Month / September 2016

by Frank Maduri

Follow Up: Mylan, Tax Inversion, & The EpiPen Debacle Continues

The controversy behind Mylan and the EpiPen has again taken a prominent role in the news cycle after their highly scrutinized CEO testified before Congress last week. The hearing on Capitol Hill focused on the $608 list price for a two pack of EpiPen product and the many ways that the amount is impacted by what their CEO called a “broken” healthcare system to arrive at a profit number of $100 per two pack of the EpiPen.

Then, the news comes out today that the profit figure of $100 was inaccurate and that Mylan actually makes 60% more in profit per two pack of this life saving product, so the “more accurate” figure is $160 in profit. The members of Congress were upset over the amount of profit they were making when they thought it was $100, I cannot imagine what their reaction was at this news today.

The explanation by Mylan regarding the change in the overall profit amount in this case was that they miscalculated the profits based on an incorrect corporate tax rate (while my fingers type the words – I cannot believe their excuse). The LA Times and CNBC did a great job in reporting this situation today, with the former news source interviewing a USC professor who has a very honest view on how badly Mylan looks after this “miscalculation” of profits.

The question naturally is raised: How can Mylan miscalculate their corporate tax rate? The other question: the corporate tax rate in the US is so high, that should have made their profits even lower if that is accurate?

The answer to the first question is murky, it appears that Mylan knew the tax rate all along and tried to present a different set of profit figures to Congress. The second question could be answered with the facts: Mylan based their original calculation on the standard U.S. corporate tax rate of 37.5% , but Mylan does not pay that rate of corporate taxes due to a tax inversion they completed in the past.

I have reported on tax inversions for years for several news sources, in brief, it is an accounting and business practice where a U.S. company can merge or obtain an overseas company and then change their corporate headquarters address to the country where they bought the controlling interest in the other company. That change in corporate headquarters location means that their corporate tax rate would be adjusted to the tax rate of the country they were now headquartered within.

In the case of Mylan, they completed an inversion to change their corporate headquarters to The Netherlands, so their U.S. tax rate should have been adjusted to about five times less than the current U.S. corporate tax, or around 7%. However, the reality is that some experts have reported to both CNBC and the LA Times that their corporate tax rate is close to zero. That fact is really going to get people angry.

Therefore, the adjusted Mylan numbers for profit are based off of a 7% tax rate in the U.S. which they actually do not pay, so those numbers are wholly inaccurate. The situation gets compounded when the fact remains that they sell about four million of the two packs of EpiPen products per year.

I keep coming back to the timing of this announcement. It has to have been divulged at this time because it was leaked and someone in the media had it or someone threatened the company that it would get released. Mylan had to get out “in front” of this story and even then it will be tough for them to withstand. The fact that they revealed this change in profit numbers today and that they misrepresented those figures to Congress is worthy of a full Congressional investigation into their business practices.

The other fact that this scenario uncovers is that Mylan pays next to nothing in corporate taxes and is still trying to “game the system” and price gouge a lifesaving product to the American public. These tax inversions are a huge problem for our country and they must be stopped, they allow a mechanism for big companies to get bigger and wealthier, while the average person gets a tax increase.

The healthcare system does have a great deal of problems currently, but dishonest corporate officials from a major pharmaceutical company surrounding a multi-billion dollar drug product that families need to provide lifesaving measures for a patient in need is totally outrageous. This completely rapacious behavior and unbridled pursuit of greed by some of these corporations must be halted.

The EpiPen is a product that should be provided at a fair price to the Americans who need it, and Mylan should be ashamed that they conducted themselves in this manner. Please contact your local Congressional representative if you feel that Mylan should be investigated by Congress for their mishandling of this situation. The American people have a right to know the true story behind the profits this company made from their greed driven price gouging of this essential product and we cannot trust their accountants in case they “miscalculate” again.
Mylan is going to find out that this is a firestorm that they will need some serious resolve to withstand and a generic form of the product is not going to make this situation better. In fact the amount of profit they have made is so disturbing to so many people, it will take a long time before this situation is repaired.

