Clip of the Week

There wasn't quite the wealth of material this week that I've had to choose from in recent weeks for Clip of the Week, but in the realm of sports highlights, there's always something good to be found. This week's special something is from the first minute of a UEFA Champions League soccer matchup between Inter Milan and Schalke.

Unfortunately, I can't find a single clip of the goal on YouTube that allows embedding, so you're gonna have to click here to see Dejan Stankovic doing his thing.

Impressive. Bonus points for the German commentator and his almost cartoonishly guttural accent.

On empty malls

Sometimes similar stories come at me in bunches--this is one of those times. On the heels of Harry & David's bankruptcy filing that I wrote about yesterday, I came across a semi-related article from Bloomberg, citing climbing vacancy rates at U.S. shopping malls.

Vacancies at U.S. regional malls rose to the highest level in at least a decade in the first quarter, a sign that landlords are struggling to keep tenants after the recession even as retail sales rise, Reis Inc. said.

The vacancy rate climbed to 9.1 percent from 8.9 percent a year earlier and 8.7 percent in the fourth quarter, the New York-based research firm said in a report today. It was the highest since Reis began publishing data on regional malls in the beginning of 2000.

An eight-month rise in U.S. retail sales has failed to spur increased mall occupancy, partly because of the amount of time it takes to structure long-term leases, said Victor Calanog, chief economist at Reis. The bankruptcy of Borders Group Inc., the second-biggest U.S. bookstore chain, and closings by Macy’s Inc., the No. 2 department store, also contributed to the vacancies, he said...

Some of the recent closings reflect the lingering impact of the recession. Retailers often decide to shut stores several months after a period of declining sales, and smaller businesses within a mall might close as overall traffic slows following the departure of an anchor tenant, Calanog said.

Much of the mall vacancy rate can be attributed to frictional shifts, a normal process during the recession/recovery cycle. It will take time to assess this dynamic properly, since it will be several months before we can tell if the vacancies have begun to fill or not. But the mention of Borders in the article is not immaterial--the question now is whether there is something different this time around in the spike in vacancies, and whether the tenants will ever be coming back.

Borders, like so many retailers, has been continually squeezed by internet retail, and the recent recession was merely the straw that broke the camel's back. Other traditional retailers are struggling in similar fashions, and there is a definite question as to the long-term viability of large-inventory retail. A recent article from The Boston Globe focused on the closing of legendary Harvard Square stationery store Bob Slate, which succumbed to squeezing margins and falling sales after an 80-year run. Owner-manager Mallory Slate, who has managed the family business for nearly 40 years, had an interesting take on the matter.

“In the old days, I used to say, ‘This is a nuts-and-bolts store, we ain’t no boutique,’ ’’ Mallory said. “Now, we’re a boutique.’’

They had record years till 2001. Then online happened.

“People spend an hour looking at every fountain pen we have, then they go home and buy it on the Internet,’’ Mallory said.

That last dynamic can't be understated. Increasingly, people are beginning to wonder if traditional retailers like Best Buy have become little more than showrooms for Amazon.com--people take a look at things, play around with them, then go buy them online at a discount. That's a nice free ride for Amazon, but it is absolutely devastating for the retailers. There's no way in the long run that Best Buy can price its goods competitively with Amazon when it has to pay huge commercial rent bills while Amazon does nothing. That's true of just about any brick-and-mortar retailer.

The question is, what happens for the consumer if and when all of the "showrooms" go out of business? Will they still shop online? Or do they in fact place a value on the ability to see, touch, and experiment with their products, a value that they will only fully realize once they no longer have the opportunity to do so?

As consumers, we often make choices that are perfectly rational in the short-run, but cause problems over the long run--problems whose impacts can't be easily reversed once we've gotten there. We shop at Wal-Mart because their products are inexpensive and of a reasonable quality, not fully appreciating that the cheap Chinese labor they rely on is devastating the U.S. manufacturing industry and harming the economy at large. We take advantage of Best Buy's kindness in letting us see their products, but realistically know that the more we buy on Amazon, the fewer Best Buys there will be.

I'm on record as being a huge Amazon fanboy, but I sometimes struggle with the implications of my decision to purchase so many of my products from them. I love Best Buy, too (and shop there occasionally when I need something immediately), and I'd be sad to see Amazon succeed entirely at its expense. But while I recognize this dynamic and try to strike the proper balance between the two, I also know that most consumers do not. And ultimately that could be bad news for retail (and shopping malls). As usual, only time will tell.

