Posts by Frank Maduri

I am passionate about producing quality writing as a freelance writer and business development consultant. I am also a professionally trained grant writer with experience in fire, school, and emergency services grants. I also write short fiction, poetry, and prose. I enjoy sports and I am a fan of the NJ Devils, NY Giants, and NY Knicks. I enjoy sharing my views about these teams. I was raised and currently reside in New Jersey and I enjoy writing about my state and The Shore where I live, it is a beautiful place that has inspired my writing.

Certified Transitional Farming: Impact On Eating Organic

The challenges of organic farming have been an area that I have covered in previous articles on other related subjects such as GMO, pesticides, the seed market, and the overall food supply. The transition of farmland that has been devastated by pesticides, herbicides, and other agricultural chemicals is an involved process.

The certified transition process identified by QAI (Quality Assurance International), is frequently a three- year endeavor by the farmer in order to properly prepare the land to produce organic crop yields. The larger farming operations can afford the significant financial outlay to convert the land from what is known as a conventional farm into an organic farm.

However, the small and mid-sized farming operations, such as family owned farms with smaller yields, could easily struggle with the burdensome costs especially on the front end which becomes a deterrent for overall agricultural land use reform toward organic farming in America. The QAI goal of organic farming growth found that the overall acreage of transitional land use for organic food production could be enhanced by financial incentives underwritten by corporations and other interested parties.

The organization also determined that if a farm had at least 51% of their total usable crop space being verified as “in transition”, then that farm could use the QAI seal for transitional organic farming on their products. This helps to raise awareness of the transition process, it helps the farmer because it provides visibility as well as profitability to aid the transition, and it helps the consumer because they are purchasing a product that will benefit them while ensuring that more organic products can be made in the future. It is the definition of a “win-win scenario”.

The estimates available from the USDA state that only 1% of all farmland in the United States is suitable for organic farming. This is a shocking statistic for many who have not closely followed this situation. My prior work has detailed the destruction of the soil used in farming by GMO containing seeds, dangerous pesticides, and harmful herbicides. These products have caused destruction to bees, birds, and other wildlife as well as being linked to several different types of illnesses in humans.

The trend toward organic eating, the utilization of organic cleaners, and the use of organic products for personal care use is a positive development in America over the past decade to fifteen years. That change notwithstanding the organic product pipeline cannot be sustained or made scalable for the long term without an increase in usable farmland.

The process for being Certified Transitional is difficult and the steps become increasingly demanding as the farm moves through the stages from year 1, 2, and 3. The optimal goal is to have each farm “graduate” into certified organic status by the end of year 3 in the process. The people at QAI achieve this by surprise audits and random sampling of crop yields to ensure that the organic transition is following the proper protocols. It should be noted that QAI is a USDA accredited organization.

The organization also has consultants that can help the individual family run farms or medium sized farms with the application process for the Certified Transitional program. The farm will be inspected at least once per year for the three- year transition process. The QAI certification personnel will review the inspection reports and have a procedure where any deficient areas can be reviewed and resolved with follow up type visits. The final step would be to have the organic certification awarded once all the requisite steps are completed.

The involvement of certain companies, such as Kashi, helps farmers with the cost of transitioning their land to organic use. Most of those farms would be unable to participate in the process based solely on the financial commitment needed to move forward through the three years of increasingly rigorous standards required to earn the organic certification.

The commitment by Kashi to source ingredients from farmers that are participating in the Certified Transitional program helps provide much needed financial resources to the individual farms through the process. The QAI inspections and the verification of the day-to-day operations of each farm in the program is an expensive scenario for the farm, especially the front-end cost.

The farms in the transitional program cannot use GMO seeds or any type of chemical agents in their farming practices. This can be challenging for a farm in transition because the cost of organic seeds can be prohibitive. The vast majority of seeds for staple crops such as corn, wheat, soybean, and sugar beet are genetically modified in some way.

The certified transitional farms that have agreements to be ingredient suppliers with major food producers such as Kashi, have some help in offsetting the costs of the process. This is imperative in the U.S. where autoimmune disease, celiac disease, and other types of cancers are on the rise. The ability for gluten free, organic products to become more mainstream will help drop the price points on certain products so they can be more affordable for people across all economic backgrounds.

The Certified Transitional farming process is a bold step in the right direction for the future of organic food availability in our country for decades into the future.

