Cheerleading Is a $2 Billion U.S. Industry, Untapped Worldwide, Varsity Says

two billion dollars. Here to talk about the cheerleading business is Jeff Webb, founder and chairman of Varsity Spirit, which is based in Memphis, Tennessee. And Jeff, you know, I'm interested. When I think about cheerleading, I think about very much an all American type of vision with girls and pigtails and pumping their pom poms and wearing those pleated skirts and specific sneakers, which I'm sure all costs money, but your and I toward a bigger business overseas. So where

is the cheerleading that's going on outside of the US. So, well, it's still in its infancy, but it is definitely a gaining momentum. We we actually have an international federation that is just recently recognized by the International Olympic Committee, which kind of gives you validation as an emerging sport or sport that's actually arrived. And we have a hundred and ten countries in that federation, so it gives you an idea of of where true how much activity there is

on a broad basis. Now as far as it being deep, uh, there's no doubt that the you know, the U s has because of its traditions children, has been around the US for over a hundred years at school gyms and so on. So we have a we have a lot more people here involved in cheerleading, but it is beginning all over the world and a lot of that just has to do with the exposure we've gotten with our now sational championships and world championships and uh saw some

of the educational programs we've been involved in overseas. But it's a it's an exciting time. Cheff. I understand that you were a yell leader at the University of Oklahoma. What is a yell leader? And did your families say, gee, you know, law school would have been a good idea, but you founded this company. Tell us how it all happened. Yeah, well, yeah, later it's the term that was used in in the

day for the men who were involved in interiorleading. And as far as the company itself, yeah, I was gonna go to law school. As a matter of fact, that was that was the that was the plan after after college and um, I've been I've been working uh three or four jobs to get through school, and gentleman who had a company that did cheerleading camps and clinics, asked me to come work for him for a year to

make money to go to law school. Did that kind of came up with different concepts, decided to leave there, start my company, and the rest is history, I guess. Well, I'm glad you mentioned the camps and the training because I wanted to just help people a little bit the scale of what is going on, how many people, how many camps, and maybe just enlightened everybody that is not

part of this business. Well, the actually started with the camps, and of course now we also have a uniform business and also the competitions that we do um throughout the country. But the camps themselves are are different than other sports camps that are normally for individuals. These are for teams. Teams are already selected high school cheerleaders, college cheerleading teams. There four days and three nights, usually done on a college campus. We have about three hundred thousand students at

our camps every summer. We're the largest especially camp operator of any kind in the world. Jeff, how much has cheerleading as a sport moved away from the sidelines of sports games and to its own discipline that is completely independent of a football game. Well, it's it's interesting there. They're now different what we call disciplines of cheer the traditional cheerleading that you see at the football games and

basketball games. It's still it's the largest part of cheerleading and we don't want to do anything to take away from that. When when when I started the company, the idea was to take the traditional leadership role on the sidelines at pep rallies and you know, in the in the parking lots before the game, and add entertainment and athleticism and just kind of modernize it. And I don't think any of us realized the the how powerful that

that combination would be. So for us, it's we look as all the all the the actual sport aspect is being additive to leadership. We think, you know, college cheerleading, high school cheerleading are very important and we don't want to do anything take away from the leadership. Having said that, there there's also an actual pure sport play that's exists

here in the US and overseas. Yeah, what I think about cheerleading now, I mean I have two sons, and if one of them went into cheerleading, I think I'd be frightened because I see some of the flips that they'll do and come down. I mean, it's it's it's really a gymnastic type of endeavor, correct, whether there are a lot of acrobatics involved in the entertainment aspect of it.

And one of the things that has allowed us to expand like we have is we've developed all the techniques and the progressions of skills to actually do those stunts is what they're called, in in a safer way as possible. I mean, there was some risk and there were some injuries, and one injury is too many, but we've been pretty successful in in mapping this out to where it can be done in controlled way. Uh your company have they have you attracted any interest from by from from buyers

private equity firms. Well, we're actually we were owned by private equity primarily right now. We've been through different types of iterations. UM started in proprietor individual proprietorship. We went through venture capital. We are a public company for a while and have and now with private equity a Charles