[Bloomberg]
[Boston Globe]

"Brie Syndrome" rears its ugly head

Some reasonably surprising news hit the wires last week, with the announcement that long-time fruit basket vendor (and holiday favorite) Harry & David had filed for Chapter 11 bankruptcy protection. With its sales plummeting, it became exceedingly difficult for the company to cover over its already struggling business model, culminating in last week's announcement.

For the New York Times' Jeff Gordinier, the announcement struck a rather familiar chord.

Surely it tells us something about the fickle nature of the American appetite that Harry & David is looking for ways to remind its customers of the existence of trees.

Harry & David’s fruit baskets have been a staple of American life for decades, but the firm has been going through a rough patch lately. Sales cratered during the recession, and a debt crisis forced the company to file for Chapter 11 bankruptcy protection last week...

Debt may be a serious threat on the financial front, but Harry & David... illustrates a different sort of peril for anyone who makes or sells a food product that has long been viewed as an established emblem of luxury. When there is a profusion of new choices, the allure of earlier choices can begin to dim. Sometimes it’s hard to stay smitten with a care package shipped from the Pacific Northwest in the belly of a jet when you can pick your own heirloom fruit right off the branches at a nearby orchard that supposedly provided sustenance to soldiers during the Revolutionary War.

Think of this as Brie Syndrome. Back in the 1970s and 1980s, it was de rigueur, when guests came over, to haul out a cold wheel of Brie.

“It was the first imported cheese that we knew and we could pronounce,” said Jason Tesauro, an author of the book “The Modern Gentleman: A Guide to Essential Manners, Savvy & Vice,” who curates high-end parties and tasting events from his headquarters in Richmond, Va.

Over time, though, Americans began to learn about manchego and Humboldt Fog and mimolette and Époisses. “Everybody just started getting more and more sophisticated about cheese,” said Susan Holland, a New York event producer. “There’s fabulous Brie, but Brie got pushed aside in the rush to learn new things, and it became not chic. It became the opposite of chic.”

These days, as the American gourmand becomes increasingly obsessed with the origins and purity of every organic nibble that might appear on, say, a cheese and fruit platter, it takes extra effort to fend off the vogue for shaggy, independent upstarts...

“What you see with Harry & David is that they really didn’t adapt,” said Pamela N. Danziger, a consultant and author who has focused, in books like “Let Them Eat Cake,” on the fine points of luxury marketing. “We are really evolving toward more of a connoisseur culture. Why would you buy a Harry & David pear when you can go to Whole Foods and get the same quality pear?”

Brie Syndrome afflicts a wide range of foods and drinks that have had a challenging time holding onto their Fancy Champion of the World status. Chowhounds who are old enough to remember the days when Whitney Houston and Phil Collins dominated the pop charts can attest that, yes, there was a time when a plate of cold pasta salad with sun-dried tomatoes, accompanied by a glass of Perrier and followed by a handful of Famous Amos cookies, was considered a lunch fit for a duchess.

This dynamic is hardly unique to the food industry--rather, it seems to be a universal tenet of capitalism. There comes a time in just about any corporation's life cycle when it (or its product) has exhausted its usefulness, if only because the company's success has bred imitators and eventually led to the product's expansion to the masses (think plasma televisions). Unless a company is particularly innovative, or else especially skilled at planned obsolescence (as Apple and Microsoft have been), it's likely that it will eventually find itself on the downside of the corporate life cycle.

Ironically enough, the better a corporation's product is (and the more widespread its popularity becomes), the more likely it becomes that the company will eventually find itself irrelevant, swamped by a sea of competitors and imitators. But it's exceedingly difficult for us to let these institutions die, whether because so many employees' well-being depends on their existence (hello, General Motors) or simply because we have an emotional connection to the brand.

Nevertheless, creative destruction is a necessary part of a properly functioning democracy. I've pointed this dynamic out several times here before, with Blockbuster, Borders, the music industry, and the Sony Walkman being among the most prominent examples. Brie Syndrome, then, is really just creative destruction applied to the food industry. We're all better off as consumers now with the wealth of food options at our disposal, but it certainly doesn't seem that way to purveyors of Brie, or to the executives at Harry & David. Maybe the company will turn things around and surprise us all, but maybe it's just another victim of creative destruction doing its thing.

[New York Times]

Fun with hypocrisy

By now you probably all know that I'm a political agnostic--I align myself with neither party, and consider myself something of a pragmatic libertarian. I just made that term up. I don't really even know what it means, but everyone needs a category, right? Good talk. At any rate, with tax season upon us, I was drawn to this infographic which was posted by the always-interesting Barry Ritholtz.