There is a hacker online right now who has made the news with a method he put on YouTube which demonstrates how you can take ingredients and make your own EpiPen at home for a lot less. It is these sorts of practices that should could have a disastrous impact on the safety of the drug and that will defeat the purpose that both Mylan and the U.S. government are supposed to protect: the health and well-being of the patient. That is a truly frightening prognosis.

by Frank Maduri

Honeybees & Zika: The Spray That Saves Humans Kills Bees

The mainstream news cycle has featured the stories related to the Zika virus for a few months now. In the past two weeks a couple of those stories gained some rather significant importance in the overall context of the costs of fighting the spread of the virus.

The first was in South Carolina where government officials from both the state and county levels failed to warn the local beekeeping communities regarding a massive spraying they were carrying out to prevent the spread of Zika. The result was that those chemicals sprayed to kill the mosquitoes that potentially carry the Zika virus also killed about 1 million bees.

I have written previously on the importance of the honeybee to our domestic food supply and about the epidemic of entire colonies of bees dying in America. The honeybee population could ill afford a situation such as the one which took place in South Carolina.

Due to the fact that we are a reactionary society, the government there (and in other states) have stated that they will introduce protocols to give advanced notice to beekeepers in the future regarding the scheduling of these massive chemical spraying projects.
That change does not reverse the damage already done by the spraying in South Carolina for many beekeepers who lost their livelihood, and for the farming community there which is looking at lost crop yields. The lost yields are due to the honeybees being unable to pollinate because of the massive depletion in their numbers.

The lost crop yields translates into higher costs for the consumer on certain food products. The chemicals being sprayed may save humans from the greater risk of contracting the Zika virus, but it will come at a cost to the food supply. That is certainly a consequence that must be curtailed in the future.

The second story in the news cycle with an impact on this situation is the announced merger of two petrochemical giants, Bayer and Monsanto, which is going to have a profound effect on the honeybee population. This merged conglomerate will produce increased amounts of herbicides and pesticides which the honeybees will ingest during the course of pollination which can cause the death of the entire colony.

The impact of the widespread use of chemical agents such as Roundup has a detrimental impact on the honeybee population, and this merger will increase the availability of this and other products of similar agricultural use.

In fact, a study was just released which concluded that American farmers had increased their usage of this product by more than 20% from the prior years examined. The rationale is mainly from the resistance that some weeds had established when treated by other products. This will have detrimental consequences to the American food supply, as the main ingredient, glyphosate has been linked to all sorts of health issues in humans and animals alike.

In addition, the use of the Roundup product by the average consumer for lawn care has led to active lawsuits against Monsanto regarding the potential link to the spraying of the product and Non-Hodgkins lymphoma.

Some research has also indicated that insects which fed on the leaves of corn stalks sprayed with this product have died in large numbers. The merger of the two companies will only increase the marketing efforts around this and other products which will cause harm to humans.

The data behind many of these studies is both revealing and troubling at the same time. I encourage all of you to take a closer look at the impact of pesticides and other petrochemical products, GMOs, and other agricultural products which will have an impact on you and your family.

The use of these products also merits increased consideration because we need to protect the population of honeybees, or our food supply will face a crisis level situation.

I understand the need to protect the population from the potential spread of the Zika virus, but all of these chemicals and their consequences and effects should be examined more closely as well. It certainly bears close observation as the regulators make a determination on this merger and the federal government weighs the GMO labeling laws in the coming months.

by Frank Maduri

Bayer Beware: The Monsanto – Bayer Merger

I write often about mergers and corporate takeovers here on Frank’s Forum so the opportunity to offer some commentary on the largest merger of the year was an opportunity I could not miss.

In between research and drafting of other pieces I have in the pipeline, and a final draft submitted for editorial review, I was reading the mainstream coverage of this gigantic transaction on Forbes and CNN Money among others.

I am not sure what I am more surprised about: the fact that Bayer made a third attempt which was more outrageous than the first two attempts to get this deal done, or that I knew that this merger deal was going to be announced before the end of the 2016 calendar year.

I thought the Dow and DuPont proposed deal was huge and scary (which it still is) especially given the implications for the seed market. However, this move by Bayer is also very large and bold with the valuation they put on Monsanto stock ($128 per share) and the clause if the deal does not meet regulatory approval (Bayer would pay Monsanto $2 billion). All of these factors and many more make this deal the most influential merger of the year.

The total valuation when this deal is broken down means that Bayer put a value on Monsanto of $66 billion. The deal, if approved, would do two things right away: have a huge impact on the U.S. seed market where Monsanto is the top player in that marketplace and dramatically expand Bayer’s North American footprint.

