On Wednesday, March 27^th, the Chicago district of the National Labor Relations Board (NLRB) ruled that Northwestern players, led by former Northwestern Quarterback Kain Colter, qualify as employees of the university and can unionize. The decision, at first glance, might seem like a big win for collegiate athletes and their battle for compensation. But unionizing collegiate athletics is layered with multiple issues ranging from the differences between private and public institutions, tax issues and vast economic implications.

Jay Bilas, an ESPN College Basketball analyst, former Duke basketball player and lawyer argues that the NLRB’s decision won’t affect anything in the short term, as the decision of whether collegiate athletes can unionize will, ultimately, end up in federal courts if it’s able to pass the national NLRB. But scandal has surrounded the NCAA since its formation more than a century ago, and now, more than ever, athletes, administrators and fans sense a momentum of change.

In 2013, the NCAA March Madness Tournament brought in more than $1.1 billion in television advertising revenue, $55 million more than the NFL Playoffs and $223 million more than the NBA Playoffs, according to ESPN. Student-athletes do not recoup any of that revenue, besides an athletic scholarship that ranges between $5,000-$65,000 per year. In 2008, the athletic programs at Alabama, Texas, Ohio State, Florida and Tennessee each made more than $100 million in total revenue. Alabama’s Head Football Coach, Nick Saban, is the highest paid public employee in the State of Alabama and makes at least $7 million per year, which is more than the salaries of all the head football coaches in the Mid-American Conference combined.

The NCAA argues that amateurism and money are mutually exclusive. But collegiate athletes, especially in sports that turn a profit, such as football and men’s basketball, continue to challenge that notion. However, the NLRB decision could have unexpected tax implications and throttle the momentum. The motion put forth by Northwestern players and their lawyers argued that athletes received compensation in the form of a scholarship making them employees of the university. If the scholarship were deemed as taxable income in federal courts, an athlete would have to pay at least $15,000 in federal taxes on a $61,000 per year scholarship. In addition, this particular ruling only serves private universities, because the NLRB does not govern labor matters at public institutions. A majority of the top performing Division I collegiate athletic programs are public universities, including all five of the universities that exceeded $100 million in total revenue in 2008.

If collegiate athletes were ever able to unionize, the NCAA would deem them ineligible for receiving compensation for play. And the NCAA has always been happy with taking the easy way out and promoting inertia. But the answer to paying collegiate athletes is simple and not as convoluted as the NCAA makes it seem. To pay athletes, universities could utilize a free-market approach, as it’s worked well for the rest of us. Like any other contract, the player and university could negotiate terms, require a player to stay for three or four years, introduce non-compete and behavioral clauses and detail a performance clause that highlights performance goals on the football field or basketball court and in the classroom. Smart minds can dictate how change can be effective and efficient and satisfy the needs of all parties involved, but asking fat cats to stop eating and make room at the dinner table, might be a little harder.

Sources: ESPN, NPR, SBNATION, ESPN

 

As a premier sportswear brand, Lululemon is known for its high-end, innovative athletic apparels that are designed specifically for yoga practice. During the recent years, its product types have expanded into a variety of technical athletic apparels for different sports.

In the United States, participation in sports has been constantly increasing slight during the past few years, and is expected to continue such slow growth, at a rate of 0.5 percent, until 2018. Even during the economic recession, sports participation increased as people used sports activities to kill their time. As a healthy alternative exercise method as well as a convenient individualized fitness activity, yoga practice has gained rising interest from sports participants over the years and is one of the major sports activities that were responsible for most of the increase in the overall sports participation within the United States. Additionally, participation in yoga practice will see strong growth in the near future as a result of people’s increasing perception that physical activities like yoga will lead to an overall healthier lifestyle. According to the latest study conducted by Yoga Journal in 2012, approximately 20.4 million Americans practice yoga, while the number was only 15.8 million based on the study in 2008. As a result, yoga practitioners in the United States now spend over $ 10.3 billion every year for yoga products and services. This is a major opportunity for Lululemon, as it is known for its innovative, high-quality yoga apparels, which is on greatly increasing demand due to the trends in the industry and marketplace.

