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Well, we are joined here in studio by Jason Kelly, Chief corresponding for Bloomberg Originals and executive producer of a new podcast, It's called The Deal with Alex Rodriguez and Jason Kelly. On this week's episode of The Deal, Alex Rodriguez and Jason Kelly speak with you as soccer legend Brandy Chastain about private equity firm Six Streets Sports investments and the bay FC owners.
Hope for the sports.
She also talks about if the world is ready for women's sports, Let's take a listen.
I honestly believe that part of the equation that wasn't in our control was the mass, general public and the business sector not ready for women, not ready for powerful women, not ready for women with big voices who have grand ideas. We didn't have the deep pockets, and before coming here today, I think that's the one thing that kept coming into my head was I had zero dollars that I could be an owner with all right, very.
Good stuff, Jessica che Chestain with our own Jason Kelly. Jason, thanks for cover much for coming into the studio. Big commute from your desk. You got a guest with you.
I know, I brought a buddy. I thought it was bringing I thought it was bringing your former all star friend to workday. Oh is it?
Oh?
Yeah, sorry, I've remembered. I mean I'm a good sit Yeah. Hey Rod, my co host right here with me. Awesome, Thanks for coming in, Alex, appreciate it. Great to be here. Thank you guys.
You guys, I've had so many cool podcasts and episodes here speaking to some really cool people. Jessica Chestain, I think for Brandy chester Brand, Brandy Chestain different chestin.
Yeah, just amazing.
Yeah, kind of when you think about nineteen ninety nine, the world ripping the jersey off and everything, just that that's such a big image and you kind of thought she maybe that would be the launch of right women's soccer, at least maybe women's sport. We haven't, I'm not sure we've seen it. What'd you guys talk.
About I mean, I thought it was so fascinating Alex because you know, she's an icon, right. I mean when you think about like the people who have defined sports in our lifetimes, especially in women's sports, like nobody bigger than Brandy Chastain. And the amazing thing was that this moment in nineteen ninet nine, it was gonna be like the takeoff for women's sports, and it's like womp wamp, like it just didn't happen. It actually failed twice, and now she's an owner of a team. I was fascinated
by just kind of her perspective on all that. I don't know if you were.
I thought it was great. And if you see what's happened with Caitlyn Clark, now, we thought that was gonna happen ninety nine and it kind of stalled, as Jason said, But for me was how she's kind of going through her journey from sports to business as a sports owner and all the lessons that she's learned sports, the hard times, the good times. She shared some incredible stories. But I'm really interested how her next decade goes because she's all in.
Can I ask it? Okay, first of all, we should know, I know very little about sports. So I'm going to ask this question. I have a question about energy power prisons. You can come to me, But why is it so hard for women's sports to take to take off in a material of way? Is it like the type of sports we play? What's the problem, Alex? What do you think?
Well?
I think Kaylen Clark has captured the imagination of everyone. And I'm old enough to remember when the NBA was on. You watch the finals on tape delay, right, it was incredible, right to think about that and the amount of tens
of millions of people that watch today. What Kayln Clark has done is very much what I think Magic Johnson and Larry Bird did in nineteen seventy nine, when you know Bird was at Indiana State, Magic was at Michigan State, and it was like these two Midwestern guys that captured America. I think that is now here is true the moments right. I think post COVID de Lance, the world has changed, and I think it's been a perfect storm and she's
been the perfect ambassador. To have almost twenty million people watching this is incredible.
And by the way, more people watched the Women's final this year than the men's final first time in history, and that actually, I think is one of the biggest points of this is that there was long this assumption of like, people are gonna watch women's sports on TV, and so they just didn't put it on. I mean, shockingly, a bunch of men made a decision that people wouldn't
watch women on TV. And then what happened was they saw and you've seen this in your investment work, Alex, what they saw was when they did put it on the air, people watched and then it just kept building. And I think the other really interesting thing that we learned from Brandy was this idea that the investment wasn't there initially. I mean, those two leagues failed because the two previous soccer leagues for women in the US failed because they tried it for like a year or two
and they're like, oh, that didn't work. Instead of you know, you think about the NBA, you think about the NFL, those were leagues that took decades to take hold. The MLS is in its like twenty fifth thirtieth season and is just getting traction. So part of it is just like putting in the time in the month. I think, you know, it's a former Wall Street guy, What makes me about this transaction? You got private equity, yes, coming private acquas not in Major League Baseball are there?
Yea?
Now they are getting there. I mean this is a big thing that you're seeing up close and personal.
