New Balance’s Big Basketball Ambitions & The Rich Are Ditching The UK

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC.

0:34Good morning Brew Daily Show. I'm Neil Primon. And I'm Toby Howell. Today, why more millionaires are leaving the UK than any other country. Then New Balance is planting its flag in the basketball market as it gears up to take on Nike and Adidas. It's Thursday, June 26th. Let's ride.

1:00Any fans of the social network here? Good news, you're getting a part two. Aaron Sorkin, who wrote the 2010 movie about the founding of Facebook, is writing and directing The Social Network Part 2 for Sony Pictures. It's not going to be a straight-up sequel to the first, but jump ahead to 2021 to explore the controversy around The Facebook Files, a series by The Wall Street Journal that claimed the company knew about the harms it caused users and buried it because it was bad for business. Like the first movie, this is not going to paint a flattering portrait of Mark Zuckerberg. On a podcast episode last year, Sorkin said he blames Facebook for January 6th, and when asked why, he replied, you're going to need to buy a movie ticket.

1:40I am very excited for this because the first movie was great. The only fear here is that Jesse Eisenberg has yet to be officially attached to the project, which if you don't have Eisenberg, who else is going to play Zuck? It would also be very fun to see Jesse Eisenberg go through the physical transformation that Zuck has in real life. Get buff, rock the chain, you gotta rock the chain. Also, I was just going down memory lane. The first movie is so good and so quotable. If you guys were the inventors of Facebook, you'd invented Facebook. A million dollars isn't cool. You know what's cool? A billion dollars.

2:13And then finally, drop the the, just Facebook. Great movie. Hope the second one can match it. Now a word from our sponsor, Domain Money. Neil, you know what really grinds my gears? When hair and makeup don't show up for work? Well, obviously, yes. But also when people who work hard to earn and invest their money start working with a financial advisor who starts charging these assets under management fees. Seems like a good idea at the time. Oh, this person has a fancy sounding title. They probably know what they're doing, but that 1 % AUM fee starts to add up and eat away at your returns, even if they do know what they're doing.

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3:21Through domain sponsorship of Morning Brew Daily, we receive compensation that included a free plan and thus have an incentive to promote domain money. This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there. Oil and water may not mix, but oil and oil could make for a smooth combination.

3:59That may be what Shell is thinking after the Wall Street Journal reported that it was in early stage talks to acquire rival BP in what would be the biggest oil deal in a generation. And by big, BP is worth$80 billion. So any takeover with the typical premium would surely top the$83 billion oil merger that created ExxonMobil in 1999, which was then the world's second largest publicly traded company. Shell and BP have a lot in common. They're both so-called oil super majors with sprawling operations around the world, producing the commodity fueling the global economic engine. And they're both based in the UK.

4:36But in recent years, they've been going in opposite directions, with Shell rising to premium grade and BP looking more regular unleaded. BP has lost nearly a third of its market value in the last 12 months due to an ill-fated pivot to renewables. And it's attracted the heat of an activist investor, Elliott Management, the same one that spurred changes at Southwest Airlines. But as BP has been going through it, Shell has kept on pumping lucrative oil and gas, giving it a market value more than twice BPs and nearly$200 billion. So it can probably afford to swallow BP, but would it? Maybe not. A Shell spokesperson denied the Wall Street Journal report of active talks to buy BP, saying this is further market speculation.

5:16No talks are taking place. Still, Toby, it's quite clear that BP is a prime takeover target for someone. Absolutely. That's why everyone believed this report as soon as it came out. One, it came from the Wall Street Journal. But two, everyone's like, yes, BP is a takeover target because it's been just the laggard in the fossil fuel market. They miscalculated a decade ago where they tried to push a lot of resources into their clean energy business. And that just wasn't the play that has caused its stock to, you know, drastically trail. Someone like Shell, who did the exact opposite, didn't go as much down the renewables path and just stuck to its guns and invested in oil and gas production.