However, despite the opportunities in the marketplace, Lululemon has faced many challenges, especially in terms of increasing competition, both domestically and overseas. For instance, Nike is the biggest and one of the most famous sportswear brands in the world, offering high-end, high-quality sports apparels to its customers, just like Lululemon does. However, with a dominant place as well as a much wider reach in the market, Nike had earned $6.3 billion in sales in 2012, while Lululemon earned $1 billion during the same year. Unlike Nike, Lululemon enjoys its reputation and popularity mainly in the United States and Canada, and even though it offers a variety of technical athletic apparels for different sports, it still mainly focuses on the niche market for yoga fashion.

Considering Lululemon’s situation and the trends in the sportswear industry, another opportunity for Lululemon is that it may want to expand its business focus more into the global market. With only a few physical stores in countries other than the United States and Canada, Lululemon should consider having more physical locations set up globally, as well as provide easier access to online shopping, like better shipping and payment policies, for customers around the world. Moreover, besides its popular yoga apparels, Lululemon can expand its products lines and provide customers with more innovative, high-quality yoga practice equipment, like yoga mats and balls. As indicated by the IBISWorld Industry Report, even though there is strong competition, including overseas competition, in the market, sales of athletic equipment will continue growing in the following periods, especially for popular sports activities like yoga.

 

While Hollywood films have gotten bigger and bigger over the last few decades, the true rags-to-riches story seems to be the independent film market. Inconceivable only a short time ago, independent film became so successful, it became a new kind of studio film. The behemoths started in the nineties, from the cameras of Soderbergh and Tarantino, and raised small time wheelers and dealers like the Weinstein brothers to immortal mogul status. That said, when Reservoir Dogs was released, only 249 other films made it to the theatres that year. This year? There were 1,500. Meanwhile, the money these movies make has actually decreased. Many in the indie business are beginning to sweat. Is this the sign of a possible market bubble?

Filmmaking, with the advent of cheap digital camera technology and the age of Kickstarter, has become a by-the-people, for-some-people medium. With a new level of accessibility, an influx of hopeful artists began producing work and sending it forth into the world. Film festival culture has spawned from this new supply of infinite content. According the Salon, “in the last 15 years, the U.S. alone has seen nearly 7,000 film festivals.” Reaping the rewards of entrance fees and, especially with high-profile events like Sundance and Telluride, market visibility, the festivals themselves have done very well for themselves. Herein lies the problem: “[The industry] is built on supply…film festivals, film schools, crowdfunding sites, film festival submission aggregators, video-on-demand distributors – all apparatuses that have a vested interest in encouraging filmmakers to keep making films, demand for those films be damned.”

A modern film production may look something like this: a group of young creatives raise money through crowdfunding in order to qualify for tax incentives, that they then subsidize to cover the likelihood that the film grosses under budget. Such productions produce little economic activity, as crews and cast are underpaid, and the finished product generates very little revenue. A lot of those 1,500 films made last year did not qualify for theatre runs. Instead, their producers rent out the screens for more money, just to grab a few reviews before dying a quick death on the VOD (video-on-demand) market.

The art of filmmaking takes time and skill to perfect. With so much amateur work taking up so much market space, there’s a chance the next Tarantino will simply get lost in the masses of mediocrity. Salon presents a few possible solutions, be it refocusing film festivals to screen work only created through their selection-based filmmaking labs (basically, a class for qualified filmmakers to create a thesis of sorts) or fitting independent productions into the vertical-integration model of the golden Hollywood studio system.

Film is an important part of American culture and art, but is in danger of falling into the same trap to which many American industries have become victims. Independent film is a beautiful thing, and with our digital age, the American Dream of making it in Hollywood seems closer than every before. However, the bloat of supply threatens the holy market competition that fuels both increased creativity and economic success. Young dreamers aren’t going to stop flooding the market with movies, so it may be time to start building a dam – for all our benefit.