Bank based in Banks in Boston. And we also our companies has transformed itself and that we we have our traditional cheerleading and school spirit division or un which is Varsity Spirit, but we also have a varsity brands has a sporting goods sports uniform division called bs IN Sports. And also we have a graduation company called her Jones which is class rings and so on, and um, you

know the company itself. The CEO of the companies Adam Blumenfeld, who came up through the bs N ranks, and uh he and I and our entire management team along with Charles Bank work to take the company as far as we can take it. I want to thank you for coming in and maybe off off Michael give us that Oklahoma University of Oklahoma, yell call well done, Bloomer Sooner, well done, very good. Jeff Webb is the founder and chairman of Varsity Spirit. They are based in Memphis. So

does the world really need another travel website? Well, apparently it does, and here to tell us more about it is Bob guccion Jr. He is the founder of wonder Lust travel dot com. He's also the founder of Spin magazine, Gear and Discover Media. Nice to have you with us, Thanks for coming into the studio. Than how do you move on from Spin which was music, right, a Gear which is gadgets and I believe men's lifestyle and lifestyle, and then Discovery Media, which is kind of science. Right,

it was a science magazine. So how does that morph into this next iteration of Bob guccion Jr. Well, actually it does. You know know that it had to by the way, um as a media editor and businessman, you know, I could have just simply said this is a great category. But it has because it's really got the same kind of uh vain of overwhelming curiosity. You know, when I went into the music magazine business always said it isn't really a music magazine. It's a magazine for young people

crossing the threshold between adolescents and young adulthood. It was much more than music magazine. It is much more holistic. And the same with Wonderless. It's not just a magazine about nice places to go. It's about the experience of traveling UM, the experiences you can expect, the experiences you have had, UM, the sort of awkwardness of of of Often travel is very awkward. That's part of the liberating

beauty of it, you know. I say. The one thing about what we travel is always going to happen is we are always going to surrender our sense of control. It was always a lousory anyway, but we think we have a sense of control, and you surrender it um, and that is what allows you to take in to absorb everything. You're not trying to pick and choose. You're actually just absorbing everything because you're like an infant dependent

on the largess of the people around you. So, Bob, the website wonder lust travel dot com launched today and I'm looking at it right now, and there's a story how to pack from Mars, which makes it really raises a question for me. Who's your audience Mostly Martians? You know, all the Martians out there, this is for you. Yeah, It's the first site exclusively for people from Mars. Um, you know this point that the audience question is. I think we're looking at, you know, everybody who's smart and

curious and likes to travel. And I would imagine it's going to fall more money as money yes, exactly as I say, it's gonna fall more into the gen X generation as matured, the baby booners who I am part of a hopefully matured and the rest have I don't know if I have, um and you know, slightly older millennial, the older of the millennial world. But really, anybody's curious, as you said, has a bit of money so they

can get on a plane. But um, I think curiosity is the main thing that the had a pack for Mars thing was a bit of a sort of joke. Started out as a joke, it became a very serious article. Um, because you know, our competitors, dearly beloved, the competitors who I won't name, I don't want to anybody, but they run articles as you may have seen, called how to pack Well once is fine, but a hundred times, almost two hundred times. These two publications we were actually in

the list all of them as links. And I just just said, looked ugly, but it was it about two hundred between videos and articles that they have done about how to pack, and I thought, how you know, how much is there to say? So I said, but however, even they have not done how to pack for Mars. And having had a science magazine, I was at NASA on a couple of occasions, and I know that they have an entire chunk of the entire organization dedicated to

this one question. How do you pack from ours? It's not a small issue, you know, it's a six month flight, it's thirty three plus million miles and only one tenth of one percent of the entire weight of the spacecraft is not fuel or rocket, so the rest of it, everything else has to go in all your people scientific equipment. So actually they're very strict about what you can take, and they have number the heavy down to fifteen pairs of clothing, not not sixteen fifteen And they want you

to bring a book. There was a suggestion, I said, to cheap, bring two books, you know, but to a fun thingur next one is how to pack for prison, because by the way, you can there are things you can bring to prison. And after that we can do how to pack for the Apocalypse, which by the way, should be self defining as the last of the articles.

What do you let us know when you're going to publish that up, that one that's the ultimate trip, you know, Yeah, you know, I want you to just offer some examples, because that way it maybe crystallizes what you're doing here. And I noticed, for example, you've got something papermaking in Korea. You also have a recommendation for restaurants in Italy that are a little bit different than perhaps the run of

the mill reviews. Just to give us some examples. Yeah, well, the one you're referring to, Hanji, it was a video made by a very young and very very talented Korean filmmaker. We discovered in Oxford, Mississippi, where I taught for a year, so I have a lot of friends and relationships there now.