Addendum To MLS Expansion – Election Day Results Impact The Process

An addendum update to the post yesterday on Election Day referendum ballot measures and the impact on the Major League Soccer expansion process:

San Diego residents voted against the Soccer City proposal of the referendum overwhelmingly. The vote all but ends the bid by Landon Donovan and his partners for landing an expansion franchise in that city. The biggest issue that I perceived with that proposal was, although the stadium and other development was going to be completely privately financed, the public was unsure that an affirmative vote on the land use for that purpose without any guarantee by MLS of them getting an expansion team was a sound choice for the land.

However, the football stadium for SDSU did get approved as well as the campus extension for the school to include the “Innovation Zone”. The public evidently understood the need for the campus extension and also understood the need for a place for the school’s football team to have an updated and appropriate venue to host games. The SDSU football team is already in the city and has a tradition going back decades, it is a safer play to vote that proposal through to the next stage. It also should be noted that the taxpayers have been paying for repairs and upkeep on the enormous Qualcomm Stadium since the Chargers moved almost two years ago. It is time to tear down that facility and replace it with a smaller, less costly venue on that site.

This vote by San Diego residents gives both Phoenix and St. Louis a better shot at landing the one remaining expansion slot left for MLS.

In Miami, the voters approved the ballot measure to allow Beckham and his partners to negotiate the lease and terms of the development of the stadium in the Freedom Park project. The issue remaining is two-fold: the group has to get approval by the city council and can have only one dissenting vote so they need 4 of 5 votes cast to approve the development moving forward. They also must face the reality that the site will not be ready for 2020 opening day and will have to explore temporary stadium sites in the area if MLS wants the team to launch in 2020.

Many moving parts, but the vote yesterday in two cities brought some clarity to the process.

MLS Expansion Update: Election Day Impacts Both San Diego & Miami Expansion Bids

The Election Day ballots impact very important and significant policies which will affect every American. The impact of the referendum questions will shape reform of tax laws, allocate funding for infrastructure projects, and formulate training programs for jobs; among many other important initiatives.

The referendum vote will also impact sports in certain cities, especially in San Diego and Miami. The voters in those two respective cities will have a choice to make on allocation of tax payer money for land use for new stadiums for two potential Major League Soccer (MLS) expansion franchises.

The San Diego residents will have to decide what to do with the city owned land that currently is occupied by the football stadium once used by the Chargers in the Mission Valley area of the city. The team vacated the city and relocated to Los Angeles prior to the 2017 NFL season. The city has been paying for the land and maintenance on the aging stadium, now they have to determine the next use for that complex.

One proposal is for San Diego State University (SDSU) to use the land for a smaller football stadium that would have a secondary use as a soccer venue for an MLS team. The rest of the land would be used for an extension of the campus and part of it would be dubbed an “Innovation Zone” for different academic/research pursuits.

The second proposal is for Soccer City which would be primarily a soccer specific stadium with a secondary use as a college football facility for the SDSU team. The plan also calls for entertainment and retail development as well as a park facing the river. The plans are both similar and would both include a facility with multi-purpose use, but the difference is how each party plan to pay for the development.

Soccer City will be funded by private financing and will require no tax money outlay from the residents. The SDSU proposal will pay for the stadium and campus extension through public-private funds, donations from alumni/benefactors, and revenue generated from the gate from football games/events.

The extension of the campus, according to local media reports, is seen as a crucial element for the university at this point. The land available to achieve this needed expansion is limited, and the football team does need a place to play as well, but not the scale of the NFL stadium on the site.

The group of business and civic leaders backing the soccer team need a stadium or else the expansion bid has no hope of survival. I covered the referendum vote for the Chargers proposed new stadium in the downtown waterfront years ago (a plan that was voted down by residents) and that vote ultimately led to the team relocating to Los Angeles.

The voters of San Diego have been here before, and they can turn the fortunes of either the university or the soccer team very quickly in one direction or another. It is worth noting that if neither proposal gains 50% of the vote, then the proposal with the majority of the votes would be the winning proposal for the land.

The stakes are high, MLS prefers the soccer team to be the primary tenant for revenue stream control, and so even though both proposals allow for a facility to host soccer matches, if the Soccer City plan loses, MLS is unlikely to approve the bid.