 

Other sources:

The New York Times, http://www.nytimes.com/2014/01/12/movies/flooding-theaters-isnt-good-for-filmmakers-or-filmgoers.html?_r=0

Nofilmschool.com, http://nofilmschool.com/2014/02/kentucker-audley-stop-making-indie-films-petition/?fb_action_ids=10201041474228386&fb_action_types=og.likes&fb_source=other_multiline&action_object_map=%5B259881744187942%5D&action_type_map=%5B%22og.likes%22%5D&action_ref_map=%5B%5D

According to Diane Coyle, an economist and author of GDP: A Brief Affectionate History, we tend to think about GDP as a natural object, like a mountain, river or lake. But GDP isn’t a thing; it’s an idea – an idea that made the U.S. economy $500 billion bigger in 2013.

Why does the world revolve around an idea that hardly anyone understands? GDP can impact elections, influence major political decisions and determine whether countries can continue borrowing or be put into a recession. In addition, though utilizing the GDP might’ve been a good statistical measure of the economy during the twentieth century, it’s become increasingly inappropriate for an economy driven by innovation, services and intangible goods, argues Coyle.

The GDP was created because of the Great Depression and people first referred to it as national income. In the decades that followed the Great Depression, national income transitioned into gross national product and eventually Gross Domestic Product.

But around the 1950s and 1960s, the GDP began to have too much power. If a country needed help from the World Bank or the United Nations, it needed to know its GDP.  When the Cold War began, GDP began to reflect the success of a country and distinguished winners and losers.

When the GDP, a statistical measure of the economy, begins to have an inflated importance that defines whether your country is doing well or not, politicians begin to look at is a measure of their success as well. But what the GDP doesn’t do, as Robert F. Kennedy famously spoke about, it doesn’t measure the “health of children, the quality of their education, or the joy of their play. It doesn’t include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.”

Not only is GDP out of touch with our current economy, but economists also warn that GDP is a tool only to be used to measure market activity and not a country’s prosperity. GDP needs to be redefined, restructured and/or replaced in order to enact progressive change. Case in point, GDP tends to rise when crime or pollution increases or when households accrue more debt. When the United States pays to fix the damage from a hurricane or tornado, the GDP actually goes up.

That raises the question, what does a post-GDP world look like and how can we promote a measure of economy that defines real progress in the United States?  Justin Zorn, a public service fellow at Harvard University, argues that we need comprehensive indicators that are empathetic to core elements of national wellbeing in the 21^st century, including economic mobility, strong families and communities, entrepreneurship, health, education, environmental quality and public safety.

We shouldn’t leave GDP behind, but our ability to collect data and analyze it in new ways opens up the window for innovation in national accounting. With the capacity to tell stories with data in new and more complex ways, we can find an objective truth – a truth that can do better in measuring the prosperity of a nation.

Sources: Huffington Post, Princeton, NPR

Despite all the policies that the Chinese government has enforced to cool house prices in China, especially in major cities like Beijing and Shanghai, prices continue to rise, causing the property bubble in the country to expand.

As shown in the graph, home prices have been increasing dramatically over the years, especially around 2005 and 2008. It slowed down a little bit after 2010, when the government started interventions and set strict real estate market policies to cool the market. For instance, in my home city, Suzhou, a fairly economically successful city in China, the newly-enforced real estate market policies in 2011 stopped many people from purchasing their new houses. If you are purchasing a new house as a resident in Suzhou and it’s the second house under the name of your family, you need to make a minimum of 60%-70% down payment instead of the original 30%-40%, with higher taxes issued and higher interest rates for loans. One family is limited to two properties in Suzhou. In major cities like Beijing and Shanghai, the market policies are even stricter. This explains the slowdown of the house price rise or even drop in China around 2011.