So uh. He did this beautiful piece about how to make paper, the ancient art of papermaking, which I thought was wonderfully ironic given that we're in the digital age, and and the piece is about how this is really kind of a spring art but just a beautiful piece of filmmaking, and it's cultural and you're there, you know, every one of my pieces let's say my hours. Everyone who wandered us to pieces has to bring you there, and that's not just by saying this is a great

hotel room. We do that too with the Rome Hotel Guide. If you want to know where to stay in Rome, check our guide out, because we went through all hotels and decided these are the best ones and most interesting from a mixture of personal experience and research. You know, my own experience was very good in that respect. Um

So another contemple, the one about the restaurants. I think you're probably talking about ten places to eat before you die and then you can die, and you know that's I'm glad you brought it up, because obviously there are ten million places you could eat that are gonna be interesting on this planet. But I just wanted to pick ten places, not all of them restaurants. One of them is a Vietnamese barge that my main food writer guy

called Chris John's as a superb travel writer. He uhs best meal ever had in his life, best meal anywhere about it? For us? We put that in. I put in the Mondo X place before in a drug rehab and it's a drug rehab center in Italy. It also happens to have amazing food. Yeah, well, world class restaurant, world class restaurant and autombiotics. Bob, you know you have a very long history in magazines. Your father founded Penthouse,

which also is into experiences of different natures. Um. But I have to wonder, and you talked about how the irony of papermaking in a digital era, in a digital era where the barrier to entry in magazines is so low, what gives you confidence that this will be successful? Oh? I think a large doses of stupidity. But alcohol helps well. But people have, people have, you know, obviously an immense

appetite for stupidity. I'm just wondering with my stupid No not there is no God, no, no glare we cleared that up? No? No, I mean I think I was joking. But in one respect, you do have to be dumb enough to believe that it will work. And I've done that my entire career. You know, I started it's been magazine. Literally did not know how to start a magazine. Um. In fact, we got all of the pages together and we all look at each others at what we do now,

and everybody I thought you knew. I I thought you knew, So I called a friend of mine up come and tell me what we did next, and she christens us the Land of the Lost Boys. Because literally none of

us knew then we got the magazine. Now I think, I think it's a beautiful, healthy dosage of innocence and naivet naive he made inscence is very helpful in these times because it keeps you focused on like you might as well do the right thing, the thing you had in mind, because you don't know how to do it otherwise. And the only thing I know how to do is tell a good story occasionally, well hopefully a lot more and occasionally, and all stories have to be a human beings,

so that that's a that's a thing. Bob Guccioni Jr. Thank you so much for joining us. Bob gucci Founder of wonder Lust wonder Lust travel dot com, which is based in New York and launched today. Well, we've heard a lot about consolidation and partnerships within the airline industry,

and Avianca Holdings is not immune to that. We're gonna be speaking now with someone who knows all about the latest partnership agreements, and that is Ernan Rincon, who is the chief executive officer of Avianca Holdings, which is based in Bogota, Colombia. Her Nan, thank you so much for joining us, and I know that Avianca has talked about some kind of partnership with content with United Correct where what stage is that in right now? Well, thank you

for having me really pleasure to be here. Last year we began to search for a commercial strategic partner that would allow Avianca, who serves Let's in America very well, to connect well with the United States and North America, and after a long process, we chose United as our best choice. Many reasons for that. First of all, United an Avianca already are part of the State Alliance and that provided a very good foundation for us to work together.

And then we found out that we have similar approaches and very complimentary routes. And we're trying to do right now is come to an agreement so that our passengers from Colombia, South America, Brazil into the United States or from the United States into Latin America would have a seamless experience either with United within the United States and then connect with a Bianca in Latin America or vice versa. We make great progress in that negotiation. We meet on

a weekly basis. We have made great progress and we believe we're aspiring to close the agreement in this year. Now, you also have something coming up this year and that is a court day. I believe it's on the nineteenth of September, and I'm wondering if you could just explain how this all happened, that you're ending up in a court case and in a lawsuit which I believe it's your second largest shareholder. That is correct. King's Land is

the company that file is sued against A Yanka. They finally suited against a Bianca United UH Synergy, which is the parent company of A Yanka and the from of his brothers. We believe that the slaw suit has absolutely no merit. As a matter of fact, the judge in the state of New York UH ruled in our favor the first two instances, and now we have, as you clearly said on September nineteen hearing. The hearing is because we file for dismissal of the case because there is

no merit. We're looking forward to having that conversation with the judge and we are optimistic that he will judge he will rule against in our favor. So you're somewhat new to the airline industry. You joined AVIANCA a little bit more than a year ago. You're obviously Microsoft Latin America, the chief executive officer of that. How is your opinion been changed about the airline industry since joining a banca and what were you most surprised to learn regarding the