Conversely, if the campus extension fails, then the university is back to the drawing board on where it can potentially put this new “Innovation Zone” in a rapidly shrinking area of available land that is scalable for such usage.

The fact that the people have the determining factor here, rather than a group of elitists and politicians is, in my view, an excellent way to make such a far-reaching civic decision. It is completely American in the way that it was conceived and San Diego deserves credit for multiple times placing the residents above their own personal gain.

In Miami, the expansion of MLS to that very important market is already approved, but the stadium site is elusive. I have reported on this situation in the past, and lead investor and former international soccer superstar, David Beckham and his partners in this endeavor have struck out on six potential sites in the past few years.

The Freedom Park proposal, as I covered previously on this site, is a $1 billion stadium and entertainment complex proposed by Beckham and his well-financed partners on a site that is currently a public golf course. The voters must decide whether to allow the group to bypass the competitive bidding process to negotiate a lease with the City of Miami directly.

Those with knowledge of the deal report that it is a 99 year lease with the city. The issue with the land is that it was once used as a waste treatment facility with an incinerator known as “Old Smoky” and to tear up the golf course and disrupt the land to build a stadium and multiple structures on the property would create an environmental cleanup that would be very costly.

The mitigating factor is that the private investors are going to pay for all the construction and all of the costs of developing the site. The proposal calls for no tax payer contribution.

The referendum needs to pass for Miami to be able to move forward with the stadium plans to meet the 2020 entry into MLS. The way forward if the vote goes against them is unclear, and could create a tremendous stumbling block to a expansion bid that has been riddled with problems from the start.

Election Day will have implications that are far-reaching for residents in cities and towns across America. In the case of San Diego and Miami, two major markets will have referendum votes that will shape sports and entertainment in those two respective cities for decades into the future.

(some background courtesy of MLS.com, Miami Herald, Sports Illustrated, and NBC 7 San Diego)

Remembering Those Lost

It is the time of year in my Catholic faith where All Saints Day and All Souls Day approach on the calendar (All Saints Day is November 1st and All Souls Day is November 2nd for those who are unaware) when I begin to think about those that have gone to their rest from this life.

The souls of those who have gone before me have eternal life in my belief system. This was achieved by the Death of Jesus Our Lord and Savior, which provides all who believe in Him with eternal life and freedom from sin.

Our lives touch so many people from who we interact with at school, at work, in our neighborhoods, our families, and in our church/faith communities as well. I remember fondly, and I am inspired by those that have gone before me. I push myself every day to spread messages of hope and love in their honor.

I know that we all have that in common, we all have someone that we remember, we have all been touched by the loss of a friend, relative, colleague, or co-worker. Some have been impacted by the loss of someone in all those categories and others in just one or two; we all have experience with loss. We all have experience with what that can do within the human condition.

In my own experience, my faith helps me to move forward from loss because of the belief that the loved one or friend is in a much better place. However, the human emotions that grief and loss can cause are still profound. The simple reality that you will never see the person again in this life, will never have another conversation, that is a stark reality.

Those emotions usually come from another common human tendency to take things for granted. We tend to think that our lives will remain the same for the foreseeable future, until one day, usually suddenly, our lives change.

It is in this way that we need to be grateful and count our blessings, we need to be reminded that time is precious, and we need to take the time to enjoy each day as a gift. This change in outlook and being grateful for everything and everyone in our lives can dramatically shift your approach to every other aspect of your life.

The important way to remember those that have died and gone before us, is to take some component of that person and incorporate that into our own lives. The way that someone served the community, gave to those in need, took care of a family member, or made friends with strangers – these are just some examples of how we can make changes in our lives to honor those that have gone before us.

These changes can be very personal and can seem overwhelming, but they can be done incrementally. They can be done at your own pace. It is important to remember that we have to take the time each day to be thankful for what we have and for the people that we have present in our daily lives.

I hope that this helps so many people who will be entering the holidays thinking of those that have gone before us. I hope it provides a different outlook and perspective. I hope that you can all find ways to remember those that have gone before us from this life in your own daily interactions with others.

MLS Update: Columbus Crew Saved From Relocation Austin FC Moves Forward As Expansion Team

This is an update to an earlier piece on the potential relocation of the Columbus Crew franchise in Major League Soccer (MLS) to Austin, Texas. The whole situation has taken, over the past week, some dramatic twists and turns.