American Dream or Nightmare?

The value to Bayer is undoubtedly the opportunity to enter the North American market in a top strategic position and expand upon that through other product areas and industry segments in the future. Bayer is much more recognizable in Europe and Asia than in any other areas of the world, so growth into an essential and largely untapped marketplace for some of their products was the main impetus.

In the case of Monsanto, which has been dealing with an endless onslaught of negative publicity regarding their products and GMOs, the deal makes a lot of sense when you consider that the Dow-DuPont merger looks like it is gaining traction toward approval by regulators throughout the world. That deal did hit a snag in Europe recently, but if you are Monsanto, you proceed thinking it will eventually get done and they will be a tough combined duo to compete against.

The premarket trading of Monsanto stock, as noted by CNN Money, was $104 per share and that sort of gap between that number and the merger valuation of $128, in my time of covering M&A activity usually means that Wall Street is anticipating this deal to not be approved through regulatory channels.

Bayer is thought of in America as the company that makes aspirin and Claritin, but the reality is that they are a major player in other parts of the world in petrochemicals and agricultural chemical products. They have a position in the agricultural seeds marketplace in other regions of the world as well, and from that perspective this deal makes sense.

Why Monsanto?

Although I had a strong feeling that this outcome was going to take place with regard to this merger, I still keep coming back to the question: why would Bayer want to purchase Monsanto? I understand that Bayer swung and missed at a deal for Syngenta, another major American seed manufacturer (which is in the process of being purchased by a Chinese company, ChemChina).

Monsanto has so much baggage with the P.R. nightmare over the perception of their products in the marketplace, the potential links to their products and certain cancers, and the inevitable GMO questions. It is also no secret that I hold Monsanto responsible for putting greed ahead of the health and wellbeing of people. I have read enough data and reviewed enough clinical trials to understand the effect of pesticides and herbicides on both humans and wildlife to know that my opinion of Monsanto is not very favorable, to put it diplomatically.

Bayer top executives may have felt that the Monsanto acquisition was the best pathway to getting the market share they desired in the product areas where they have synergy in order to compete with Dow-DuPont in both the North American market and the global marketplace.

Heavy Scrutiny

This deal, make no mistake about it, will be scrutinized heavily by the political powers at play here; other online news sources are already running separate stories about that aspect of this proposed merger. Bloomberg featured a story on the merger’s impact on the cottonseed industry which if the two companies joined forces they would control a staggering 70% of the market. What further complicates the deregulation of this particular market is that Monsanto sold a piece of their cottonseed business portfolio to Bayer recently to make another acquisition themselves. I am not sure who would be to purchase assets from either company in order to satisfy regulators.

The overall picture for Bayer and Monsanto joining forces is made even further complicated because they will have limited pathways to sell off assets overall because Dow-DuPont and the ChemChina deal I mentioned earlier puts all of those companies in a holding pattern as well. Those companies are not going to be undertaking any large transactions while under regulatory review themselves.

A merged Bayer and Monsanto would control an alarming amount of agricultural products and products directly related to our food supply. They would have enormous influence and power over the pricing that all of those markets are set within. In addition, they would be able to exert enormous price pressure, which could translate to cost increases that are passed along to the consumer.

The potential combined behemoth would also have a tremendous impact on the global environment through an increased number of synergies in the pesticide, herbicide, and other agro-chemical products which will have negative effects on the soil, water, and wildlife.

The potential merger of Bayer and Monsanto is, in short, bad for the consumer, bad for the environment, bad for ingredient suppliers, and bad for farmers. I hope that the analysts on Wall Street are right, and that this merger fails to meet regulatory approval.

It is a proposal with tremendous consequences on a multitude of levels which could have a detrimental impact to our society. This proposal represents greed and the unbridled pursuit of power. I am very concerned over the outcome, and I hope I have proven to all of you that you should feel the same.

by Frank Maduri

MLS Soccer Expansion Update

Major League Soccer (MLS) has been in the sports news lately with more announcements regarding the expansion of the burgeoning league to new markets in North America. The league currently sits at 20 teams and plans to get to 28 as a target number at some point in the future.