Yeah, I mean sports have these franchises have gotten so expensive. To think a guy like Jerry Reinsdorf bought in nineteen eighty one the White Sox for about sixteen million dollars, and three years later, in eighty four, he buys the Bulls with a guy with the name of Michael Jordan already there for nineteen million dollars. It's incredible, right, and those franches are worth close to ten collectively today.
So the world has exploded.
So what's happened is individuals can't really afford to write checks for a billion two million dollars. It's hard to have the type of liquidity. So what that leagues have done is they've opened up the capital markets and private eco groups like Arctos and Dial are now big investors. And they said as LPs while passive LPs it's been an industry for the last thirty years, has gone up into the right about fifteen percent a year a year over year.
And this is why Jason you were here because you've covered private equity for a very long time. You literally wrote books on it, and then you kind of saw a while ago like where the direction of travel was really going, Yeah, what's the kind of the return? Like what's the return like on these things? Like like what do you think?
I mean TBD A little long pause. Well, because we haven't really you know, we've seen a couple exits. I mean, so Dial made some money on the Phoenix Suns when they were sold for four billion dollars a couple of years ago, So that's been one exit. I mean what's interesting is so Sixth Street. Just speaking specifically about Sixth Street, and you know this is started by Alan Waxman, former special situation said for Goldman Sachs was in a partnership
with TPG. You know, so they've invested one hundred and twenty five million. They led an investment for one hundred and twenty five million dollars into BAFC. I mean that's real money, paid a record franchise fee fifty three million dollars just to buy the team. I mean they're looking at a scenario where they can get a five x
ten X. I mean, this is a long hold. So the franchise values, as Alex just demonstrated, I mean, think about I mean, Jerry Jones bought the Dallas Cowboys for less than two hundred million dollars in the late eighties early nineties, which, by the way, they said he was insane. That was a crazy amount. This is a franchise now worth nine or ten billion dollars. Alex, let's talk about ownership.
You're part of an ownership group for the Minnesota Timberwolves, right, talk to us about that experience, and I love you to talk to you about My personal opinion is I'm concerned about the evaluation of franchises. I'm concerned about salaries because it's all predicated in large part.
On broadcast rights.
Yeah, and with cord cutting, I'm not sure ESPN's going to continue to write these crazy checks. So talk to us about kind of what you've learned about as being an owner there.
It's funny because one of my good friends and mentors of Magic Johnson, and of course he played basketball for a long time and he owns a baseball team, and I played baseball for a long time, and I'm part of the ownership group of the Minnesota Timberwolves and the Lynks. You know what I think is there's no question that the giant in sports in America's NFL. Right, And to think that, you know, almost twenty million people watch Kayln Clark.
Those are NFL numbers on Sundays. I mean that is that's the number one driver for all sports and which creates a lot of people to be very bullish in women's sports. But going back to well we have the links as well. But I do think that the NFL and the NBA are global sports, especially the NBA.
It's growing year over year.
If you look at social media as an example. As a metrics, we're almost ten to one to the NFL. We're almost fifteen to one to Major League Baseball. So Lebron, James, Michael Jordan, Steph Curry, these are global names. I think that is going to be a different landscape. But you'll have more contributors. Maybe you have NBC pop in Amazon.
Apples, a lot of shooters.
Is not going to be the traditional So ESPN may not write as big as check, but is there. I'm not speaking for the NBA. I'm just giving you my opinion that you may have a world where NBC may split the finals with ESPN and ABC, So I think you'll get to a similar result, just a different way.
So you said those words, and I knew those people, so I feel like I'm not qualified ask this question. But then for someone like me who's a newbie who maybe wants to watch some stuff like I'm I don't know, I would I need like a spreadsheet to like find out like what's playing where or when what time, like Amazon Prime, Netflix, something like that. And I wonder if that's going to be a hurdle. Jason, what do you think.
To like, I mean, it could be. I mean, and Paul knows this space better than anyone. You know, there's been sort of a fracturing, but now sort of a reconsolidation. It feels like of how we're going to consume sports. I mean, you've followed this for years. You know that live sports. Alex knows it from being on tele Division and being broadcast himself. People love live sports and that it's one of the only things that actually keeps people
coming back to live content. I do think, though, we are in this weird world where sometimes you don't know where to find it, and yet when you do, it attracts the eyeballs. My New York Yankees off to a great start this year.
Yes, what's your scouting You could say an hour New York games in this room. Also a great start this year, and now what's your scouting report of them?
Well, I think the Yankees have done a bunch of good things this year.