My earlier piece on this topic focused on the politics and business anglings of Crew “principle operator” Anthony Precourt and his company Precourt Sports Ventures (PSV). The article centered upon the process of getting a soccer stadium approved for the McKalla Place vacant plots of land in North Austin.

That measure passed the City Council and the plan was for Precourt to relocate the Crew to Austin and rename the club Austin FC to begin play in 2019. The plan calls for PSV to pay for the construction of the stadium which the city of Austin will take ownership of and then lease back the stadium to the team for games.

However, the Crew relocation is being held up by court litigation in Ohio which has certain laws on the books, one notably known as the “Modell Rule”. This was named for Art Modell, the owner who notoriously and ingloriously moved the Cleveland Browns to Baltimore, where they became the Ravens. It was put in place to have a mechanism to protect professional sports franchises in Ohio from future similar circumstances.

The campaign started by the fans and other interested parties in Columbus was called #SaveTheCrew and it gained traction both in the courts and in the consciousness of the people of Ohio. Then, it gained national recognition because this attempted relocation by PSV of the Crew, which are an original MLS franchise, would have gone down as the most significant violation of fan loyalty in the history of American soccer. It could even be seen as one of the worst moves by an owner in American sports history.

The City of Columbus won the bid for an MLS franchise in the 1990s after being up against Cleveland for the rights to be the league entrant in the region. The tipping point in favor of Columbus at that time was the commitment by the city to build the first soccer specific stadium in the United States at that time.

Unfortunately, Crew Stadium as it was known then (MAPFRE Stadium as it has a corporate sponsored name now) was built on the outskirts of the city limits and has nothing else nearby. It lacks certain amenities for fans and does not have really any luxury boxes or other premium seating which could be used to increase revenue as well as provide a better fan experience.

The #SaveTheCrew movement attracted the attention of Jimmy Haslam, the owner of the Cleveland Browns of the NFL. Haslam assembled a group of investors from his network and they are deep in negotiations to keep the Crew in Columbus. They are actively working with a group called the Columbus Partnership on a new stadium proposal as part of retaining the team in the city.

The new stadium would most likely be located downtown with plenty of accessible public transit options and be close to other points of interest for fans and visitors attending a game. The future use for their current stadium is unknown, but it should be noted that many fans do not like the location of the current stadium.

The news that the Crew are most likely staying put in Ohio led to the inevitable question: what happens to the Austin FC proposal and all the work that people from the league office, Austin officials, and PSV put forth to get a stadium plan for McKalla Place done?
It appears likely that MLS will use an “investor transition” option in this situation. If you recall, in my earlier articles on this topic, I explained that the MLS franchises are not owned by individual men or women or ownership groups like the other sports leagues. MLS is structured as a single-entity meaning that the MLS owns the teams and they have interested investors assigned to each one.

That was the loophole that MLS tried to take with the Ohio lawsuit, arguing that Precourt did not “own” the Crew outright, so they could not sue him. The league is now looking to make the Haslam group the investor for the Columbus Crew, and then they will transition Precourt / PSV to be the investor of a new team in Austin.

That essentially means that Austin FC will still be joining the league in 2019 as an expansion franchise, and that the plans to build a stadium in McKalla Place will move forward as scheduled.

The MLS got what it wanted in the end, it kept an original franchise with a dedicated and established fan base in Columbus and will get a new downtown stadium for the Crew to increase revenue in that market. In addition, they will get access to Austin, the largest U.S. metro area without a major pro sports team, and they will gain that market with no competition for dollars.

In a pure business sense, it was all orchestrated well, but it has an effect on people in both cities as well as in the expansion process. This situation has both winners and losers, like any other situation of the type.

The winners here are MLS, Columbus, and Austin as well as the fans in those cities. The losers are those who are not in favor of building a stadium in that part of Austin, and the other entrants in the expansion process and their fans. The entry of Austin as an expansion team rather than a relocated team, means that only one spot remains in the expansion phase that the league identified to get to 28 teams.

The cities of Phoenix, Sacramento, Charlotte, Raleigh, San Antonio, Indianapolis, Detroit, and Tampa/St. Petersburg are all under consideration for what we all thought was going to be two expansion slots. Those bids each have issues which I have covered in past pieces here on this site.