5:54So BP has been trying to turn the ship around recently and announced plans earlier this year that we're going back to basics. We are boosting oil and gas production. The chairman that kind of led this push into the low carbon strategy is stepping down. So there is certainly a renewed focus on what they are good at. But it's also why when a report comes out that Shell is looking to buy them, everyone said, yes, this makes a ton of sense because they are a prime takeover target. Right. So Shell is rejecting the fact that there's active talks. But analysts around this industry say something might happen soon.

6:27There's been a lot of consolidation in the oil and gas industry. Chevron is trying to close that$53 billion deal for Hesse. I mean, these numbers are just astronomical when you're talking about this industry, these companies print money. The question is, what's going to happen to BP? Is it going to be Shell trying to take it over? Well, some are speculating that there might be an alternative bid for BP. Maybe it comes from Chevron, and then Shell is waiting for that first shoe to drop, and then it will come in with a bid of its own. There's other speculation that it's simply waiting for BP to get even more cheap.

7:04We mentioned how much the stock has fallen over the recent years, perhaps. it's just waiting for BP's price to fall even more so and get a better price. Also, oil prices are low. Despite all these tensions in the Middle East, oil prices are remaining at month lows, in which case that's not good for oil companies. So Shell might be just waiting it out for oil prices to keep on going lower, which would make this acquisition cheaper for them. Yeah. And let's talk about gas prices right now, despite the conflict in the Middle East that you would expect to spike oil prices. That just hasn't been the case.

7:40The average cost for a gallon of regular gas in the U.S. right now is$3.21. That is 23 cents cheaper than it was a year ago. So even though oil prices did spike initially, they have come back down. And part of it is because more people around the world produce oil and gas. Now the U.S. has produced a lot more oil since the early 2010. So there is an abundance of excess oil right now, which is helping reduce some of that pain at the pump. That being said, things can change very quickly. I mean, we talk a lot about the Strait of Hormuz, which 20 % of the world's oil passes through. If something happens there, we could see gas prices rising.

8:17But it is a fascinating backdrop to this mega merger deal that was rumored to be happening, but then looks like maybe not. While most NBA fans know the NBA draft was yesterday to new balance execs it went by a different name flag day the dallas mavericks selected 18 year old duke blue devil cooper flag with the number one overall pick to no one's surprise but the shoes he'll be wearing on the hardwood are raising some eyebrows instead of representing adidas like fellow number one pick anthony edwards or nike like zion williamson flag will be rocking new balances as he begins his career it represents a major coup for a brand looking to plant its flag in the basketball world once more by associating itself with one of the game's brightest and up-and-coming stars.

9:00Flag has been on New Balance's radar since he was a teenager growing up in Maine. He grew up in Newport, just 25 miles away from a New Balance manufacturing facility. And Naveen Lokish, New Balance's basketball and football director, pitched Flag on partnering with the company with a tribute video from the workers at a nearby facility. For New Balance, it ended up being a trump card that gave it a leg up over bigger brand's carding flag and flag joins a small but mighty roster of athletes rocking new balance these days that spans from tennis superstar coco goff to three-time mvp shohei otani in the mlb neil new balance is still a distant fourth behind nike adidas and puma when it comes to sportswear revenue but landing stars like flag is a good way to start closing the gap first let's just talk about how new england this deal is because as a massachusetts baller myself i have to marvel that This is the best prospect to ever come out of Maine.

9:52He's one of the best basketball prospects who's ever stepped foot on a court. And the fact that he's tying up with a Boston company just kind of warms my Western Massachusetts heart. But yes, the pecking order right now is Nike, Adidas, Puma, New Balance. New Balance has$7.8 billion in revenue. It wants to get to that third spot in Leapfrog Puma's$9.5 billion. It thinks it can get to that$10 billion number, but it's going to have to lean into basketball and Cooper flag as the way to get there. It's already come a long way. New Balance has had a major renaissance in recent years. In 2010, it just did$1.8 billion in revenue.