The first round of expansion sites gained more clarity over the last few weeks with the league announcing that Atlanta will join as the 21st franchise and Minnesota United will join as the 22nd team in the fast-growing top league in America. Both teams will begin play in 2017, which was the long rumored expectation for Atlanta because they will play in the new NFL stadium downtown; but a surprise in the case of Minnesota.

The Minnesota expansion bid had been mired in a stadium land site situation that was finally resolved with the club announcing it will construct a new facility in St. Paul but that project is still in the initial phases. The team will play in 2017 (and beyond until their stadium is ready) at TCF Bank Stadium on the campus of the University of Minnesota. That facility just finished a stint serving as the temporary home of the NFL’s Minnesota Vikings while their new football stadium was being built. MLS has been targeting Minnesota and the Twin Cities market for years to fill a geographical and TV market / media market void and now achieved that goal. The new facility that will eventually open in St. Paul looks amazing.

Atlanta FC, which is owned by Arthur Blank, announced that their franchise broke the MLS season ticket record for an expansion team with sales of close to 22,000 season ticket plans since the announcement. The Atlanta area also represents a huge television market and a growing population that is increasingly culturally diverse and interested in the sport of soccer. That expansion decision looks like it will be a “home run” for the league and they will play at the new downtown domed stadium which will have a system that will cover over the unused seating levels, similar to the system used in MLS currently by the Vancouver Whitecaps.

The Next Round

The next round of expansion will feature the rebranded LAFC and the Miami re-entry with David Beckham and his investors. Both of these bids have had some twists and turns. They are also similar in that they are both in cities where the MLS is currently (L.A.) and was previously (Miami) and they are both essentially reboots from past league miscues.

LAFC as it is currently known is the rebranded replacement for the now disbanded Chivas USA, which was a team that shared the L.A. market with the Galaxy and also shared the same stadium as the Galaxy, and none of that worked or connected with the fans.

Chivas USA was owned by the same group as a major pro team in Mexico, and those owners treated the MLS team like a minor league farm team and invested little to no money in it. The results were very bad for the league and for the on-field product and resulted in a league buy out of the Mexican group and the disbanding of the team a couple of years ago. MLS made a concurrent announcement that they were planning a new rebooted LA team to take the place of Chivas USA at a later point.

LAFC has some big name Hollywood owners and a lot of star power. The owners secured land for their own stadium near the old LA Sports Arena where the Clippers used to play their home games. They will be launching with a whole new look and will no longer share a stadium with the Galaxy. The league and those involved with the new club there look like they will get this right, after the first attempt at a second LA franchise went so completely wrong.

Miami is a whole other story, but a similar narrative. MLS was in that area with a team called the Miami Fusion back around 2000-01 and they played their games out in Fort Lauderdale. That proved to be too far from the city center and the attendance and the whole concept eventually was disbanded. The league has not returned to that city until now, and this bid has been handled very differently.

David Beckham was given a clause in his contract when he came over from Europe to join MLS and play for the LA Galaxy that allowed him to become the owner of an expansion team to play in a destination he chose for a greatly reduced entrance fee. The superstar chose Miami, and the team will play downtown and will look to correct all the issues which went wrong when the league tried and failed with the Fusion.

This Miami bid has had several stadium site selection issues and temporary stadium issues but it is all starting to take shape and looks like it will be a successful venture for the league in an important market for US soccer.

Done Deal

Once Miami and the new second LA team join the circuit that will bring MLS to 24 teams. The next bid that is all but a done deal to be approved is Sacramento. I have covered their quest for a MLS franchise in the past, and the smartest thing that they did is consolidate their bids because, at one point, the city had two groups bidding to land that coveted spot.

Those involved in the Sacramento bid moved forward with the group that operates the Sacramento Republic club, which plays in a minor league currently, but has set attendance records for that league. The city of Sacramento, which fought hard to keep their NBA team from leaving and were successful, banded together to move quickly on a stadium proposal to present to the MLS. The new stadium is planned for the area downtown around the old railroad yards.

The stadium built specifically for soccer is the key piece to any MLS expansion bid because it allows the teams and the league to enhance their profitability through control of the revenue streams. A club which would be leasing a stadium and playing as a tenant would not be financially viable over the long term.

Sacramento has gained some highly reputable investors and has impressed the MLS executives with their persistence in gaining a franchise. They are also in the position of offering a scenario where the league has a natural rivalry with the San Jose Earthquakes in the same region (also important to MLS expansion) and that the team will not compete for fans with another major league team, for the most part, because the NBA season ends in April and the MLS season gets underway in March.