The Sacramento bid stands out as having the most to lose by Austin now grabbing that other spot. Sacramento was once favored to get a team and is constructing a new stadium downtown but they had some partners leave the investor group. The league has stated that without a big financial investor they will not be awarded an expansion team.

San Antonio also likewise has a doomed bid because the league will never put another team that close to Austin and put a fourth team in Texas. They come out on the losing end due to these developments.

The Tampa/St. Petersburg bid just had an investor change to the group that owns the Tampa Bay Rays of MLB, which is a deeply resourced and financed group. It remains to be seen if that helps their bid for the last seat at the table.

In the end, the precedent set by the team and the league working together to keep the Crew in Columbus is a good one for MLS. The last situation they need as a league is for teams to start moving around the map. They need stability in their franchises. It is great for the fans and the Crew employees and staff to stay in the place they know as home.

The City of Austin gets a shot here to have a big league sports team and the impact that will have on the region and on the expansion process for MLS will be felt for years to come.

(some background courtesy of The Austin Statesman, The Columbus Dispatch, and America Soccer Now, MLS website)

Follow Up: CBS / Viacom Merger News: The Saga Continues

The CBS and Viacom saga continues to loom within the media landscape following the sexual misconduct allegations against former CBS Chief Executive, Les Moonves, which led to him being removed from that post recently. This has caused many within the financial sector to have renewed speculation regarding the potential for a CBS merger deal with Viacom to get back on track.

In a follow up to earlier pieces on this topic, the interplay between CBS, Viacom, and their common parent company, National Amusements (NAI) has been a mess over the past couple of years. The struggle between Moonves and Shari Redstone from NAI and the discord that conflict created within the CBS board has shaped most of the news around this merger over the past several months.

The removal of Mr. Moonves from the equation seems to indicate that the merger will take place at some point between CBS and Viacom. This can be simply because no other external entity has indicated any type of interest level in obtaining CBS at this point.

The potential merger of these once-joined media conglomerates (CBS and Viacom were once under the same roof until they split apart several years ago) would make sense from a financial perspective as Wall Street analysts have stated that the merged CBS-Viacom unit would have a better valuation. Some analysts have estimated that the total valuation would increase in value between 20-30% compared to the two remaining single entities.

While that valuation impact is significant, the most critical issue facing CBS at this point is to find a new CEO. The reports have been centered around the likelihood that this candidate will be hired externally to bring a fresh perspective to the network and the corporation.

In my prior work on this topic, the dynamics between Ms. Redstone, Mr. Moonves, and Viacom head Bob Bakish were explored. The interpersonal issues between all of these figures has been at the center of the saga between CBS, Viacom, and NAI. The reports from multiple media outlets are that the new external CEO of CBS will be the individual in charge of the combined CBS – Viacom and not Mr. Bakish.

This added responsibility increases the importance for CBS to find the right candidate on what is probably a very short list of people who have the requisite skills and background to run such a complex, diversified combined media corporation.

The terms of the settlement in court between NAI and CBS stipulate that NAI cannot initiate any offers to consolidate CBS and Viacom for a period of two years. However, the settlement does not preclude either CBS approaching Viacom or vice versa, with a potential merger bid.

The likelihood of that happening after a new chief executive is named at CBS is seen as highly possible. In my prior work within this merger proposal saga, I have always maintained that Verizon would be the “dark horse” that would come out of the woodwork and purchase CBS for some inconceivable amount of money.

The media landscape has evolved though, and my view is starting to shift in thinking that Verizon may not be interested in CBS at all. They may not be interested in the capital outlay and the organizational changes that would need to take place in order to integrate CBS into the Verizon umbrella.

The other major networks and “old media” companies are out of the mix for CBS for mostly anti-trust reasons. Some have rumored that maybe CBS – Viacom combine and then merge again with a major studio such as Lions Gate or another television outlet such as AMC. In my view, that could happen because both CBS and an outlet like AMC would have to grow larger or else be swallowed up by another conglomerate.

The rumor that a “new media” entity such as Amazon, Apple, Netflix, or Google could snap up CBS seems unlikely at this point too. That sort of consolidation is delivered at a significant cost because of the complexity of the merger, the legal proceedings involved, and the integration of the key business units within CBS into an existing corporate and operational structure.

