make cable feel like necessity. Streaming has completely disrupted the media and television market by creating platforms that prioritize ease of use and acquiring consumer-wanted content. It is not uncommon that people choose to pay for both TV and a streaming service. For live TV news, sports, and TV shows, many still turn to traditional pay TV networks. Forty three percent of US households currently subscribe to both cable and streaming video services, with this number expected to drop as more streaming services are launched. Without the availability of tons of streaming services, many see a need for both. In coming months many more streaming services will be launched and the integration of live entertainment into these streaming services can entirely eliminate the need for any cable service, lowering the percentage of households that subscribe to both. As households begin to eliminate their cable use, they must make decisions based on which streaming services offer the content they see value in. To subscribe to every streaming service, and therefore have access to all original and already aired content created by those networks, is financially infeasible for many households. This then pushes away many viewers from enjoying certain offerings because it becomes an unaffordable reality. To piece together an individual experience through streaming subscriptions seems exciting at first, but when considering the profound costs that come with this, it becomes more problematic. Just like cable, a consumer subscribes to a streaming service with thousands of options and they will never even crack the surface of what is offered on each platform. The consumer is still not getting the ultimate personalized experience. Cable and streaming both face a similar issue of charging a set price, even if you want just one channel or just one show. Simply put, streaming services do not eliminate the costliness of getting to the few shows or movies that a consumer may be seeking out. The continual development of streaming services by many of the large media conglomerates may lead to financial strain on households who seek out the diverse offered content from a variety of streaming services but do not have the monetary means to do so.

Cost of subscribing to multiple streaming services is not the only frustration consumers face when deciding where to invest their money in subscriptions. The freedom to choose between services comes with friction. As shown in the figure, the top two frustrations with streaming services are the disappearance of shows and the need to subscribe to multiple services to watch all the content they want. Streaming services often cycle through shows and movies, eliminating a few and adding another few per month. Media conglomerates recognize that Netflix became their only buyer, so they began to claw back content and will hold them exclusively on their streaming service. Die-hard fans and binge watchers of shows like The Office won’t be super happy to hear that once NBCUniversal launches their streaming service, Peacock, The Office will no longer be available to watch on Netflix. TV networks are pulling content from major streaming services so that they have more exclusive content on their soon-to-be streaming platforms. Twenty percent of Netflix content is provided by NBCUniversal, Warner, Disney and Fox. Once these respective companies launch their streaming services, Netflix would have lost a fifth of its online content. This forces customers to add other services or to live without some of their longtime favorite shows and movies. While many opt for several services instead of sticking to cable alone, nearly a half of subscribers are frustrated by the growing number of services they need to put together to get the content they want to watch. After subscribing to multiple services, consumers have access to so much content that they struggle to discover what they may enjoy. Forty three percent of consumers report that they give up searching for content if they can’t find it within a few minutes. Despite having so many options, consumers still feel finding a good show is hard.

The growing number of streaming services not only presents a challenge to household budgets, but also the ability of these streaming services to produce original content to entice viewers to subscribe. In 2018, 57 percent of paid streaming video users said they subscribed to access original content. Among millennials, this number is even higher, at 71 percent. Streaming services are spending billions to produce award-winning entertainment and many niche channels do not have the capital to compete. Powerhouse companies push out the less financially able through production of original content. But do these powerhouse companies themselves even have the capital to produce the content they continually release?

Let’s take a look at Netflix, currently the most popular streaming service in the world. The streaming service operates on a subscription-based model with over 125 million subscribers in over 190 countries. It’s only source of revenue is subscription fees and the site alone takes up about a third of all broadband in North America. It would seem reasonable to assume Netflix is making tons of money until hearing they announced they had 88% more original content on the site in just one year. Netflix has not had any positive cash flow since 2011. The cost of creating original content far outpaces the revenue being generated from the subscriptions of the hundreds of millions of viewers. The company continues to borrow more money than it is making with the hopes of future growth. The desperation to stay relevant and competitive in the market leads to growing costs in billions, leading to negative cash flow. An even larger issue for Netflix is the threat of non-loyal subscribers who will cancel their Netflix subscriptions and choose a few of their many other streaming options instead, which sparks this over-the-top spending on original content. Again, for many homes it is not financially feasible to subscribe to every streaming service, so households will become even pickier with the original content they want to watch, potentially leaving Netflix behind. To combat this issue, Netflix will continue to create content, spending even more, possibly leading to even more money lost because of the loss of some subscribers. So even the supposed powerhouse in the industry is struggling to compete with the soon to be streaming underdogs.  

In order to maintain relevancy in the market, streaming platforms turn to massive spending in original content resulting in a booming need for creatives in the industry. This ultimately results in negative cash flow as these services hope this spending may encourage more people to subscribe. Consumers are then challenged to strategically choose which services to subscribe to based on the content they seek, potentially proving to be problematic for their wallets. Streaming services compete for consumer attention as cable becomes less relevant and less of a desire in the household. The creation of online streaming shifted the entire entertainment industry to suit it, but is too many options of a good thing just too much inconvenience for the consumer?