In short, it charts the per capita federal tax payments by state, matches it up with federal tax distributions by state, and then uses complex math (division) to sort the states by their status as "payers" (states whose citizens pay more than they receive back) and "takers" (states whose citizens receive more than they pay). Here it is (click for super-large version):

Not surprisingly, I was most intrigued by the bottom portion, the ranking of states by their status as payers or recipients. I noticed a couple of strange trends that seemed to be shaping up, and I decided to do a little digging (I do that every once in a while) to confirm my suspicions.

Maybe it was the red map/blue map thing that got me thinking along these lines, who knows... but I got to wondering, what does a state's status as a net payer or net recipient tell us about its likely voting behavior in federal elections? Focusing on our most recent Presidential election (Obama vs. McCain, 2008), I decided to do a quick rundown on the data. And here's what I found (ranked from 1 to 50, with 1 being the highest net payer, 50 the greatest net recipient):

Notice anything? Yeah, me too.

Of the 25 states who pay the most and receive the least, a whopping 22 of them voted for Obama, the Democrat, the man whom the right has vilified for taxing and spending us into oblivion since taking office (for what it's worth, I tend to agree with their assessment). As for those federal tax-mooching states who receive more than they pay, 19 of the 25 worst offenders (and 9 of the "top" 11) voted Republican. Huh?

Off the cuff, none of this makes any sense. Are we just a nation of self-loathing hypocrites? Or do we simply not realize just how much we receive in federal benefits when we receive them? It hardly seems logical that someone who was so heavily reliant on the federal dole would knowingly vote for the party who promised to cut them off, but that's exactly what we're seeing. And we're not just seeing one or two isolated examples, it's instead a systemic, widespread phenomenon.

I think all of this speaks to how out of sync the political rhetoric has become with the actual economic and practical reality. You'll often hear people in the Republican-voting recipient states harping on the welfare state, complaining about how the Democrats are bankrupting the nation... while riding on Medicare-funded electric wheelchairs and cashing their Social Security checks. It's an odd dissonance that Matt Taibbi covered at length in his piece about the Tea Party, and the implications for our society are somewhat troubling.

How can we expect honest and productive debate in Washington when it seems like our voters have no idea what they're voting for and why? Maybe I'm missing something here, and the Republican voters in these states are in fact voting based on other principles rather than economics and taxes. But if that's the case, then that only serves to drive home the point as to how economically f**ked up our nation is.

Any of you have any brilliant explanations? Because I'm honestly baffled.

[Visual Economics]
(h/t Barry Ritholtz)

Anyone here know how to shoot?

After suffering through last night's almost-unwatchable NCAA basketball championship game (an unworthy closing argument to what had been a fantastic tournament), I'm willing to add fuel to the fire of an old debate--should we really be playing our most important games in different circumstances than all the rest? In this case, the question is whether playing the Final Four in giant football stadiums is harming the product on the court during the sport's biggest showcase.

Walking into a football stadium and seeing 75,000 people in one place for a basketball game is an impressive sight. With such a large mass of humanity in one place, a collective energy pervades the building and immediately signals to all who are in attendance that an important event is about to take place. From an aesthetic standpoint, it makes the Final Four a tremendous experience.

However as Monday night showed us once again, the football stadium Final Four all too often also produces horrific basketball. The numbers from UConn’s 53-41 victory over Butler suggest it was the worst offensive game in Final Four history. Butler shot 18.8 percent from the field, the lowest percentage of any team in any championship game in tournament history. It was also the lowest shooting percentage of any team in this year’s tournament, obliterating the futility record set by St. Peter’s in shooting 29 percent versus Purdue. UConn may have won the game, but it too contributed to the string of horrendous bricks, going 1-11 from the three point line and becoming the first team to win an NCAA title shooting less than 10 percent from behind the arc.

But the awful shooting didn’t start on Monday. In the Kentucky-UConn game on Saturday night, the Huskies went 1-12 from three point land and won, leading to a preposterous 2-23 total for the weekend. Kentucky shot only 33 percent from the field for the game and went 2-12 from three point land in the first half, even though virtually every one of the looks was completely wide open. In fact, the entire Final Four was one consistent parade of missed open three pointers, leading to a brand of eye-bleeding basketball that does little to sell the college game while played on its biggest stage.

Our author continues,

Believe me, I understand the reason these games are played in such massive structures. With 75,000 fans on Saturday and another 70,000 on Monday, the NCAA set a new attendance record for the Final Four and produced not only a large stream of revenue, but also an atmosphere to compete with the biggest sporting events in the United States. So arguing that the NCAA should go back to something resembling a regular arena for the Final Four is unrealistic and akin to arguing that “student-athletes” should miss less class during March.