The content that CBS controls is a tremendous asset, and at the end of the day, content is king. The CBS app called All Access is a subscription-based service that has a robust base of viewers. It will be interesting to see if those variables are a motivating factor toward a “new media” entity taking a shot at consolidating CBS, especially if they would also hold the rights to the Viacom content.

The major shifts in the media industry this year have created a climate where CBS and Viacom both must make some sort of strategic growth move in order to stay relevant. It may become a merger of necessity rather than joining together willingly and with enthusiasm. The combined entity of CBS-Viacom would have certain strengths that would help them compete in an increasingly competitive and margin conscious industry.

The content and streaming app as well as other business units could position CBS – Viacom to better meet the demands of viewers that are changing the way they access media, television, and movies. The timing will all be predicated on how long it takes for CBS to complete their search for a new CEO.

The changes in the media and television industry has already seen some incredible M&A activity during 2018. The future for both CBS and Viacom could highlight the industry merger news in the new year ahead.

(Some background information courtesy of CNBC and AP)

Follow Up: NHL Expansion To Seattle Takes Crucial Step

In a follow up to earlier posts on this topic, the bid by Seattle to become the 32nd franchise in the National Hockey League (NHL) took a crucial step forward on Tuesday.

The Seattle ownership group partners and Mayor Durkan met with a nine-member committee of NHL governors (owners) and other top league executives in New York to make a presentation essentially framing why the NHL should expand into the Seattle market.

The news comes as no real surprise because the Seattle group set records for season ticket commitments and blew away the number that Las Vegas did a couple of years ago in their respective season ticket drive. The region in the Pacific Northwest is untapped in the U.S. by the NHL, and the prospective Seattle team would have a built-in rivalry with the Vancouver Canucks about a two hour drive away to the north.

The committee yesterday voted 9-0 in favor of the Seattle bid moving forward in the expansion process. The financing of the team and the arena renovations to Key Arena at Seattle Center (which was the center of my last article on this topic) were not seen as a deterring factor.

The next step is for the NHL to vote on the formal expansion to Seattle in early December at the league meetings in Georgia. The expansion fee is expected to be (and widely reported) around $650 million. It should also be noted, for those who did not read my earlier coverage, that Seattle is the largest metro area in the United States without a major winter pro sports team.

The city is known for their passionate support of their current teams: the Seahawks in the NFL, the Sounders of MLS, the Mariners of MLB, and the Seattle Storm in the WNBA. The Seattle group used that as part of their pitch to the NHL committee on Tuesday and noted the excitement of the city, as evidenced by the season ticket drive results which were outstanding.

The addition of Seattle (it looks like a mere formality at this point) means that Quebec has no realistic prospect of entering the league unless one of the current teams decides to relocate to their city. The league, once it adds Seattle, will be balanced with 16 teams in each conference for the first time in several years. The NHL will not be looking to expand and “cut the pie” of revenue sharing again for quite some time.

The relocation targets for Quebec of the Carolina Hurricanes or Florida Panthers moving north of the border both look more unlikely. The Carolina team changes owners but the lease agreement on the arena is very friendly to the ownership. The Florida club got better, younger, and they saw their attendance improve somewhat. It seems less likely they will move or that the NHL would allow them to exit the South Florida market.

The last remaining hope is the Arizona Coyotes, but they are looking at a new arena site in The Valley and are also linked to Portland, OR if they were to relocate. I think the NHL, which wants desperately to remain in Phoenix, would more likely approve a move to Portland to keep the conferences balanced before it would vote to move the team to Quebec.

Seattle is going to be an intriguing market for the sport and for visiting teams and their respective fans. The Key Arena renovation is very ambitious and is the mitigating factor on whether the new team begins play in 2020 or 2021. That facility is going to combine the old with the new. The iconic roof will remain in place, the green space around the arena will be kept as well. The modern amenities and wider concourses will be added and the design of the new seating will provide hockey fans with great angles to view all of the action.

The talk in Seattle is that now that the NHL looks like a lock to come to the Emerald City, where is the NBA in all of this? When can the Sonics return to the hardwood? That looks rather unlikely from the standpoint and tone of the NBA and their Commissioner, Adam Silver, in recent statements.

Some people do not understand it, but in my earlier coverage of this topic and the NBA expansion bid to Seattle, it makes sense. The NBA preferred the “SoDo arena” proposal as it was known with Chris Hansen investing in all of that land downtown to build a brand-new arena for the Sonics to return. That agreement with the city was for an NBA-first facility. It would be designed with hockey as a secondary tenant.

