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Pro sports are going on strike. Will other industries follow?
Last night, the Milwaukee Bucks refused to play their N.B.A. playoff game against the Orlando Magic to protest the shooting of a Black man, Jacob Blake, on Sunday by the police in Kenosha, Wis. The momentum quickly spread: The rest of the night’s N.B.A. games were canceled, as were matches in the W.N.B.A., Major League Baseball, Major League Soccer and professional tennis.
Could this fuel a broader business movement? Labor lawyers told DealBook that while withholding performance as a means of advocacy was not new, they hadn’t previously seen anything of this magnitude. The N.B.A. is a business, and like many others, it has embraced social justice movements like Black Lives Matter. But as employees become more outspoken, possibly by going on strike or interrupting operations in other ways, it will become a big challenge for corporate leaders.
The strike “shows that this issue of excessive force of police and Black Lives Matter is not going away,” said Karen Boykin-Towns, a senior counselor at the communications firm Sard Verbinnen and a vice chair of the NAACP’s national board of directors. “If you’re the C.E.O. of a Fortune 500 company, you can’t just sit back and not do anything,” she said. “Employees are seeing this, and they’re outraged.”
• She suggested that corporate executives write to lawmakers and support initiatives like overhauling policing. (After canceling their game, Bucks players called on Wisconsin state lawmakers to “take up meaningful measures to address issues of police accountability, brutality and criminal justice reform.”) She also encouraged companies to give their employees a day off to vote.
N.B.A. owners and executives are supporting the strike. “The only way to bring about change is to shine a light on the racial injustices that are happening in front of us,” said the Bucks’ owners, the Wall Street moguls Marc Lasry, Wes Edens and Jamie Dinan. Mark Cuban, the billionaire owner of the Dallas Mavericks, also weighed in: “I’m proud of our guys for taking the lead and using their platform to try and effect change. I am with them every step of the way.”
Sponsors and media partners have been quiet. Representatives for ABC, Disney (which owns ABC and ESPN) and Turner Media did not respond to DealBook’s requests for comment. Nor did representatives for prominent N.B.A. sponsors State Farm, AB InBev and PepsiCo.
• The playoffs are “disproportionately valuable” for TV stations compared with regular season games, said Ed Desser, the president of the consultancy Desser Sports Media. Canceling the playoffs — especially after costly efforts to restart games during the pandemic — would have a big financial impact.
There is power in denying America entertainment. “People need sports,” said Alan Milstein, a sports ethics professor at the University of New Hampshire’s law school. “The N.B.A. is acting as a modern ‘Lysistrata,’” he said, referring to the Greek tale of women who refuse their warring husbands pleasure until they sign a peace treaty. Pro athletes have a unique ability to draw the attention of millions, which they are now leveraging to push for social change.
• “As a Black woman I feel as though there are much more important matters at hand that need immediate attention, rather than watching me play tennis,” the tennis star Naomi Osaka, who was scheduled to play in a U.S. Open warm-up tournament, said on Twitter.
How long could this go on? A meeting of N.B.A. executives and players ended last night without agreement on how to proceed, although tonight’s games are unlikely to be played, according to ESPN. The Lakers and Clippers — favorites to win the playoffs — reportedly voted to end the season. Teams will meet separately today at 11 a.m. Eastern to discuss the next steps.
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Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, and Michael J. de la Merced and Jason Karaian in London.
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TikTok’s C.E.O. quits in the middle of deal talks
Kevin Mayer joined TikTok just three months ago as its chief executive. Yesterday, he told employees that he was resigning — while his company and its China-based parent, ByteDance, negotiate its sale under orders from President Trump.
Going from leading a global tech company to a smaller, U.S.-focused one was a factor, Mr. Mayer suggested in his memo to the staff. “I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for,” he wrote. His boss, the ByteDance founder and C.E.O. Zhang Yiming, said in a statement that he understood Mr. Mayer’s decision, given that “the political circumstances we are operating within” would have a “significant impact” on the scope of his role.
• Mr. Mayer will be replaced on an interim basis by Vanessa Pappas, TikTok’s head for North America.
The outgoing TikTok chief said he expected deal talks to reach a resolution “soon.” The video-sharing app seems destined to become a division of an American company, after Mr. Trump threatened to ban it in the U.S. if it isn’t sold, citing national security concerns. Microsoft and Oracle remain the favorites to buy some or all of TikTok’s operations outside China. As The Times noted yesterday, many parts of the deal talks, including price and structure, remain in flux.
It isn’t clear how much Mr. Mayer’s departure will affect those negotiations. He was involved in the talks, and was previously Disney’s top deal maker, who helped the media giant buy Marvel, Pixar and Lucasfilm. But Mr. Zhang has always been the key player on the TikTok side.
• Mr. Mayer was hired in large part to give TikTok a prominent American face in Washington, which didn’t necessarily have the intended effect, given a White House adviser’s dismissal of him as an “American puppet.”
Just asking ... Were TikTok’s suitors considering replacing Mr. Mayer after an acquisition? And will leaving early cost him a payout as part of TikTok’s sale? (His resignation suggests that this is not the case.)
The potentially huge toll of Hurricane Laura
The storm slammed into the Gulf Coast early this morning as a Category 4 hurricane, bringing 150-mile-per-hour winds and water surges that could reach 20 feet. The human and financial devastation could be vast.