However we should acknowledge that what we see at the Final Four is not the same game that is played throughout the regular season or in the early rounds of the NCAA tournament. A game in a football stadium leads to a shooting environment that is unlike anything a player will otherwise see. Behind the basket is simply open space, often filled with temporary stands that dont raise immediately as in virtually every arena in America. With no real backdrop to create a context, the basketball goal seems to almost be floating in space. This will often cause even a great shooter to have issues with depth perception that in many cases, he has never previously seen.

To understand exactly what is occurring, imagine standing in a desert, with no trees, mountains or buildings to help your eyes and brain conceptualize how far a particular object is from you at a given point. Absent the context around you, one is generally guessing to determine distances from a given point, an effect that is exaggerated to an even greater degree in a split-second situation. This occurs on a much smaller level in these football environments, often interfering with the regular routine of a shooter who is used to a regular context in the average basketball arena. Add the additional oddity of a raised court that hovers over the fans in the first couple of rows, and the difference from the players’ norm is real.

I don't normally excerpt other articles this heavily, but this piece does a particularly fantastic job of laying out the argument in the same way I would. To be fair, the empirical evidence to support the "anti-football stadium" argument is spotty at best, in large part because there are so few games played in such settings, making any fair comparison almost impossible.

But from a fan standpoint, it's always distasteful when the business side of the game starts to impact the product on the field (or the court, as the case may be). I first wrote about this dynamic with respect to TV's ever-growing influence on the baseball playoffs (which, to me, are sacred), and there is no shortage of examples these days.

As fans, we expect and accept that the franchises, leagues, and players we love do not operate in a business vacuum, and sometimes must make revenue-maximizing choices that seem unpalatable to us on the outside. We know by now that we are "rooting for laundry" as they say, and that loyalty, etc. is in short supply. But there is a certain point at which supposedly "revenue-maximizing" decisions begin to impact and compromise the integrity of the product--at this point, what might look like revenue maximization in the short run can turn into a huge long-term mistake.

Eventually, if the product sucks, (and last night's game sucked in a BIG way), you can't sell it to anyone for any price. In the short run, before people notice that the product is starting to fall apart, you can get away with quite a bit and look like a business genius. This isn't a dynamic that's unique to sports, or any business; rather, it's universal. Cut corners on safety inspections, save money, make more profit, look like a genius... until the whole thing blows up and you end up wondering what went wrong.

Maybe it's a bit overblown to compare the NCAA to BP, but it's quite possible that last night's debacle was no accident. The apathy with which the world regarded last October's World Series was entirely of MLB's doing, all the result of supposedly revenue-maximizing decisions. A couple more title games like last night's disaster, and people will start to tune out the Final Four, too. If the only thing keeping people interested in your product is widespread semi-legal nationwide gambling on teenagers... then you might want to reconsider a couple of things.

I don't think the roof is caving in on the NCAA just yet, but it was hard to stay up and watch last night's game (oh yeah, I forgot to mention the post-9pm EST start time thanks to TV, making it hard for young kids to stay up and watch, and you know what just nevermind...) and think that it was worthwhile. Sooner or later, I'll tune out, and that's bad news for the NCAA.

[CBS Sports]

Oh come on...

Alright, maybe my last post was a little bit lame... but this is lamer.

If “Glee” and “E.R.” had a baby it would be [last night]’s episode of the medical drama “Grey’s Anatomy,” titled “Song Beneath the Song.” The staff at Seattle Grace had a patient that was one of their own. That tends to happen a lot at this hospital.

After a car accident sent Callie Torres through a windshield, the pregnant orthopedic surgeon spent much of her time on the operating table and floating around the hospital singing lite rock and pop as the staff fights to save her life and the life of her unborn child. And, of course, at one point everyone sings “How to Save a Life.” We’re not joking. It happens. At least nobody sang “Calling Dr. Love.”

Alright, look... no, I don't watch Grey's Anatomy. But my wife does, and we just so happen to live together (imagine that), so I've been forced to watch a few episodes over the years--including last night's. It was seriously one of the worst pieces of popular culture "entertainment" I've ever seen.

In the past, I've actually had a fair amount of fun openly mocking the show while my wife has watched it, since it's an amazingly easy target--I've almost begun to enjoy the show because of how absolutely absurd and generally poorly written (and poorly conceived) it is. Everyone in the hospital is emotionally crippled beyond recognition, to the point that nobody in their right mind would ever want to be treated there. Besides the ridiculous amount of back-room sex, the incredibly far-fetched and overwrought drama (not to mention mass-casualty events) that pervade the show, and the generally trite commentary that the title character provides as narration, the show actually typically succeeds at the very least at knowing its audience and staying true to its very bizarre mission.