10:29Now it's looking at$10 billion. It's almost quadrupled over the last 15 years in revenue. So New Balance is this strategy of picking very particular high-value prospects and just riding them has been very successful. And it's been a change in strategy for New Balance, who back in the 90s, they had this campaign with the tagline endorsed by no one. They really were trying to cater to the everyday athlete. They wanted their shoes to speak for themselves. So they didn't go down the Nike path of associating with these really big stars. Now they are changing that. They've signed some very big names, not a ton of names, but they're focusing on quality over quantity.

11:08I mean, Gabby Thomas, Olympic sprinter, Shohei Otani, obviously one of the greatest baseball players of all time. Coco Goff. Now you have Cooper Flagg to the mix on your NBA team, which also has Kawhi Leonard. So they're not necessarily spraying and praying. They are very much hunting with a spear here and trying to go for big game players. And Cooper Flagg is just one that completely changes because he is on the level of like you put him in the rarefied air of like LeBron. And when it comes to prospects, he is just that good. So that is a big coup for New Balance. Meanwhile, the sneaker Wars are heating up later today.

11:42We have this big race that's going on. Nike and their athlete, Faith Kip Yegan, who is a longer distance runner, she is trying to become the first woman to run a mile in under four minutes using these new Nike shoes. So we are going to be absolutely glued to that. I think it's at like 1.30 Eastern time. So make sure to check that out as these Sneaker Wars heat up. You've heard of Brexit, but now the UK is contending with Wexit. That That W has nothing to do with Wales, and everything to do with the wealth UK is poised to lose this year more than any other country. The great wealth exit, a.k.a.

12:18Wexit, is hitting the country hard, according to Henley & Partners' wealth migration report. Britain is set to lose a record 16 ,500 millionaires this year, more than double second-place China, who has held the top spot every year for the past decade. It's record-setting in a bad way. No other country has seen this level of exodus in the 10 years since Henley has been tracking data, and it also marks the first time a European country has ever topped the list. Since the 2016 Brexit vote, Britain has gradually shifted from a refuge for the wealthy to a springboard for their departure, accelerated by new laws which introduced steep hikes in capital gains and inheritance taxes, along with new rules cracking down on non-domiciled residents that took effect back in April.

13:02It's all combined, Neil, to turn the UK from a wealth attractor to a wealth deflector, with other countries happy to step in and pick up the slack. Yeah, Hedley and Partners didn't mince words about the symbolism of this. They said it reflected a deepening perception among the wealthy that greater opportunity, freedom, and stability lie elsewhere. There are huge long-term implications for Europe and the UK's economic competitiveness and investment appeal. They called it a very significant move. And I think what you mentioned about the non-domiciled residents, the changing rules for them is really the key here because 60 % of everyone leaving the UK, of all these high net worth individuals, these millionaires leaving the UK in 2024 and 2025 are foreign born.

13:48And so they are going back maybe to the Middle East or India or places where they came from. And that is because the U.K. once had these very favorable tax laws where you could come and live in the U.K. at a very tax efficient status for up to 15 years. That's changed. And they say, well, now I have to live in a much higher tax jurisdiction. Why don't I go to other places that have a much more favorable tax environment? And that's where they're going. Yeah, this is a shift in general to a lot of high net worth individuals are migrating. The report found that 142 ,000 people plan to relocate in 2025.

14:26Along with the UK, France, Spain and Germany are all forecast to see net millionaire outflows. Not as stark as the UK, but a lot of them are going to southern European countries like Italy, Portugal and Greece, who are becoming these new magnets for wealth. But if we're talking globally, the UAE has been the destination to move through. It is expected to attract almost 10 ,000 millionaires in 2025. It is followed by the U.S. with 7 ,500. So clearly the centers of gravity for where millionaires want to put their flag down is shifting obviously to the U.S., which will always be a major player, but also to the UAE because of their, you know, very beneficial tax structure.

15:07And let's talk about the beneficial tax structure in Dubai and Abu Dhabi, the two biggest cities of the UAE. There is zero income, capital gains or inheritance tax. So it's not a surprise why they're moving from London, a higher tax jurisdiction to the Gulf cities. Up next, it's time for Neal's Numbers. Does it ever feel like you're a marketing professional just speaking into the void? But with LinkedIn ads, you can know you're reaching the right decision makers, a network of 130 million of them, in fact. You can even target buyers by job title, industry, company, seniority, skills, and did I say job title?