Excuse me.
One of them is they've introduced baseball people back. If you think about the powerhouse of the Yankees, they've been built by great baseball people like Geene Michael's Stick Michael as they call them, you know, Lupenela, Billy Martin. They've gone away from that the last four or five years, and they've suffered tremendously. The fact they brought baseball people back in. They brought a much more balanced lineup, meaning Alex there's more lefties than righty's. Historically, Yankee Stadium is
better for lefties. Last year they have like nine righties in the lineup, which just way too much. They've gone back to a much balanced lineup and now they have the best one two punch in the sport with Aaron Judge and Juan Soto. The challenge is do they have enough pitching is one and two? They have they cornered themselves by bringing in Juan Soto and not have a long term contract. Where now? Is he gonna want the tiny contract for seven hundred million dollars? And is he
just a one year wonder here in New York? I think he's gonna have a massive year.
Yep.
The question is can they keep them? Second question is do they have enough pitching to win the title?
Well, let me ask you that question. We like to think New York fans that New York is a selling point everybody would love to be. If you can be a star here, you can be a star anywhere. There's nothing better to be a star than New York City. A lot of players, it's that I think they find it hard to play in New York.
What was your experience coming to New York. I know you're a New Yorker, so you you kind of know this, But some of the people you saw during your career.
No, Paul, You're exactly right. I mean some people, you know, the kitchens maybe a little bit too hot for some players, and you know right away if they're uncomfortable, it's a different place. He's the biggest media market in the world. As they say, the pinstripes are very very heavy and not everyone can carry them. Juan SODA's obviously one that is going to play and play really well. Aaron Judge.
The Jetters of the.
World, they're icons for life because they won here in New York. But some, I mean they melt into the sun. I mean, you've seen a couple over the last four or five years that were a shell of themselves and you quickly have to pivot and get them out of here.
Yep.
One interesting thing on that note. First of all, we talked about Michael talked to Michael Strahan about that on the previous episode of The Deal. One person we are literally going to tape with today, it's one of the reasons Alex is in the building is stephen A. Smith, and he's actually talked about Soto and like the power of the pin stripes maybe enough to lure him in to stay. So yeah, tune into that episode of The Deal coming up in a few weeks because stephen A
he's got literally some takes. It's a sole job, that's what he does, and what a career.
So this is this is really cool, Like what you guys, do is super fun. Jason comes in and he talks about it and you can tell he's like totally digg is what's it like to work with Jason Kelly? How do you manage that guy? Like?
What, Alex?
We already made a deal this morning because we are you know, he's covered private equity. He's a great writer, so I say, he writes, and I used the bat so I hit he writes, and.
We made a good team.
But no, Alex, in all seriousness, is really the intersection of Jason's career, mostly here at Bloomberg, in my career mostly with the Yankees. And the fact is what we're talking about is exactly both. And we live in a world where it used to be sports and media and culture. Now all three have come together, and that's what we
try to take away. And then also a lot of lessons learned in this world of Shark Tank where young people want to be more entrepreneurs than athletes, right, And that's I think we're serving up and teaching and hoping and inspiring through storytelling.
A lot of greats and I like you guys do kind of bringing sports, entertainment, you know, all that together and we're seeing it actually now in college sports with it the nil the transfer portals, a lot of these kids are able to monetize their value totally.
But there's some downside to that. It seems like if you talk to you know, coach j.
Right at Villanova or maybe even coach k I'm going to see today down at Duke or some others, they're saying, boy, I'm not sure, maybe we've gone too far. What do you think, Alex about what's happening in the college ranks about paying some of these athletes.
It's a very dangerous road.
It's a very dangerous and very slippery and the reason why I love that players are getting you know, the finances and all of that. But maybe there's a structure where there's more parity. Maybe there's a structure where kids don't get the money when they're not ready for it and they get in trouble by not knowing how to pay taxes, And is this more of a liability than
an asset. I'm all for somebody getting market value, but is there a world that we can, you know, hold unto their thirty or thirty five until they get the majority of that where that money is compounding for them, so gift from the curse. And the other part is that I'm concerned is we want to teach Coach k is one of my great friends and one of the great great personalities in all of sports. You want athletes to be around coach k for three or four years,
not just one great point. So and same thing with Kyle Party and all of that. So we want to teach these kids that you know the power of restriction and to be able to wait a little bit before they get you know, the marshmallow, as they.
Say, before you let you go. And this is a question we ask everybody, So, hey, why not you What are you gonna buy?
Now?
What do you like?