Sources:

https://www.vox.com/2018/12/5/18124117/netflix-media-companies-remove-content-charts

https://www2.deloitte.com/us/en/insights/industry/technology/digital-media-trends-consumption-habits-survey/summary.html

https://www.latimes.com/entertainment-arts/tv/story/2019-10-10/streaming-wars-per-month-total-shocking-apple-hbo-disney-netflix

https://fortune.com/2018/04/29/viewers-cable-streaming/

https://www.investopedia.com/insights/how-netflix-makes-money/

https://www.techwalla.com/articles/what-is-the-difference-between-cable-direct-tv

https://www.techwalla.com/articles/what-is-the-average-cost-of-cable-tv-per-month

The Pumpkin Spice Latte, Starbucks’ most profitable seasonal drink, returns every year pre-Labor Day and is a staple to many peoples’ daily routines until the end of January. The iconic pumpkin spice flavor is sold in supermarkets everywhere, whether in ice cream, cereal, or even dog food but Starbucks has popularized the trend through a simple latte drink. The autumnal flavor has been a Starbucks go-to since 2003. Although considered a fall-flavored drink, Starbucks has begun to release the flavor during the warm summer months. It was predicted that customers would not order the drink in a humid summer but Starbucks was confident in the risk of making it available during more months of the year. Starbucks hoped for three outcomes:

1. Customers pay one more visit to its retail shops.
2. Customers spend more by buying a baked good or sandwich with the latte.
3. The early release will garner so much media attention that it will gain massive amounts of free publicity.

Starbucks achieved what they had hoped and the PSL has now become the flavor of Fall as many products attempt an imitation of the customer-loved flavor.

With many products and brands that implement the pumpkin spice flavor into their products, customers can choose from a massive variety of food and drink options. Despite having an almost ridiculous amount of pumpkin spice flavored products, customers still choose the Starbucks latte over almost everything else. The dollar sales of pumpkin-related flavors is trumped by three main categories: in first place, with $130.6 million in sales, is pie filling, in second place is the PSL with $110 million in sales, and finally, in third place and probably the strangest way to choose this flavor is dog food with $109 million in sales.

The pumpkin spice latte seems to be one of the large contributors to Starbucks’ success, but in reality, PSL sales are barely 1% of annual revenue for the coffee giant. Starbucks has sold more than 350 million pumpkin spice lattes since its inception in 2003, but the success of the flavor is just a small, debatably tiny, contribution to the overall prosperity of the coffee chain. The latte alone may not contribute as monumentally as believed, but the flavor clearly brings customers into stores during the PSL season. Customers who purchase the latte spend an average of $1.14 more per purchase than the non-PSL buyer. A little over $1 per customer may not seem huge, but considering the 350 million pumpkin spice lattes sold over the past 14 years, it is safe to assume the $1 per customer adds up enough to keep the flavor in stores. The PSL is one of those must-try flavors because of its widespread popularity, and I have yet to get my hands on one.

https://www.delish.com/food-news/a22862289/how-much-money-does-starbucks-make-on-psl/

https://www.forbes.com/sites/maggiemcgrath/2018/10/31/inside-the-600-million-pumpkin-spice-industrial-complex/#1535b3ef1b95

https://www.forbes.com/sites/garystern/2018/09/21/starbucks-pumpkin-spice-latte-exceeds-expectations-but-will-it-turn-the-tide-for-sluggish-stock/#6e25ec3b20cb

Just a couple days ago, on September 18, the Federal Reserve dropped interest rates by a quarter point. This is the second time the Fed cut rates in 2019 as an effort to encourage businesses to take out loans to hire more people leading to expansion and to boost economic activity by encouraging people to take out loans and use that money to spend and invest. This boosted economy means all is well and a recession can be avoided as long as people keep spending. With low rates, it is easier to borrow money and encourages more spending and investing. So, why aren’t people spending more? The perception of a soon-to-come recession.  

            “The Federal Reserve should get our interest rates to down to ZERO, or less, and we should then start to refinance our debt… A once in a lifetime opportunity that we are missing because of boneheads,” tweets the President of the United States. When the current sitting president calls the head of the Federal Reserve, who he appointed, a “bonehead,” it does not instill any sort of confidence in American people that our economy is stable and growing. Unsurprisingly, it has the very opposite effect. People are fearful of a potential recession. It has been over 10 years since our economy’s last big recession and people seem to believe that we are due for another. As a result of this fear, people are ultra-conscious of their spending habits and make even more of an effort to save money. Saving money might be great for people’s pockets, but it does not contribute to boosting economic growth. Less spending can lead to a slowdown in the economy and as a result, the recession.

Some economic indicators reveal the reality of the U.S. consumer. What retail spending, worker pay, and household spending show is that a consumer in the United States is still financially healthy. The supposed coming recession is not supported by these economic indicators but is instead backed by the public perception that our economy is due for downturn.

Had the Federal Reserve listened to President Trump’s suggestions, the public would likely have been even more fearful of oncoming doom. To conform would show weakness in our central banking system. If the Federal Reserve did cut interest rates to zero, like suggested, there would likely be even more of a panic that the recession is imminent. The Federal Reserve made a decision independent of the president which is critical in maintaining the mysterious reputation and its ability to create money and to withdraw money from the economy. If they acted as the president suggested they should, the public perception would shift to distrust in the central bank, and ultimately an even more problematic idea of the potential recession.

To avoid the recession people strongly believe is overdue, people must borrow money to spend which will contribute to economic growth. The health of our economy is now reliant on whether people respond to the lowered interest rates and to the encouragement to spend and invest. The recession is not a guarantee, and people should take individual action to make sure they add value to a growing economy.