15:45See how you can avoid the void and reach the right buyers with LinkedIn ads. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started at linkedin.com slash campaign. Terms and conditions apply. The Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA. Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen and keep striving. Visit Strayer.edu slash Jack Welch MBA to learn more. Strayer University is certified to operate in Virginia by Shev and as many campuses, including at 2121 15th Street North in Arlington, Virginia.

16:28Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will feel like walking into an air-conditioned building after sweating your butt off outside. My first number reveals how linguistic preferences from AI chatbots are changing the way humans speak. Next time you find yourself in conversation or writing an email, think about how much you use the words such as meticulous, realm, and adept. Researchers at the Max Planck Institute for Human Development found that speakers on academic YouTube channels use those words 51 % more frequently than three years prior, which they attribute to ChatGPT favoring those words in its prompts.

17:04Other words that have gotten a boost in our vocabulary, thanks to ChatGPT, are prowess and tapestry. But the number one offender, the siren call of AI voice, is the word delve. The Verge writes that Delve is a kind of linguistic watermark that tells everyone, I use AI a lot because for whatever reason, chatbots love the word Delve. Even as some words have seen their star rise from AI, others are on their way out. Researchers found that words like bolster, unearth, and nuance have declined in use because they are not favored by ChatGPT. Toby, it's compelling evidence that AI chatbots are profoundly changing the way we communicate, but I got to know, are you a big Delve guy?

17:42It's made me very self-conscious because do I say it? I don't know. Sometimes words just come out and it is due to what we are reading, what we are consuming. But these same researchers found that it's not just the vocabulary that we're using. It's the tone in which we speak. Now people are talking in longer, more structured speech because that's how AI returns answers to you. So they are muting emotional expression. All the little idiosyncrasies that make human speech human are being flattened out because of these AI chatbots. The ironic thing, too, is another set of researchers at Cornell found that when people were conversing with AI, it increased overall cooperation and feelings of closeness between participants.

18:25So the actual text that AI is spitting out, people like and connect to. But as soon as they understood that it was coming from AI, their trust levels plummeted immediately and they didn't feel connected or trust the person they were conversing with. So it's this catch 22 where technically the stuff we're being fed makes for better communication, but we don't like it because it's coming from AI. We are in a whole new world, one with a lot less nuance. My next number shows why your local factory has a now hiring sign on the front door. An incredible 400 ,000 manufacturing jobs are currently unfilled in the United States, an existential challenge for President Trump's goal to revive America's industrial base.

19:05Why so many open positions? As boomers retire and hit the bingo tables, there aren't enough young employees with sufficient training to replace them on the factory floor. It's a problem that's been simmering for years. American manufacturers have said since 2017 that the difficulty of attracting and retaining a quality workforce is their top primary challenge. But the gap between open positions and the people to fill them is growing by the day. At an event for the Business Roundtable, an influential lobbying group, some executives noted that Trump's immigration crackdown was making it tougher for them to fill open roles.

19:37They also said that young people were shunning vocational schools and community colleges where they could pick up training needed to run the increasingly sophisticated software and machinery used in cutting-edge factories. And that's led to Slim Pickens. The CEO of air conditioning giant Carrier said for every 20 job postings that we have, there is one qualified applicant right now. Yeah, the New York Times talked to a lot of these factory owners and one told them, we spent three generations telling everyone that if they didn't go to college, they are a loser. Now we are paying for it. We still need people to use their hands.

20:08There is this force of bringing a lot of manufacturing back to the United States, which these owners like, but they're saying we don't have the people to actually satisfy that demand. And another example that was given is that as data centers that serve artificial intelligence have exploded, you also need technicians that help with the heating and cooling systems that make these things run. We don't have nearly enough of them. There's 425 ,000 technicians out there today. People are saying that we're going to need to hire 500 ,000 more over the next 10 years. Where are those people going to come from?

