Notes From The Week #13

Welcome back all. Hope you’ve had a good week. If you’ve been keeping up with British politics I’m sure you’re aware of the meltdown the Conservative Party and their current government are experiencing. We’re going to take a look at the macro picture of the UK economy. Suffice to say it’s not too bullish. We’ll be looking at how to become American royalty and a new bidder interested in joining the ranks and finally, we’ll finish off with some thoughts spurred by the work of the great Toni Morrison.

The State of the UK

If we’re taking a long-term macroeconomic view the writing is on the wall at this point: the UK’s economy is in a sustained period of decline with investors all coming to the same realisation. The UK hasn’t been industrially productive for decades now. We relied on relatively cheap Russian energy and now that’s gone. While the UK is brilliant for wealth preservation it hasn’t had much to say for creating a viable environment for significant wealth creation. There are many reasons as to why this is potentially the case but from my vantage point and understanding of history I think it stems largely from the fact that the UK’s heyday spanned two centuries (1700-1945) ending in the mid-twentieth century as the Second World War came to a close.

The UK’s economy relies heavily on services which has severely been impacted by Brexit. Deciding to leave your largest trading partner on the account of populist sentiment in hindsight doesn’t seem the most sensible thing to do. 6 years on and it’s clear there isn’t much of an idea as to how a divorce from the European Union should be facilitated. As a result, one of the UK’s major services, financial services, is now being fragmented across other European hubs mainly Paris and Frankfurt. An issue which the now former Chancellor Kwasi Kwarteng sought to address in his mini-budget proposal by scrapping the cap on the bonuses of bankers. An effort to encourage banks and other financial services firms to remain in the City.

Not to be the bearer of too much bad news I’ll look to end on a positive note. If you have a British passport it’s still incredibly powerful (ref: passport privilege). At a time when India has recently surpassed the UK as the 5th largest economy in the world and other emerging economies are coming into a period of sustained growth after a relatively quiet decade of ‘low’ growth—it’s an important time to think internationally about opportunities.

For more information on how trends are changing and how best to leverage such trends then have a look at this fantastic visual lecture from Ray Dalio:

American Royalty: Sports Franchise Owners

Since its inception the United States has been republican in disposition and outlook. However, it has been often said that the closest thing the USA has to royalty is the small band of individuals who own the major sports teams across the MLB, NBA and NFL—with the highest premium (by some distance) being provided to the owners of the 32 franchises in the National Football League.

Since 2000, according to Forbes figures, the average sports franchise has increased 250 percent, with a compound annual growth rate of more than 9 percent, significantly better than the S&P 500’s 3.2 percent. Sports are famously recession-proof: During the 2007-8 Recession, revenues in the “big four” sports leagues—the National Football League, Major League Baseball, the National Basketball Association and National Hockey League—continued to grow.

Professional and college sports programs strike a strong emotional chord with their audiences. There aren't a lot of companies that can claim a higher brand loyalty to their businesses than big-time athletics. The natural model of professional sports locks in brand loyalty over generations as many families pass down the responsibility of supporting their team to their children. Typically, this means their dollars will follow their hearts. Professional sports, particularly in the US, has found multiple ways to monetise—most notably through ticket sales, merchandise, broadcast rights, and marketing deals. Professional teams also benefit from local monopolies as there are only a small number of cities with teams and most professional leagues in America having a limited number of teams per league.

There are many reasons as to why LeBron James would want to own a team in the NBA. Over the last two decades he’s been one of the main selling factors of the National Basketball Association. He’s had one of the most illustrious careers in NBA history and will most likely go down as the greatest player to have ever graced the hardwood. He will join an exclusive company of owners such as Steve Balmer (LA Clippers), the Buss family (LA Lakers) and Michael Jordan (Charlotte Hornets).

LeBron has been vocal about the fact that he would not be looking to retire until he would be able to play in the league with his oldest son, Bronny. Tracking Bronny’s career—this could potentially happen in 2024. This creates a slight problem for LeBron’s ownership dreams. The NBA is very stringent when it comes to investigating potential future owners of franchises, the likelihood of LeBron being allowed to directly or indirectly involved in ownership as long as he’s playing is very low. While the possibilities of expansion in the NBA a few years away—it may actually help James’ timeline. Looking at LeBron’s resume nothing has seemed too hard for the chosen one. It’s seems only fitting that the man nicknamed the King is given the chance to join American royalty.

Toni Morrison

I could write for years about Toni Morrison and her impact on me. Her words were a balm for me as I left university and started in the corporate world. Her fierce confidence interlaced with a gracious spirit served, and still serves, as a powerful reference for me. She is a tower that sought to depict the stories of the common and make them majestic. Making us all realise along the way that the two were actually the same.

Recently I’ve found myself thinking a lot about how my participation in the world. Most times we are forced to think about our participation in the world through an economic lens. If we’re not careful we can be quick to place all of our value in our economic output and contribution. That’s not very sustainable. I’m not spending too much time thinking using that framework these days. I want to process from a more foundational setting. I’m holding up and analysing the scripts, beliefs and worldviews I’ve come to possess and interrogating them thoroughly. Some scripts I’ve adopted from systems and processes and others I’ve cultivated through the combination of nature and nurture. Why do I believe Y? Is X fundamentally true? Is Z in accordance with the person I want to be? It’s only after wrestling with such questions can one really chart an honest path forward. It’s excruciating and will often times see us revising and discarding ideas and thoughts that were once central to our worldviews and belief systems.

One of the realisations that I’ve come to since cross-examining myself has been the basis of what I’d call the othering of self — as children of the diaspora navigating the West we’ve been conditioned to centre others in our own story—seldom do we look at our context and determine it as the centre. Our centre is usually fixed elsewhere as we stand on the periphery. We’d be wise to take the teachings of Mrs. Morrison and to claim where we stand as central. The world will move over. It always does.

Until next week. Peace.