However, even though the real estate market seems to be under tight control of the Chinese government, the house prices in China started to rise again. According to China’s National Bureau of Statistics, China experienced a 0.8 percent rise in average new housing prices across China’s 70 major cities in August 2013 and a 0.7 percent rise in September 2013. That was the “ninth-straight monthly rise on an annual basis.” (On an annual basis, the house price rise was 9.1 percent as of September 2013) The national average new house prices continued to rise 0.5 percent in November 2013 and 0.4 percent in December 2013.

The situation is even worse when applied to individual cities in China. Beijing had a year-on-year increase of 16.3 percent in average new housing prices in November 2013, and 16 percent in December 2013. For major cities in southern China, Guangzhou had a year-on-year house price increase of 20.7 percent in November 2013 and 20.1 percent in December 2013. Even though there was a slowdown in the increase of house prices (and it was the first one in 2013), the situation is still horrible, differing from what the government expected; house prices in China are still kind of out of control, thus causing the property bubbles.

China has experienced great GDP growth over recent years. However, China’s dramatic economic growth has been a result of the government’s policy to spur exports, instead of consumer spending, which indeed indicates the purchasing power of people in the country. China’s economy is growing and expanding rapidly, and so is the wealth gap in China. Fewer residents, especially in major cities in China, can afford to purchase their own houses, while wealthy people are not quite influenced by such government policies and continue their huge investments in real estate as usual. Even though the Chinese government hopes to utilize market policies to cool the real estate market, it doesn’t seem to solve China’s problem of a property bubble. In spite of China’s ambitious economic development plan for the following years, the Chinese government really needs to take a step back to rethink about how to actually make the house prices under control, resolve the problem of property bubble and thus to realize healthier economic growth, and ultimately, to benefit its people.

 

When’s the last time you watched a film in a movie theatre? This past weekend or has it been awhile? Well, if you’ve watched a movie in a theatre within the last month, you’re in the minority.

Sixty-one percent of adults said that they rarely or never go to the movies, according to a Harris Interactive poll conducted in early 2012. More importantly, the moviegoers indicated that the recession had impacted how often they go to the theatre. Fifty-five percent of the people who watch movies in the theatre said that they see fewer films now.

However, in 2009, ticket sales grew by 17.5 percent, to $1.7 billion, according to Media by Numbers, a box-office tracking company. Attendance also grew by 16 percent.

The disconnect between those surveyed in the Harris Interactive poll and 2009 box office numbers might seem perplexing, but a quick analysis of the yearly total gross numbers helps us better understand what’s going on. In 2009, total gross grew by 10 percent. But in 2010 and 2011, — years which those surveyed in the Harris Interactive poll would be recollecting — total gross declined by 0.3 percent and 3.7 percent, respectively, according to Box Office Mojo, a box-office reporting service.

The idea that people who want to forget their troubles often do it in movie theatres might be a misconception. In 1989, the employment rate was at a relatively low (and happy) 5.4 percent, but theatre audiences grew by 16.4 percent. In 2011, when the unemployment rate was hovering around nine percent, ticket sales declined by 4.2 percent from the previous year.

The reason for the incongruent relationship between ticket sales and unemployment rate is due, in large part, to the quality of movies made. Though Martin Kaplan, the director of the Norman Lear Center for the study of entertainment and society at the University of Southern California, argues that it’s common sense that people want to hide in a dark place and forget about their problems, they might not want to if they’re not intrigued by any of the movies being shown in theatres.

Moreover, as theatres continue to make technological advances (and pay for these technological advances) and movie studios continue to lose money on eight out of ten films made (according to my movie business professor, Peter Exline) ticket prices will continue to increase.

Ticket prices have grown by 41 percent since 2001, according to The New York Times. In 2001, the average price for a ticket was $8, but in 2011, the price had increased to $11.75. Children’s tickets rose 67 percent in the same period and senior tickets increased by 95 percent.

The other factors that influence yearly box office sales — quality of movies and ticket prices — often mask our ability to understand whether there is an inverse relationship between box office totals and unemployment or overall health of the economy. Though consumers might spend more on affordable splurges during times of distress, perhaps a night out at the movies isn’t so affordable anymore.