20:41So that's just emblematic of all these high-tech advances we're making, but you still need the very low-tech, hands-on people to make them work. which is actually now becoming pretty high tech with all the software involved. I remember a couple of years ago, Tim Cook was responding to someone asking, why don't we make iPhones in the United States? Well, he said in the U.S., you could have a meeting of tooling engineers, and I'm not sure we could fill the room. In China, you could fill multiple football fields. Hence, the vocational expertise in China is very deep. So we're looking at probably one of the biggest roadblocks to bringing manufacturing back to the United States is just filling all the open positions that already exist.

21:17For my final number, Pixar just notched a record, but the kind of record you don't want to set. Elio, which tracks the space adventures of an 11-year-old orphan, just posted the famed studio's worst opening weekend ever with a miserable$21 million at the domestic box office. That's 30 % below the previous worst performer, Elemental, from 2023. Why did Elio flop so hard? Well, one reason is that families aren't heading out to see original animated movies anymore. It's becoming increasingly difficult to bring new stories into the world the way Pixar did with The Incredibles, Toy Story, and Finding Nemo decades ago.

21:52With any commercial success, Elio joins a long list of other original animated dumpster fires in recent years, including DreamWorks' Ruby, Gildman, Teenage Kraken, and Illuminations Migration. You probably haven't heard of either of those, which, exactly my point. But while new animated stories are out, stories building on existing IP are so in. Last year, Pixar had the biggest movie in the world, Inside Out 2, which raked in$1.7 billion globally. Other sequels from 2024 like Despicable Me 4, Moana 2, and Sonic the Hedgehog 3 all made boatloads of money. And currently, the How to Train Your Dragon live-action remake is dominating the box office, leaving little oxygen for freshly drawn ideas.

22:32is Toby, should we just resign ourselves to the fact that there will never be another franchise-spawning, mind-blowing Pixar original like Monsters, Inc., Nemo, or Frozen? You need to have a number in your name these days to even make any money at the box office. And I think it was kind of Disney and Pixar's fault here because during the pandemic, they released Luca, Soul, and Turning Red. And most of those just skipped theaters entirely and went straight to Disney+. That sort of trained people to say, oh, original movies, I don't need to go and turn out to theaters. I'll just watch them at home on my couch for on my streaming service.

23:05So that has been some of the misfortune that these original titles have gone into. But apparently this movie is pretty good. It's got an 84 % on the Rotten Tomato meter. And I wouldn't write it off yet because you mentioned Elemental, which was this uber flop. Everyone said, oh, Pixar's lost its fastball. It actually ended up hanging on and grossing over$200 million at the global box office. It was$500 million. $500 million. dollars it's a 2023's ninth most profitable film so it got off to this really really slow start but people started coming around to it and had a great life on disney plus as well so even though these movies start slow it doesn't mean they're going to be a flop in general let's sprint to the finish with some final headlines the dating app business continues to display all kinds of red flags yesterday bumble announced plans to cut 30 of its workforce as it struggles to hold on to younger users who are fed up with swiping.

23:57CEO Whitney Wolf Heard, who founded the company and recently returned to stage a turnaround, told staff that the online dating industry was at an inflection point and Bubble needs to take decisive action to restructure to build a company that's resilient, intentional and ready for the next decade. Investors, surprisingly, viewed the mass layoffs as a green flag, sending Bumble shares up more than 25 percent. And bubble shares going up is something you do not hear often. Not at all. Whitney Wolf Hurd has this very interesting perspective on what's the matter with dating apps right now because she's like dating apps are not social networks where more people and content automatically makes the product better.

24:35In fact, it can lead to the opposite, more mismatches, more fake or low quality profiles and a frustrating experience. So her general thesis is that dating apps have almost gotten too big to serve the people on them correctly and that they need to recalibrate expectations or add new features that improve the experience. So she's really just going down to the fundamental question here is like, how do we facilitate relationships? How do we facilitate good matches? Because right now people are not going on dates. They're not finding quality matches and they're not falling in love. So maybe the way to do that is just pare it down, ship features faster and figure out what people are actually looking for.