This is a question. We have support folio matter what, You've got a lot of investments.
Yeah, so what do you like?
You know that is a great question.
I mean, I'm so excited about the Minnesota Timbles and the Lynx and we've done a lot of good work over the last three years. We've been in first place for most of the year, only two games remaining, so we're sound to make a poison to make a good run, hopefully in the postseason. But look, I think you wake up every day you're prepared, you're ready for opportunities. That's exactly how the opportunity of the timbulves came up and
the links. So the answer is, I don't know, but we're always looking.
What are you guys going to ask steven A. I can't imagine this thing could get heated quickly, you know. I mean what I'm really interested in with him is the business of stephen A. You know, I mean, because he he's a game changer in so many ways. You know, we both had chance to read his book ahead of this. I mean, this is a guy who completely reshaped the business of sports media. My sheer force of will got knocked down a bunch. He had a great mentor in
Mark Shapiro, another upcoming guest on the deal. I'm just telling all of our guests here, that's what I did. Shameless plug, shamelessly, that's my middle name. But you know, for stephen A, I think we don't know where it's going to go. We know he doesn't like the Dallas Cowboys, he doesn't, and he does love the Yankees.
And I just say, in conclusion, with Steven A is really a story of rags to riches, But it hasn't been straight up into the right. I mean to think most people forgot this reading his book. I just remembered he got fired from ESPN, he had to go to Fox Radio, and then he's come back. And to think, not only is he going to be the first guy that makes person that makes over probably twenty to twenty
five million, but he's also could be the next Johnny Carson. Yeah, and he's built an incredible business and I can't wait to ask.
Them Michael Strahan talk about another mazing career coming in entertainment. All right, guys, thanks very much.
Podcast It's called The Deal with Alex Rodriguez and Jason Kelly. On this week's episode of The Deal, Alex Rodriguez and Jason Kelly speak with US soccer legend Brandy Schestain about private equity firm Sixth Street Sports Investment and the Bay FC owners hope for the sports. She also talks about if the world is ready.
For women's sports. So take a listen to that good stuff.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecard Play and Android otto With the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty Caroly Paul.
Amazon had a let her out today.
Yeah, this is something to do.
Is that a thing we do?
No?
Well, I think we start doing it now with mister Jesse.
M hmm, okay, I mean do we care about Amazon letters? Is that something that.
I mean, there's so big and its retail goes to the consumer. It's now they're a tech behemoth. They're now huge advertising play. So I think the answer is yes. And so let's check in with an expert. Punam Goyle, senior US retail analyst for Bloomberg in Intelligence. She joins us from our Princeton offices down there in.
The swamps of New Jersey. Punam, what did you make of this letter? I mean, I think mister Jasse is trying to just make sure that the market doesn't take its attention away from the fact that Amazon is in effect an AI play.
That is part of the story. Definitely. I think the focus on the letter goes into all its businesses, starting with retail, where they continue to push the envelope on value and driving that GMB higher through its logistics platform where they're improving same day delivery and really taking costs
out of the equation as much as they can. On the AWS side, AI is the name of the game, and they want to make sure that they are visible that they are playing in that space and that is going to improve every part of their business, not just AWS alone, but in terms of AWS.
It feels like what they were saying is that AWS is going to be the foundation for all the AI plays. Is that Am I reading that correctly?
Yeah?
I mean, you know, where AI is built is going to be inside of AWS. For Amazon, They're going to be building or you could call it, the raw materials of the codes and really providing that as an entry point for businesses that use AWS and even within their own businesses to create the efficiencies and the speed that's needed to operate in the agile environment we live in today and compete with OpenAI.
You know what I've learned since moving down to the Jersey Shore is Central New Jersey and southern New Jersey is like a warehouse capital.
Of the world. It seems like everywhere you go and Punam lives around.
There, is it all Amazon or just it's everything.
It's everything about tons and tons of Amazon because you got and you get to part and the gardens, the State Parkway, got the new Jersey Turnpike, Philadelphia Port, New York Port. I think it's all there. It's just amazing. So pun them, I mean, talk to us about do investors that you talk to that they still want Amazon
On to invest aggressively in their retail operations? There is there more to go there and to investors, are they okay with that given that maybe some of those dollars could be to the cloud, or maybe Amazon has got so much money they can invest in anything they want.
I mean, I think they need to invest in both the cloud and retail. I don't think you want them to stop investing in retail because remember, Paul, as the retail business grows, which we estimate the GMA to grow to our trillion dollars in the next coming years, that impacts their advertising business, right, which has grown to nearly fifty billion dollars today. The bigger retail gets, the more
money they can get for advertising too. So there is a connection here and that's how retail is made profitable.