The bid does lack some important aspects such as Fortune 500 companies in the area for corporate partnerships, and the media market is a medium size compared to other bidding cities. However, MLS will have added the second team in LA, the Miami franchise, Atlanta, and Minnesota which are all large media markets; by the time they would consider adding Sacramento. The Kings also enjoy the support of some pretty strong regional corporate sponsors, and the capital city of California has some attractive features because many companies of all types visit there to do a variety of business matters.

The Sacramento Republic minor league team has an established fan base which would remain loyal to the team in their transition to MLS, which is a very important aspect of any expansion bid. I have to give credit to Sacramento they worked together and made took this bid from an outsider to what experts feel is the consensus pick for the 25th franchise in MLS.

Gateway to the West

St. Louis has long been known as the “Gateway to the West” and they have a long and rich tradition for soccer in America. The city has drawn upon that deep history coupled with an opportunity that arose out of a separate situation which was initially very negative, to put together a bid for an MLS expansion team. The St. Louis bid is said to have impressed the MLS executives with decision making authority so much that reports state that their bid is on a fast track for approval.

The roots of professional soccer began in America in the early 1900s, most people do not realize the hotbed that St. Louis is for the sport in our country. The city has been host to a number of professional teams through the years for both indoor and outdoor soccer. The St. Louis Stars played in the old NASL for ten years from 1967 to 1977 before moving to California.

The St. Louis Steamers were an indoor soccer team which set attendance records, and the city is currently home to St. Louis FC which plays in the USL Pro minor league system. The city has attempted to bid for an MLS team in the past and failed, most recently when the league expanded by two teams in 2010.

St. Louis submitted a bid, but due to some issues with the stadium plan and lacking a viable ownership group, it lost out to Portland and Vancouver. MLS at that time did not like the idea of their team sharing a facility with the Rams or playing at Bush Stadium and sharing that with the Cardinals. The plan back in 2010 for a new soccer stadium had several issues.

The three keys to a successful MLS expansion bid are fan support, a stadium solution, and local ownership. The St. Louis bid is building their fan support through the USL Pro team, they have multiple local ownership groups with some prominent people from the sports and business community involved, and the stadium solution is taking shape.

The stadium plan for the St. Louis bid is probably the biggest issue they have right now overall, but as I wrote earlier, they are taking a negative situation and turning it into an opportunity. The negative situation was that St. Louis lost their NFL team, the Rams, who relocated to Los Angeles this spring. The opportunity is that the city officials and those involved with the push for an MLS franchise are planning to use the land that had been initially set aside for a potential new stadium for the Rams as a site for a soccer specific stadium.

The land is on the riverfront adjacent to the Gateway Arch, which FOX Sports, ESPN, and others have reported that concept for the stadium site appeals to MLS Commissioner Garber. The city is also in close proximity to Kansas City and Chicago to form regional rivalries with those teams, which is another appealing aspect of the bid. It is going to take a significant amount of time to get all of the key elements aligned, but St. Louis is gaining traction toward the goal of adding a MLS team now that the city lost the Rams. It is a really interesting bid.

Motor City Gains Ground

The Detroit bid for MLS expansion has gained some serious ground in the race for the final three spots if you believe that Sacramento is basically in as the 25th franchise. The league has kept close tabs on Detroit for years regarding potential expansion because it fills a void in their national footprint in that region, it is a large television market (which enhances the value of future media rights deals), it is ethnically diverse which fits for the fan base of the “global game”, and it has excellent potential for corporate partnerships compared to other cities.

The latest in the Motor City bid is they are grooming a fan base with their minor league club, they have deep pocketed business leaders (billionaires Dan Gilbert and Tom Gores) interested in getting a seat at the MLS table, and they have a plan for a new soccer stadium in the same downtown area as the new Red Wings hockey arena. This bid bears watching as it continues to gain traction.

Charging Through

The San Diego bid for an MLS franchise is in some ways similar to the St. Louis bid because it is tied to the fate of an NFL team, in this case, the Chargers. In the event that the Chargers fail to get a new football stadium deal approved for the downtown waterfront district on Election Day, then I think the parties involved on the city and county level will turn their attention to getting the MLS into San Diego.