That ended last night. The "Glee"-inspired episode wasn't just unwatchable (though it certainly was that, a point that even my wife conceded), it also reeked of a lazy network executive seeing the crossover success of a show on another network, envying that success, and then betraying the concept of his own show in order to generate some buzz and make a few extra bucks. For a show that's made sport out of "jumping the shark" (it's done so at least six times already), this marked an astonishing new low.

But what angers me the most isn't that the network executives tried the feat--it's that it seems to have worked. Predictably, the soundtrack from the episode (9 tracks of singing actor/doctors) was posted immediately on iTunes, and 7 of those 9 tracks are in the iTunes Top 200 singles today--4 of them in the Top 100. Lord help us.

The only guarantee from last night's ridiculous episode, then, is that we'll end up seeing much more just like it. If something makes money, it really doesn't matter how bad it is, or how lazy the concept was. That's what has generated the explosion of reality TV, the prevalence of hack movie sequels and remakes, and just about everything else that sucks about modern pop culture (sorry, I feel strongly about this). As a wise man once said, nobody ever went broke underestimating the intelligence of the American public.

So it doesn't matter that the episode has been panned by every serious critic from coast to coast--angry ranters like me will, as usual, go quietly into the night, overwhelmed by the spoon-fed public who lapped up last night's pre-packaged disaster. Sigh... Happy Friday.

[Wall Street Journal]

Site update

After careful consideration over the past several weeks, I've decided to make some fairly significant changes to the format and content of The Crimson Cavalier. I do not not make these changes lightly (I know that many of you, like me, despise change in all its forms), but I do expect that they will make this site more enjoyable for me and my readers alike.

Probably the most noticeable and important of these changes is that I will no longer be providing long-form content or opinion in any way. Instead, I will become a mere aggregator of content--a "best of" blog that aims to provide my readers with links to the best pictures, bike-crash videos, and articles from around the world and allowing them to draw their own conclusions.

Recognizing that this will be a dramatic change for many of my more loyal readers, I do promise to provide the occasional traditional long-form diatribe over at the newly formed Red Cowboy blog. I think this will help to support the fledgling readership of my good friend's blog while retaining a fair amount of what made you read The Crimson Cavalier in the first place.

I know that these changes are sudden, but I have been considering them for some time and I am confident that they are the right choice for me. They will also make this site easier to digest, as you will no longer be forced to slog through my irritable rants against all those who annoy me in order to get to the great content you all desire.

Like any rational blogger and businessperson, I welcome and encourage your feedback in the coming days and weeks. It will be my pleasure to reconsider these site changes in the future, if and when it seems prudent.

For those of you who wonder what I will do with the rest of my spare time now that I am free from the tyranny of posting a daily rant, I have good news. In addition to the aforementioned occasional guest post over at The Red Cowboy, I have also signed on with Fox News to be an independent blogger on their site, as part of their new initiative to provide "fair and balanced" input from around the blogosphere--consider it like Huffington Post for conservatives and radical anarchists.
 
Of course, I do recognize the irony that a political agnostic like myself would choose to join forces with an organization that is so well-known for its political partisanship and blatant hypocrisy. But I am always willing to provide a second chance to those who show true contrition, and I choose to view Fox News' offer of partnership as an olive branch and admission of past transgressions.

On the surface, I do recognize that you might view me to be "selling out" my original intent on this blog with my current moves. In particular, my long-standing belief that the world is rife with irresponsible journalism might seem to be taking a back seat to my own ambitions as a political and financial commentator, seeing as Fox News has historically been among the worst offenders as far as violating journalistic integrity.

Like you, I have my own suspicions, and I will be quick to pull the plug if I see Fox being anything but authentic and genuine in our partnership. But so far, I see no reason to doubt their contrition, and I look forward to being part of the solution. It's not often you get the opportunity to be on the front line of solving the problems that you see as so important, and I relish the chance to help turn Fox News into a responsible corporate citizen. I have great hope for our future together.

So with that, I move on to new things (and hopefully greener pastures), happy to continue in the original mission of The Crimson Cavalier but also eager to expand my reach to a broader audience. I hope that you will continue to read my "best of" blog here, my occasional guest posts at The Red Cowboy, and my (hopefully) ever-expanding role within the Fox family of networks. Maybe you'll even see me on The O'Reilly Factor some day soon, engaging in an honest debate over the benefits and drawbacks of government-subsidized health care... but I'm trying not to get my hopes up too much. See you on the other side... and if you haven't caught on yet, do me a favor and go back and read the first letter of each paragraph in this post. Then look at your calendar. Thanks for playing.