What also is interesting, aside from retail is what they said about their Amazon Prime Video. They seem to think it could be its own standalone, like good enough to live on its own. What did you make of that?
I thought that was interesting. You know, Amazon Prime Video. We know that it's something that they've been investing aggressively. But I think the game changer here really is going to be advertising again. Where as they implement ads within the Prime videos, that's what's going to take it to be profitable. Whenever that is. We haven't run the model yet, but we think there's still a bit of time before you can say that Prime Video on a standalone entity is going to be profitable.
Do you do prime video?
I'm going to just say yes.
I mean, you know, you know what I do periodic and maybe I'll do it on the plane ride down today.
Is I just go through and I delete.
Them all, you know, just periodically go and just delete like I don't need this right now. I mean, you know, because it's so easy to delete. Is as opposed to trying and disconnect from Verizon or Comcast, which takes like a half a lifetime.
It's true at the one hundred percent, and then there's weird fees and it doesn't work in the whole thing.
Hey, put, what's the what's the investment call on Amazon these days? I'm looking at the stock here, it's up twenty two percent year to date, it's up over eighty percent or but the trailing twelve months, so it's really performed well. We're just under two trillion dollars in market cap. When when you talk to investors kind of why do people own it today? Why do people buy it today?
We think it's all about profitability. For the longest time, for over two decades, Amazon was about market share gains and top line gains. Today we're starting the store to see the story turn into a profit play. So as Aws climbs to over two hundred billion dollars in revenues, which we expect, as the GMV for its online business climbs to over a trillion dollars, and as advertising gain scale to over one hundred billion dollars, you're talking about
the profit ability of this company improving vastly. Just last year, you know, the profit's improved to about over six percent from two percent the year before that. So we're starting to see that play out, and we think the road ahead is still very clear in terms of how they parse out their way to be even more profitable.
Put before we let you go. Usually the reason why we like the Jamie Diamond letter is because we get really great macro reads and like calls on raids and opinions about the FED. Did we get any of that from Anny Jassey and of like consumer outlook, how their end user me, how I'm doing in the market.
Well, they talked a little bit about value and how they continue to really focus on low prices, which they had done in four Q with Prime Prime Day, and they also launched earlier this year a Spring Day sale. So we do see that push on value, which tells us that the consumer cares about prices. So they are being sensitive to that and responding to that, and we don't expect that to change as a year unfolds.
I tell you if I were an investor here, it'd be for this reason. Free cash flow in twenty twenty three thirty two billion.
Nice.
How about twenty twenty four sixty three billion is the forecast and in twenty five eighty three billion a free cashlow, So growth and free.
Cash flow put in, what do they do with the free cash flow?
They're going to invest it back in the business. Right as you said it. They still need to invest in AI, they need to invest in AWS, and they need to invest in logistics, so that will be the primary drivers of their cash investments.
How I guess is the question. Rightly, they can't go buy stuff, can they? Because of all the regulatory scrutiny over big tech in that way. I mean, they can't just go by TikTok for example.
No, I don't. I think it'll be much harder for them to make an acquisition. They have to grow organically, and they have to invest in their own businesses. That said, there's plenty of opportunity for them to invest in what they own, whether it's across advertising, prime video, their retail business, and AWS. There's still a long runway for them to go.
Digital commerce alone is just at twenty five percent penetration in the US and probably a little over that globally, So there's opportunity across all of their businesses, even their biggest business.
Yeah.
I mean, they're spending you know, sixty billion dollars a year in capital expenditure, so it's sound like they're you know, yeah, exactly, all right. Put them thanks so much for joining us there. Put them Goyle, senior US retail analysts for Bloomberg Intelligence, Joining us from our studios down in Princeton, New Jersey.
You're listening to the Bloomberg Intelligence podcast live weekdays at ten am Eastern on Effocarplay and Android Otto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
We also cover Bloomberg Big Take stories, and that's when we take a broad look at some of the major trends in the market and we dive deep. And they are really amazing stories and they're worth a ton of work. And the one today blew my brain And for a mother of a daughter who's nine and a half, I gotta tell you, I love the story. This has to do with basically your return on investment for Ivy League colleges, private colleges, Mini ivys, public schools, et cetera. And it's
very different from what you may think. Joining us now are the personal finance reporters in charge of the story, Paulina Chiceriro and Francesca Maglioni. Joining us now live in our inactive broker studio. Ladies, First of all, how did you come up with this. I would never have thought of sort of putting a bloomberg angle ROI of college in this particular regular light. How did you guys together come up with it?