The bid is a lower priority in compared to keeping the mega bucks potential that the NFL provides the city, which is much the same way it played out in St. Louis earlier this year. In the event that the Chargers relocate to Los Angeles, the most likely course for a soccer stadium for the MLS bid would probably be a massive rebuilding and reconversion of the old Qualcomm Stadium in Mission Valley to seat around 30,000 and convert the other space for alternative use.

The trend in MLS has been toward stadiums in a downtown or centralized area in an urban setting, but that cannot always be the case for every city in the league. The downtown concept gets tricky with the San Diego bid because the city does not own the land.

The Mission Valley scenario is a more viable option because the city owns the land and businessman and former San Diego Padres owner, John Moores, got the exclusive rights to bring professional soccer to the area when he signed the deal allowing the team to change hands when they moved into their new downtown baseball stadium.

San Diego could be a destination city for MLS with the great weather, the proximity to the other teams in California, the diversity of the population base, and the commitment of local ownership. The issues with the bid are that the stadium would most likely not be downtown, and it is very close to two other teams in the league in Los Angeles which could be seen as market oversaturation.

The Outsiders

These cities have bids that are, at this time, equivalent to the outsiders looking in: Phoenix, Nashville, Cincinnati, San Antonio, and Austin. These bids would stand a better chance if MLS eventually determines they have enough financially viable markets with sustainability in place to expand beyond the 28 team target to 30 teams.

The league would undeniably be interested in Phoenix because of the size of the metro area population and the role that soccer could play in that marketplace. The issue right now with their minor league team is that it plays way out in the Valley suburb of Peoria, which MLS stated will not work for their league.

The local ownership could be a problematic scenario as well as getting funding for a soccer stadium in downtown Phoenix. I think this bid has too many issues to be a serious candidate until some of these issues can be resolved. The local government does not want to pay for improvements to be made to the MLB Arizona Diamondbacks stadium, so I get the feeling they are not going to jump to publicly finance a portion of a soccer stadium.

Nashville could be a really good fit for MLS and they would run mostly opposite the NFL’s Tennessee Titans schedule, so the overlap would not be a big issue. The bid has many potential owners interested but it lacks corporate sponsors and is not a very large media market, which are detractions. The stadium site and financing plan also could bear out some major concerns. This situation would take several years before the bid could merit serious consideration.

Cincinnati is a whole other story even though it is relatively close in proximity to Nashville. The “Cinci” bid has one very big positive that the MLS brass in New York have noticed: tremendous fan support for a market of that size. They have had great turnout which is the first part of the three traits I covered earlier. The other two components: local ownership and a stadium plan are the two areas which need details to be worked out. The corporate sponsorships have better potential than other bids and some of those business leaders may step forward and head an ownership group. The government support seems good but not great in so far as the stadium and other hurdles that need to be cleared.

San Antonio has long been a rumored destination for MLS expansion with the minor league team, the Scorpions, being the best selling point for the bid. The MLS execs do not like the location of the current stadium (which would need to be expanded and renovated anyway) and reports indicate that they want a downtown site near The Alamo before they consider this city for expansion. The stadium is a huge piece of the bid for an MLS team because it is the main revenue driver.
The league was also not thrilled with the Scorpions management but they were just sold recently to the owners of the NBA’s San Antonio Spurs (one of the best run franchises in all of sports). The Spurs management should be able to successfully market that team and present a pretty compelling pitch to MLS executives for expansion to that growing market.

I must state, in full disclosure, that I am a proponent of the MLS expanding to San Antonio, I think it would work really well because it is a growing population base with the right age and cultural demographics. However, I have read that the league views this as more of a long shot, especially if they favor two other bids from other markets. San Antonio could be left without a seat at the table.

Austin is the final market I will touch upon in this feature piece on MLS expansion. It is certainly an interesting market because it fits with the overall millennial/youthful targeted marketing for MLS at this point. It is also a high growth area for jobs and the team would have good corporate support. The team would be the only professional sport in the city, which the MLS looks at very favorably because they are not competing for dollars with other teams.

The team would have political support both locally and regionally, but it lacks a viable ownership group at this point in time. It would also be the smallest market in MLS if it gained entry, which will be a concern and leave some to think that San Antonio might be the more sustainable option in that region for expansion.