challenges of this industry. That's a great question, and I can give you an answer for hours, but let's let me say the following. The number one qualification that I had to be considered for CEO of AVIANCA is that I have six point five million miles with other airlines, So you've You've had a lot of experience in the passenger seat, all right there exactly. I have been left in airport for three days. I have been given royal treatment by other airlines, so I know all the experiences

that that a passenger can have. But what I'm bringing to a YANKA is two things. Number One, the digital and information technology background. For many years, fourteen years from Microsoft, I help companies embraced technology, change their business model and embrace digital. And that's what we're gonna do with Avianca. We are transforming Avianca into a digital company that flies aircraft, and at the same time, we're building one of the top two one of the top two airlines Latin American

Why serving the whole continent. I love that everybody wants to be a tech company. Even airlines are saying We're going to be a tech company that also flies planes. But I'm wondering, you know, what is the biggest challenge to the business model going forward? I know that some analysts have some pretty uh ambitious growth targets for Avianca. What's the biggest challenge? The biggest challenge is to take

at ninety seven year old company. Avianca is the oldest erline continuously flying in the world, not in an America, in the world, taking that rich culture that was not digital and transforming into a digital company. What do we mean by that? The number one thing that we need to do is that every interaction between our passengers and Avianca be fully digital at the moment that are we identify eighteen points in which a passenger interacts with a Bianca.

One of those seven eighteen is when they're actually in the aircraft. The other seventeen or elsewhere, when you make a reservation, when you make a change, when you get and check in, when you go to the counter, all of that and we're beginning to transform that and we're applying digital technology to each one of those eighteen points. Let me give you an example. Millennials live in Facebook.

That's where their life is, and we realize that for them to make a reservation, they would have to get out of Facebook, go to a bianca and make a reservation. We developed a digital assistant that is part of Facebook Messenger, and within Facebook, you can make a reservation to fly with a bianca. That's what we mean by digital I just want to ask you one quick question. This is about money. Are you going to be raised any money this year? You're going to be doing a dead offering.

How are you going to proceed? We are planning a capital increase of two million dollars. That capital increase has been given the green light by the board of directors and we're now in the process of doing all the legal and financial to raise capital by the hundred million dollars. Well, John, thank you very much for being with us. Her Nan Rincon he is the chief executive of Avianca holdings. They

are also expanding in North America. Do you know that they have a new route that goes from Boston home to Bloomberg one O six one to Bogata. Thank you very much. We hear a lot about active versus passive, in particular about how money is absolutely pouring into exchange traded funds that seek to just passively mimic broad indexes and away from active fund But when it comes to debt markets, the trend is starting to reverse, and this

I find really fascinating. Eric Balconis, who does incredible research on this, joins us now. Eric Baltnis is senior et F analyst for Bloomberg Intelligence and is a font of incredible knowledge when it comes to all things fund related. Eric, can you give us a sense of just how much this trend of money toward passive out of active, how much that's reversing within the bond universe? Right, So, when we talk about active mutual fun outflows, uh, you look,

it's pretty bad. We're talking about seven hundred and fifty billion over the last five years. However, almost all of that is out of equity. That's the story. Nobody really talks about UM active fixed income has held held its own over the last couple of years. It had maybe fifty billion out here and there, but it's cumulative flows over the last four years are in positive territory. But

here's the thing. This year they've taken in a hundred billion dollars, which is more than dead ETFs have taken in. So it really does kind of screw up a narrative here about everything going to a E T S and be passive. And the reason they're doing it is because

they're outperforming. Most of that money is going into the corporate bond managers, and those managers are taking advantage of what they consider to be a really bad group of indexes, namely the AGG They're able to just beat it pretty easily, and I think equity managers have a tougher time with the SMP. Well, Eric, I wanted to ask you because for a number of years there wasn't as reliable of an outperformance by active corporate bond fund managers versus broader indexes.

Is the outperformance particularly notable this year? Yeah, Well, Spiva, the SMP five Active versus Index report came out and had numbers there were even a little more better than ours for them and they started over ten years, five years, three years, so it's pretty consistent. Um. Where it doesn't work is government government bond fund managers are doing awful, but munise and corporate bond fund managers are doing really well.

