Business Report: The NBA And China
Friday, October 11, 2019
Q: One of the biggest stories this week is the NBA and China. What's at stake as the league tries to balance business and freedom of expression?
A: It all started last week when the general manager of the Houston Rockets tweeted support for the protests in Hong Kong. NBA commissioner Adam Silver supported the tweet and the right of free speech of NBA players and its organization. The Chinese government swiftly reacted. They played a game yesterday between the Brooklyn Nets and the L.A. Lakers. But all the signage in the city of Shanghai was taken down. They blacked out a number of pre-season basketball games. This puts the NBA a little bit on their heels because they're not quite sure what to do. They have they have a multi-decade relationship. There's hundreds of millions of dollars at stake including player endorsements. They're in a no win situation. They canceled all their press conferences so they don't have to address the issue. So this is a very delicate public relations issue that the NBA has found itself in. And in the context the greater trade negotiations with China, there's it's a very interesting time for for the U.S. and the NBA.
Q: We've followed the plan to redesign Horton Plaza as a tech office hub. But one major brand is not going quietly. Why is Macy's suing Horton Plaza's new owner?
A: This is a great thing for the city of San Diego. The city council is very excited. This tech hub is a $275 million dollar investment by Stockdale Capital Partners. They want to convert Horton Plaza into a combination retail and office space. But the original lease and contracts state that the center has to be a prime first class shopping retail center. And that's why Macy's is suing Stockdale Capital Partners because that's not going to be the case. There is going to be more office space than retail space. The real issue is money. Right now Macy's has a sweetheart deal. They pay 28 cents per square foot or and they only pay $457,000 in rent a year. Their lease is up in 2060.
Q: It won't be long until we're talking about holiday shopping. How is one big brand trying to make a comeback with the help of Target?
A: Toys R Us went bankrupt at the end of 2017. They closed 800 stores last year and launched their new Toys R Us website. The successor firm is looking to kind of reemerge in the marketplace. Target last year, when Toys R Us went out of business, was probably invested the most in the toy business. By running the Toys R Us website they're able to fulfill orders. And with their new relationship with Shipt, they can deliver toys the same day, within a day, or have consumers pick up toys at Target stores. The winner really is Target because they're going to be seen as helping Toys R Us, and Toys R Us as a company probably should ultimately own their own e-commerce infrastructure. So it's just an issue where Toys R Us says how can I get started. How can I build rebuild my brand and I'm going to have Target to help me out.
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