The Key Arena proposal which the city ended up going forward with, is an NHL-first agreement which means that the NHL team will be the primary tenant and will get the better end of the revenue and gate sharing agreements in the building. The NBA expansion to that market under those conditions would limit the profitability of the Sonics. The NBA also has no imminent plans to expand and has other markets that will promise and are in better position to deliver, better profitability for the NBA in the long term than Seattle at this point.

The fans of hockey in Seattle should be thrilled, it is an exciting time for them and for hockey fans in general; especially given the success of the Golden Knights in their inaugural season last year. The next big decision once the vote comes through in December is to determine a team name. The NHL is coming to Seattle and the excitement has only just begun.

(thanks to The Seattle Times for some background information and to NHL.com as well)

Healthcare Mergers: The Impact On Patients

CVS and Aetna are just the latest in a list of healthcare M&A activity that is on the deck for the industry. The changing tide of the industry is alarming to some groups of people who see a future of less competition and patient choice. That can be a significant “red flag” for regulators, though so far it does not seem to have derailed any of these acquisitions from moving steadily forward.

The mega-merger that was long rumored between Cigna and Express Scripts was approved on Monday by the Department of Justice. This deal is set to pave the way for the CVS – Aetna proposed merger valued at $69 billion. The reports out of the financial media outlets are that CVS and Aetna would have to divest some holdings to satisfy anti-trust regulations.

Cigna – Express Scripts consolidating creates a combination of a major health insurer with a Pharmacy Benefit Manager (PBM) which they contend will make an environment to decrease costs for the patient. However, some feel that it will have the reverse effect.

Some feel that this deal and the corresponding proposed combination of CVS-Aetna will limit patient choice and force consumers into formularies where they will be faced with having to pay more for prescription drugs in the future.

This activity all comes amid the backdrop of Amazon making a concerted and deliberate push into the healthcare space with their partnership with Berkshire Hathaway and JP Morgan Chase to attempt to reinvent employer provided healthcare provisions. In a subsequent transaction, Amazon purchased the burgeoning mail order prescription provider, PillPack, for $1 billion over the summer.

Furthermore, Amazon announced a joint venture with Xealth which provides the internet shopping giant with a foothold into the healthcare services delivery system. The rest of the industry took notice, and in response Aetna entered into negotiations with CVS, Cigna began talking about synergies with Express Scripts, and Walgreens made certain deals of their own with national insurance carriers on a regional basis such as United Healthcare and Blue Cross & Blue Shield.

In my prior work in the M&A space, I have covered the premise of horizontal and vertical mergers. The vertical merger is one where the two companies may be in the same general industry space, but not in direct competition with one another. A good example of this type of merger was the AT&T – Time Warner deal. They both have business holdings in telecommunications and in television specifically (AT&T owns DirecTV and Time Warner owns multiple cable TV outlets) but they were viewed by the government as vertical in nature.

The example of a horizontal merger would be when Walgreens attempted to consolidate and merge with Rite Aid. I covered that with a series of articles and eventually, the federal regulators struck down that merger because it was between two businesses directly competing in the same industry space: retail drug store. The merger was seen, if approved, to have the effect of limiting consumer choice and potentially increasing costs to the consumer. It would have limited consumer choice in drug stores and the consolidation could have closed locations that were once part of Rite Aid, forcing people in rural areas to travel further to get to a pharmacy.

The CVS – Aetna deal hinges on the sale of Medicare Part D related plans that would most certainly need to be sold off to pass the regulatory standards in place. Some consumers feel that the deal would unfairly limit the choice of pharmacies because if they hold Aetna employer-based benefit plans, they would be funneled to CVS to fill their prescriptions. This could also be seen as giving CVS “a captive” group of consumers.

The Cigna – Express Scripts deal should help them compete against the Amazon healthcare joint venture that will continue to shape the landscape of the industry in the future. The potential impact of all of this M&A activity on the consumer has yet to be determined. Please check with your healthcare provider to make sure that you are aware of any changes this may have on your individual prescription plan coverage.