And look, part of it is right now, if you look at the best performing active fixed income mutual funds, like the top five, they all have a higher duration and more high yield exposure than the egg. So you could call it cheating, you could call it tricks. Whatever it has that could turn the other direction though, So they are sort of going out on a limb a bit to pick up some extra juice, but that adds

more risks. In other words, you're saying that the broad bet among active managers is to have longer dated bonds in their portfolios and risk your bonds, specifically investment grade credit investors, right, um, And you're basically saying that this is a bet that could have absolutely gone the wrong way,

but they just got lucky or whatever the case may bee. Yeah, I mean this is where a bond manager would say, look, if it does go the way, I'll be able to react way quicker than say a smart bay to et F for something and then maybe they will um. In the case of Gunlock, he's heavy and the mortgages so much so that we had to move his fund into the mortgage category. But there's other ways to do it.

And you know, I work with um Irah Jersey who has been just a great resource for Active Fix that he used to manage a bond fund, and he also talks about there's like it's just a bigger world. I mean, you've got liquidity premiums in bonds that aren't on the in the index. You know, it's compared to the equity world, where there's only four thousand stocks total and there's the SMP five hundreds. So if you're a large cap you don't have much room to outperform, and the SMP five

hundred essentially is full of momentum um. You know. Fang stocks are a good example. They weren't really a big waiting maybe one percent five six years ago. Now there are a seven percent waiting and the SMP road those stocks up and got their performance as the market cap got bigger. So I think this is part of the

difference between being a bond manager and being an equity manager. Eric, I want you to just comment on the concept of size, for example, the amount of money that is in an exchange trade and funds, because the Guggenheim High Yield Fund that beat the benchmark, and I'm just wondering if you could put that into context for us. Yeah, so this is one where it looked like some security picking and it had it had a little bit of senior loans in it that the HyG doesn't have that, but it

didn't do too much. And what I liked about this one the Guggenheim High Yield is it's triple C was about the same as h y G. But what it it's sharp ratio was pretty high. In other words, it got has good risk adjusted returns, so it didn't take on that much extra risk. And so I think if you have a high sharp ratio and you don't see anything that's like too far out on a limb, I think you have a good manager there. And I think that one that's why I highlight it is because I

couldn't really find anything that was that dramatically risky. At the same time, it outperformed without taking too much risk. Eric, just another point and maybe just to shift your thoughts here, um the percentage of money that is in bond and equity markets that are in index products or funds versus just the act of funds. Do we see any overall numbers for that. It's very low. We're talking about um in the equity case. Uh, you're looking at more like

in the bond case. It's more this is a ballpark ten bond e t s and index funds have about a ten year or equity has a headstart. Passive equity has about a tenure head start on fixed income, so they you know, the flows are good, bond flows are like debt. E t F flows are good. But the thing is e t f s really gotta made a killing on the equity side because of that under performance. If that our performance persists from active fixed income, e t s won't have as big of a space to

go and enter that market. Well, and Eric, this is exactly what I wanted to touch on with you. Do you expect from the people that you speak with and from your own analyzes that right now we're seeing saturation of fixed income specifically within the corporate debt uniform universe, or do you think that there still is room for a spansion of passive e t F s in this area. Well, the big thing that like l q D and T and um H y g DO is there being used

in place of derivatives by institutions. So it's not just like the ts IS is competing with the fixed income mutual fund. It's also competing with derivatives. So those those ETFs are like a whole different species. But for a lot of the like the power shares and the SCHWA bond ets that are competing with mutual funds, they're not you know, they're still pretty small. They they're probably going to get assets ultimately because they're so cheap. And one

thing I've been going over a smart beta. So you know how what we just talked about how the AG is so beatable, Well that's smart beta. Ets are now coming out that take that beatable strategy and just put it into an index. So I Shares has a risk weighted ETF NEUVIN has a new AGG which is basically the AGG with like a little dip into high yield. So they're taking the tricks of the fixed income bond

managers and turning it into an index. If that can get root, then the bond managers are going to have a problem them because if they're graded against that index, it's going to be tougher to beat than the egg. And just quickly, Erica, the use of indexes is how's that changing? Give you about twenty seconds there. Yeah, the use of index is well looked. The I'm sure the bond managers love that the agg is still but if you look at what they invest in, it's probably not

the right one. So I think that's something they're going to want to keep. But I think the E t F market is going to try to prove that, hey, look this is actually not the right index. They should be graded against these other ones. Well done, all right, thanks very much. Eric val Tunis has always our senior et F analysts for Bloomberg Intelligence. You can follow him on Twitter at Eric Baltunas. Thanks for listening to the

Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio KA