Yeah, So we had been talking to a bunch of families, college counselors, parents and kids that were nervous about getting into college, thinking about the cost of college, thinking is it even worth it? And we kind of wanted to give people a number to answer their question, like, yes, everyone says college is overwhelmingly worth it, but like, how does that change depending on the school that you're looking at and the kind of institution that you're thinking of attending.
So we kind of wanted to give people a tool to answer that question a little bit more.
Yeah, and smart way.
Francesca has done really a lot of great reporting tracking just how much colleges costs, especially elite institutions. She wrote a great story about how college is today, the elite colleges that most students want to get into, the costs are stretching past ninety thousand dollars.
Paul knows.
Paul knows aware.
And so when you think of those costs, I think a lot more families are being forced to consider, like what is the ROI, and they've been doing these calculations themselves, so we wanted to, you know, crunch the numbers for them.
Of the four kids of mine who I've paid for, Penn State was the best value.
It was a relative by well relative to everybody else way low, and it's got one of the best engineering schools, and the numbnuts got a great job and aerospace engineering doing all kinds of crazy stuff.
So it makes sense to me. I think one of the.
Parts of the story that's interesting is just generally is college in general worth it relative to or also you could go maybe go to a trade school and come out with little to no debt and still get jobs, and.
That ROI looks very interesting. I mean, how do you guys think about that?
Yeah, So we actually, like in our story, did look at what would the ROI be of someone who graduated from high school. So someone making ten dollars an hour would have an ROI of about one hundred and ninety one thousand dollars ten years after, you know, when normal
college graduates enroll. And to put that into perspective, the average ROI for all colleges was about ninety eight thousand, so you can see how you know, initially it might seem like beneficial, but that's because when you're going to college, you know, you're paying for college, you're putting in that investment. But you know, once you graduate, college graduates do tend to have higher earnings, so it does balance out in the longer term.
So for ESSCA, help me understand the different buckets that you guys looked at and sort of the data that you found.
Yeah, so we wanted to understand what types of schools were doing better than others, and so we grouped schools by the ivys, which obviously overperformed as they do always, and then we looked at private elite institutions, which were a group of sixty three schools that are any school that you would think of is competitive, selective, think Vasa, Oberlin,
Wake Forest, those kinds of schools. Then we looked at public flagship institutions and other public and elite, other public and private schools, and what we found was that after you look at the ivys, the private elite institutions and the public flagships kind of performed the same at the
ten year mark. And that was I think our most surprising finding because we feel like a lot of people put a lot of emphasis on prestige when thinking about college, and we're kind of trying to tell them, Wait, maybe a public college that accepts most of its applicants can give you that same ROI.
So how about what's the impact I guess or on your ROI calculations from what.
Major you take?
Yes, that's a good question, you know.
Engineering, good business? I would think good.
The same idea is, like, you go to Oberlin, it's a liberal arts education, right, like that humanities and psychologip play into the math.
I guess. Yeah.
So we did tend to find that major place a huge role in ROI. Schools where a majority of their graduates came from STEM fields tended to overperform well. And there are actually some surprise winners. When you look at our roy LIFT schools like the Colorado School of Mines, the Saint Louis Pharmacy Academy, and many more schools that have a STEM focus, we're doing just as well as some ivy's, or even better than other ivs as well.
So what is it? I wonder if what this really tells us is that if you major in humanities, your ROI stinks, Like is this like what we're learning unless you do that in an ivy, because then you have the certain types of connections, et cetera, and you may get a better job other than that. Do we just is that the problem? Francesca's sort of laughing.
I mean, it's typ a critical of me to say I studied visual and media.
Science, girl, I was a theater director. We're all good.
But I guess if you just look at the data and you're paying a hefty sticker price for college, then yes, it's strategically the strategically, the most I guess smart way to go about it is to study STEM because these jobs put you directly into the labor market and are really high paying careers. If you look further down the line, these liberal art colleges do tend to gain get better earnings, but it's more of a long run than it would be if you're like, really want to see those earnings right away?
Please?
Oh sorry.
One thing I wanted to know is that with the rise of artificial intelligence, there has been a lot of discussion about how the critical thinking skills associated with a liberal arts degree, you know, might actually be more advantageous in the labor market later down the line, but we don't know what that is. So this is a snapshot of a point in time, probably the last ten years.