(Some background information courtesy of Bloomberg News, The Wall Street Journal, CNBC, and Reuters)

Merger News: P&G Gains Approval for Merck Germany

The formal merger announcement came as no surprise that Procter and Gamble received approval from the E.U. regulatory boards to obtain the Consumer Health business unit of Merck Germany. The acquisition has been in the works and approval was being rumored for about a month leading up to the official approval.

This is the largest acquisition for Procter & Gamble (P&G) since they obtained personal care giant, Gillette, in 2005. The consolidation of this business unit from Merck Germany will expand the reach of P&G into new markets in the European Union, Latin America, and Asia.

In accordance with this announcement today, P&G also formalized the end of their strategic joint venture with TEVA Pharmaceuticals in which they had worked for a number of years together on synergies in the Over The Counter (OTC) products space.
The growth of the OTC area is a core strategic direction for P&G within that industry. This move will allow them to grow that business and expand their existing product lines as well as determining new potential growth pathways within the OTC area.

Merck Germany is not affiliated with the U.S. based pharmaceutical company of the same name, it was essentially spun-off several years ago. The company is a big player in the industry with 900 products distributed in 44 countries. The estimates are for 3,000 employees to transfer from Merck Germany to become P&G employees should the merger gain approval.

The financial experts and Wall Street investment types view this move in a positive way for the retail channels it will impact, but have a more cautious view overall because the merged unit does not have synergy. The deal is not expected to close until the summer of 2019. The ramifications for monopolies in certain industry segments will most certainly be scrutinized by regulators in the European Union.

The potential impact on pricing for consumers on personal care products will be an area of significant concern for the anti-trust regulatory boards in the E.U. relative to this proposed merger. The combined entity will have a larger presence in muscle, joint, and back pain relief which will be a certain area of growth within the demographics of a population that is living longer overall.

Some analysts have speculated that P&G could use the technologies acquired in this transaction to bolster their existing product lines in the U.S. and North America. This is to meet increasingly sophisticated consumer demand for products that deliver more efficacy with no major side effects.

The proposal between P&G and Merck Germany also triggered the news that P&G will end their joint partnership with TEVA Pharmaceuticals. The statement from P&G called the partnership “highly successful” and it did last for seven years.

However, the partnership has always been focused on growing OTC business areas outside of the United States. The bid for Merck Germany creates a redundancy in this regard. The other official statement reads that the goals of the two companies are “no longer closely aligned”. Each side will retain their brands and will look to recalibrate their marketing strategies around those brands on an individual basis.

The merger will have more impact in other regions of the world, especially in Europe and Asia, but the North American consumer impact will be most noticeable in the potential for new or enhanced products in the respiratory, sleep, and cough/cold relief.

The other potential impact of this merger in the U.S. is the potential response by the competitors of P&G in the consumer health industry. How will Unilever, Colgate, or Johnson & Johnson respond to this merger? Pfizer is already moving through the early stages of a complete reorganization to be able to compete more effectively in a few key strategic business areas.

Then, the next area to watch is for the new competitors such as Amazon and Kroger and how they will respond to this move by P&G in the coming months. It is essentially like a big domino that could trigger a whole set of other M&A activity within consumer health.

The potential for P&G to grow in geographic areas where they have limited to no presence currently is an intriguing aspect of this proposed deal. The regulatory decision in the E.U. bears watching and the response by the competitors will shape consumer health/personal care products for the foreseeable future.

(Some background information and statistical info courtesy of Forbes, www.bizjournals.com, Pharmacy Times, and CNBC)

“Names” – A Tribute to 9/11 – Poetry by Frank J. Maduri

“Names”

All of these names read aloud
Some read quickly and others –
More measured, more deliberate
All of these names mean something
Most of the names have many titles:
Husband, wife, mother, father
Grandfather, uncle, aunt, sister
Brother, cousin, nephew, niece
Friend, colleague, client, citizen
All of these names represent a life
A life extinguished far too soon
A life taken by a tragic event
Seventeen years ago on a bright
Sunny September morning
The names just keep going
And going, being read by
Family members, friends of those
Lost in the attacks that fateful day
The names and faces all unique
From older men and women
To mid-life professionals
To recent college grads
To firemen and police
The names reflect all ethnicities
All races, all colors, all walks
Of life and religions
With a common thread
They all left this world
On 9/11 and they left behind
A legacy and an imprint
A promise we made as a nation
And need to always keep
We will never forget

Copyright 2018 – Frank J. Maduri – All rights reserved