“Our state has not seen a storm surge like this in many, many decades,” Gov. John Bel Edwards of Louisiana warned residents as 1.5 million Louisianians and Texans were under evacuation orders.The National Hurricane Center called the expected storm surge “unsurvivable.”
Here’s a sense of the potential financial toll:
• The 430,000 homes in Texas and Louisiana at risk from the storm have a reconstruction cost value of $88.6 billion, according to the real estate data provider CoreLogic.
• Reinsurers’ quarterly catastrophe budgets could be exhausted if storm-related losses top $12 billion, according to Credit Suisse. That’s in part because the hurricane is following a string of disasters, including Hurricane Isaias, California wildfires and the disastrous “derecho” storms that hit the Midwest.
• Many oil refineries, representing over 20 percent of U.S. refining capacity, and petrochemical plants are squarely in Laura’s path, according to the data firm IHS Markit. About 84 percent of oil production in the Gulf of Mexico — 15 percent of overall U.S. output — has been shut, according to estimates by the Bureau of Safety and Environment Enforcement.
Laura also highlights the growing cost of relocating flood-prone neighborhoods. The Times reports that the practice, previously criticized as an expensive use of taxpayer funds, is becoming more common as storms become more powerful and more frequent.
Here’s what’s happening
Vice President Mike Pence warned of lawlessness under a Biden administration. In a speech accepting the Republican vice-presidential nomination last night, Mr. Pence cited looting in Kenosha, Wis., during protests against police brutality. The final night of the Republican convention will include speeches by Ben Carson, the secretary of health and human services; Senator Mitch McConnell, the majority leader; Ivanka Trump; and President Trump, who will accept his party’s presidential nomination.
The F.D.A. gave emergency approval to a $5 test for Covid-19. The antigen test from Abbott Laboratories could be delivered in a doctor’s or nurse’s office and provides results in about 15 minutes. Meanwhile, Dr. Anthony Fauci, America’s top infectious disease expert, said the White House coronavirus task force had discussed changes to C.D.C. testing guidelines while he was having surgery.
Facebook is pressuring Apple on forthcoming advertising restrictions. The social media giant protested the iPhone maker’s plans to limit advertisers’ ability to track iOS device users, arguing that it would hurt companies who use its ad tools, including publishers and game makers. It escalates tensions between the two companies, as Apple fends off pressure on other fronts from Epic Games, Microsoft and others.
The White House may act to prevent airline furloughs. Mark Meadows, the White House chief of staff, said that the Trump administration is weighing an executive action to help out carriers after American Airlines warned of potentially huge job cuts. But it’s unclear how much President Trump can do without cooperation from Congress.
The World Economic Forum’s annual meeting in Davos, Switzerland, has been rescheduled. The gathering of top global political and business leaders, normally held every January, is now scheduled for early next summer on the advice of health experts. The deal making that often happens on the event’s sidelines will thus shift from the ski slopes to the mountain biking trails.
What we talk about when we talk about inflation
What are you doing at 9:10 a.m. Eastern today? In a wonky but important speech, the Fed chairman Jay Powell will give an update on how the central bank uses its tools to steer the economy. The conference isn’t normally broadcast, but the storied annual gathering of elite economists in Jackson Hole, Wyo., is being held virtually this year, allowing the public to tune in for the first time.
The Fed has spent nearly two years revamping its policy approach, and Mr. Powell could reveal some of the results today, The Times’s Jeanna Smialek writes. Many expect the bank to change how it targets inflation, by adopting a more flexible approach that would have it aim for a 2 percent average over time instead of trying to stay always at or near that level.
That could lead to long periods of near-zero interest rates, along with very low unemployment. This fundamentally rethinks how the economy works. An absence of inflation despite low unemployment (in pre-pandemic times) has puzzled policymakers. But research suggests that the “natural rate” of interest that keeps inflation stable when the labor market is running at full steam has fallen sharply as the population ages and productivity growth slows.
• Before tuning in to Mr. Powell’s speech, which will stream on the Kansas City Fed’s YouTube page, Jeanna suggests reading his remarks in October about how the Fed interprets new data when it makes decisions.
The speed read
Deals
• The underwriters of Ant Group’s huge I.P.O. — including China International Capital, Citigroup, JPMorgan Chase and Morgan Stanley — are reportedly set to share at least $300 million in fees. (FT)
• The S.E.C. loosened the qualifications for investments in private equity firms, hedge funds and privately held start-ups. (WSJ)
• The lenders Broadway Federal and City First Bank plan to combine, in a deal that would create America’s biggest Black-owned depositary institution backed by the federal government. (NYT)
Politics and policy
• The Small Business Administration may have handed out more than $1 billion in coronavirus aid to ineligible companies. (Bloomberg Businessweek)
• The E.U.’s trade chief, Phil Hogan, resigned after attending a dinner with lawmakers in Ireland that violated the country’s coronavirus restrictions. (NYT)
Tech
• Federal prosecutors charged three men with participating in a global piracy ring that distributed movies and TV shows before their release dates. (NYT)
• The head of Britain’s National Cyber Security Center warned that the internet increasingly appeared headed toward a split between the West and China. (FT)
Best of the rest
• How the maker of OxyContin shifted nearly $11 billion to entities tied to the company’s founding Sackler family before it filed for bankruptcy. (Bloomberg Businessweek)
• The back story behind that viral photo about the state of 2020. (NYT)
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Will N.B.A. Strike Fuel a Broader Business Movement? - The New York Times
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