You know, I see you look at like one of the schools, the big state schools, the University of Georgia. You think about a big school like that, you know, one of the events is they have a big alumni network. But I mean the state schools in general, how did they kind of rank in general? Because there are some really really good state schools, whether.
It's you know, Virginia or Michigan or in those kinds of things.
Yeah, the state schools did really well. I think what's driving their ROI to be higher than many elite private schools is that they're just cheaper to attend. And at the end of the day, like Paulina mentioned at the beginning, paying ninety thousand dollars for college is just going to set you back in terms of ROI, You're going to be uh just it's the earnings are going to take longer to level out, and so public schools in this instance tend to overperform because of that.
And one of the sources that we talked to went to the University of Georgia and is now working as a credit analyst at Blackstone, and one of the things that he mentioned was he knew he was someone who is ambitious and driven and was going to put the work in that he think he had the same outcome as people who did go to these elite colleges. So sometimes it is it is very individual dependent. If you're willing to put in the work and you're really ambitious.
Right and graduate, Yeah, I flying down. And that just makes the point that like if you want humanities like maybe sort of the public institutions where you can get keeper but also get that humanity education, I'm wondering, and you're right, it all like the drive for sure, Like that's going to depend. That's why I keep telling my kid, like I'm like it's okay, Like great, I know, I know, but it's like grades are important, for sure, you got to get into a school, but like your ability to
be a human is also more important. She did draw the whole hey do I have to go to college thing the other night out of like nowhere, and I was like, oh, yeah, you do. That's how you said it didn't matter, And I was like, not didn't it didn't matter where you went? Are you guys going to do this for New York City public versus private schools, because I would really appreciate that ROI please.
Yes, exactly, they're not even they're.
Not even Dad is available?
All right?
What's the what's the biggest surprise that you guys had from from your work here?
The biggest surprise, I think that you know, there's a lot of intangible benefits that people think of when going to a prestigious school, this alumni network, this idea that it'll open doors and help you, you know, climb the
economic ladder. And I think what was surprising is that people felt, even with all that and acknowledging that they did get those when they went to the prestigious schools, that you know, it's still the cost of that college kept them from achieving the things in life that they thought really mattered, like being able to start a family, owning a home, even being able to buy a car.
One of the people we spoke with said he his student loan payments have been more than his rent and have been since he graduated, So I believe it.
I'm going to have this conversation with my daughter about helping out with a home purchase.
That's kind of Monday.
Is that coming?
I think that's money asked me to go to lunch.
Like priorities change, Like your priority that you're going to have when you're eighteen is different when you're thirty.
Like socialistic thing.
I love the story. I'm like, all great, thank you so much.
And Duke, so some pretty good schools there, you guys feel like it was good worth it?
Yeah?
Yeah, yes they did pretty decent ROII so yeah.
Okay, right, frantask. Thank you very much for Tessca Maglione and also Paulina Chicero. Thank you very much. I highly recommend that you do private versus public in New York City. Thank you, next assignment, good job. You can check out that article. It's the big take. Definitely check that out. It is definitely worth reading. If you have a kid, or any grandkids or anything. It is worth talking about. This is Bloomberg.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa play Bloomberg eleven thirty.
Let's talk about the food and beverage business a little bit. Constellation Brands, there are fifty billion dollar market cap company based in Victor, New York, and they reported some numbers here today. So let's break it down with Ken Shay Bloomberg Intelligence Senior Consumer products analyst. Ken remind everybody what constant relation brands is, what are the big brands that they have, and how's business going?
Yeah, hi, Paul. Well, Constellation Brands is well known for its at line of Corona Beers, Nice and increasingly Medello part of that family. It also makes Woodbridge Wines, High West Whiskey. Pretty much a portfolio of beer, wine and spirits brands, but again mostly skewed towards beer.
So how they do walk us through more stuff?
So the quarter, you know, I think the backdrop, first of all, was for a slow quarter, you know for most wine and beer companies right now, and spirits you've been given some recent results from Brown, Foreman and Duckcorn portfolio. They're a producer of wines. Well they're all saying, you know, trade inventory reductions stemming from cooling demand across all alcoholic beverages was kind of the backdrop to this earnings report. So when it came out, it beat expectations. Beer sales
were up eleven percent, Whine and spirits were weak. But again, this is mostly a beer company, and so that's why I was perceived very positively because you know, this was a dose of good news and otherwise very cautious market. So the company is doing basically what it said it would do. You know, it had good results for beer, it reduced debt some more, it's committed to expanding its big brewery operations down in Mexico, increased the dividend thirteen percent.