Austin does have a USL team currently but it would need a stadium plan for a new facility that is up to the standards of MLS. I think that is too many variables and hurdles to put together to have a viable bid for expansion even by 2020.

It is clear to me through my research and covering this topic in the past that MLS soccer is growing in popularity and has a significant number of interested cities for potential expansion. The downside to that scenario is what the league and the current owners must be wary of, and that is that rapid expansion was the main culprit for the demise of prior major professional soccer leagues in America. MLS must remain cognizant of this fact if they do not wish to meet with similar peril.

by Frank Maduri

Unjustified: The Aurora Theater Shooting Lawsuit

The LA Times did some great reporting on the mass shooting which took place in Aurora, Colorado in a movie theater in July 2012 which was one of the deadliest mass shootings in American history. I will include the link to the piece, which details the decision on the subsequent law suit by the victims’ families and the survivors: http://www.latimes.com/nation/la-na-batman-shooting-lawsuit-20160822-snap-story.html

The plaintiffs, in this case that would be the victims and their families, were essentially given a low-ball settlement offer from Cinemark, the operator of the movie theater where the shooting took place. Cinemark hired a high priced legal defense attorney from New York to work this trial which took place in the state level court system in Colorado.

Most of the plaintiffs, there were 41 in total, agreed that they would give the lion’s share of the settlement to the three people who were most severely impacted. The remaining plaintiffs would then split the remaining money which was around $50,000 total to split by 38 people. They agreed to do this only because they had few options so they were willing to settle the case.

However, the three people who were most severely impacted by this tragic event would not agree to the settlement offer and they wanted to press the court for a verdict. The other plaintiffs dropped the suit, leaving the three people remaining to move forward with the process, despite their lawyers pressing for a settlement.

It is at this point that you might be asking: why would they want to take such a terrible settlement offer? It is because the court decided the next day at the hearing that the circumstances for Cinemark were unforeseen, that they had no way of knowing about the attack and therefore were not liable. The three plaintiffs remaining lost the case.

Furthermore, due to Colorado state law, the plaintiffs (the three victims) are now responsible to pay for the entire bill of the legal defense for Cinemark which costs $700,000 and that is why the plaintiffs’ lawyers wanted a settlement. It is also why the others dropped out of the suit entirely.

That is a huge flaw and a complete injustice in our legal system that those three victims should be on the hook for the legal bills for a giant corporation. One of the three victims lost someone in the attack, she herself was shot, and she was pregnant at the time and lost the baby. Her choices were take a terrible settlement or push to go to trial with the risk that they would be left holding the bag on the legal bills.

When I read the article I attached above from the LA Times it greatly upset me to the point I felt I should raise awareness of this whole topic because I know of too many situations where big corporations strong arm people in lawsuits. It also made me want to boycott Cinemark movie theaters, which is the local theater in my community. I think Cinemark should pay the $700,000, if they let the victims pay it, that would be horrible and also not a very good move from a public image standpoint.

On the other hand, this story is not garnering the national media attention I thought it would especially in the Northeast and the East Coast. This is a terrible injustice of our legal system, and those who lost so much on that tragic day should never have been put in this position. Those who opted to drop the suit spent four years of their lives fighting this battle after having their lives turned upside down, and in the end, they got nothing. I still find it just so hard to believe.

The theater company promised to implement security measures in all of their locations and to push for new security protocols for theaters across the country. It was promised to the victims and their families, and it never happened. That is also a horribly sad outcome to this matter is that even that part of the scenario, the security aspect to prevent this from happening again, went out the window.

These large corporations, insurance companies, and large financial institutions have too much influence on the legal system. It has gone to being completely out of balance where the judicial system was supposed to be fair and impartial, it seems like it is anything but that in recent years. This case is just a microcosm of a much larger issue that needs to be addressed and reformed. I cannot believe a judge would hand down a decision that would put the victims in that type of situation.

In the end analysis nothing is going to change unless we take action peacefully and diplomatically by appealing to our elected officials on both the state and federal level that this type of injustice in the legal system has to change. I know that this profoundly upset me, if it did the same for you, I hope you will share this piece with those you know. It is through strength in numbers, through unity behind this cause that we can achieve substantive change.

I will continue to pray for the victims of the Aurora shooting tragedy and continue to process how I and my other fellow Americans may help them in this hour of need after such a blatant act of injustice took place.