So from a shareholder point of view, they're doing the things they said they would do, and the beer results beat expectations, and I gave the market a dosa good news today.
Stop getting a fifty two week high today, up about ten point six percent year to date, up about nineteen percent.
Over the past twelve months. What's the growth story here?
I guess let's go go another way. What's Constellation saying about the.
Consumer in general?
Because you know, there's a lot of concern out there as we look at some of the big data coming out of Washington, DC about the consumers, is inflation and all that type of stuff.
What do they sing, Well, they look at the paper.
Also, they understand, you know, the environment that they're in that the consumer has definitely turned a little cautious here towards purchases that they can differ. I guess that's the best way to put it. You know, beer is you know, a roughtively low price point product visa the wine and spirits. You know, a high end bottle of wine or high end bottle of bourbon you can maybe put off for a while, but you know, a bottle of beer or even a six pack whatever, you're not as prone to
do that. Even though Corona Medelic you know, command a very premium price. It's a premium product. So they're aware that they can't just keep you know, tacking on big price increases. They're aware of what's going on, but they see the consumer is resilient, particularly for beer right now.
So Ken, when we get you on, we like to talk about all the things, and one of the things we like talk about is weed. Because you walk on the street in New York City you get the wafting. I mean, I think it smells.
Good right Well, the clar fathers that Ken covers the cannabis, it's not that he's right, I.
Did not frame this correctly. Ken. You're an analyst that also covers the cannabis stocks. When I walk around in New York City, I smell a lot of cannabis products. How are these companies actually doing well?
Alex are doing pretty well from a sales point of view, from an ibada point of view, but you know that the taxation on cannabis companies is so onerous and a lot of not very many are profitable from a gap accounting point of view. So if you're if you're an investor in this market, you certainly have to be patient.
And that's because you need some help from regulators from Washington, whether it's a reclassification from you know, a prohibited drug like marijuana is considered today, or it's outright legalization in some states and so on. So you need some help from regulators to keep this thing going. So it's going at a mod Sales are from an industry point of view,
are moving positively. As more states legalized, you know, Florida, it's going to be on the bal foarda as they could be a you know, a six billion dollars legal market, or about three times the size that it is now in a very short order if in November voters approve, you know, a legalization for adult use in November. So it's moving positively, but again from an accounting point of view, you know, it's not looking as rosy.
So what's this.
You cover a lot of the consumer companies that can from the beverage companies to the beer companies and packaged goods. What's the sector that's that's doing the best year? Where's the most investor interest?
These days?
You don't go to a soft drinks, non alcoholic soft drinks, Coca Cola, PepsiCo, you know, care Doctor Pepper, Celsius Energy. You know, people love their soft drinks and it's a very very resilient market. It's doing well, whether it's it's a food service or it's you know, take home for home consumption doing very well. And that's what the pricing power is that you know, you're looking at categories like energy. Energy is no longer in an upstart category. It's a
twenty billion dollar account. It's a big category, right, but it's still growing at high single digit rates and it's no sign of slowing down. Even the soft drink of the carbonated beverages you know, Coke, Pepsi, the products has been around a long time. I think they're discovering that maybe they were underpriced for a long time because they've been taking pricing up for a while. Consumers are not
bulking at all. As a matter of fact, those mini cans have far higher unit prices than the regular size and consumers love them.
I like that.
So that's an area of particular strength right now.
Yeah, cans nice and get flat if you don't drink the whole thing before, you know, can the non alcoholic spirit thing? Does that have real legs? John tuckerdo's anything? Only a minute?
Uh? I think it does, you know to a small audience. I mean this is this reminds me of the the liquid death water. You know, it's basically spring water and it can it's called liquid death. People like to act like beer or not act, but they like to be social at parties, and you know, it's a certain vibe that's given off if you're drinking a bottle of you know, plane bottle of water as opposed to something that looks cool liquid death, even though it's buying largest same ingredients
inside so same. It could be suf of non alcoholic beverages may make a little joke of this, but I think I think younger demographics tend not to imbibe in alcohol as much as you know, uh maybe my generation did, and I think that's part of the attraction as well.
All Right, KEM, we gotta leave it there. Thanks a lot, Ken Shay, Bloomberg Intelligence, Senior Consumer Products Analyst. I tried all that stuff because I don't really drink that much anymore. And then I'm like, why I just drink juice and all that sugar.
Anyway, Anyway, this is the Bloomberg Intelligence podcast, available on Apples, Spotify, and anywhere else you get your podcasts. Listen live each weekday, ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.