The Pro Sports Move Costing DC Billions & 'Nerds' Candy Sweet $500M Business

0:26Race the rudders! Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, why Tesla is recalling nearly every vehicle it's ever made in the U.S. Ben, DC sports fans, shield your eyes because it looks like your sports arena is heading to Virginia. It's Thursday, December 14th. Let's ride.

0:53I'm giving everyone permission to open up their brokerage account this morning because hot dang stocks are ripping. The Dow closed at an all-time high. Apple closed at an all-time high. It was just a euphoric day all around. And we have the main man, Jerome Powell, to thank. At the Fed's last meeting of the year yesterday, Powell left interest rates steady and gave his clearest signal yet that rate cuts were coming in 2024. After a year and a half of historic increases, it is an indication that the Fed no longer thinks inflation is public enemy number one. And it believes it's pulled off the once unthinkable soft landing, bringing inflation down from 9 % without sending the economy into a recession.

1:35And traders all across the globe rejoiced. Rejoiced is an understatement. You should have seen Twitter yesterday. Just every stock chart was posted up and to the right. So, I mean, I haven't checked my portfolio in a little bit, Neil. I think you should this morning. It's not going to get better than it is now. Oh, that's for sure. Okay, before we jump into the news, quick shout out to our friends over at Yahoo Finance. As we already mentioned, the Dow hit an all-time high yesterday, and you know what we say. It's a whole lot more fun checking your portfolio when the numbers are going up. Yep, Yahoo Finance is the perfect place for you to hang out and bask in that sweet, sweet glow of green.

2:10That's the power of a platform that offers trusted news, in-depth analysis, and market data all in one place. Once you arrive, there is no need to leave. So head to finance.yahoo.com today or download the Yahoo Finance mobile app to get it directly on your phone. Tonight on NBC, Jimmy Fallon and Bozema 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.

2:47I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere tonight on NBC. We got an arena on the move, everybody. The NBA's Washington Wizards and the NHL's Washington Capitals are leaving behind their old Capital One arena digs in downtown D.C. and moving out to the burbs of northern Virginia. No official agreement has been signed yet, but Ted Leonsis, head of Monumental, the group that owns the Wizards in the Caps, as well as Virginia Governor Glenn Youngkin felt confident enough to announce the deal yesterday. Now, this matters for a few reasons.

3:22One, it's another win for Virginia, the most populous state without a major sports team, on the heels of luring Amazon's HQ2 to Crystal City in June of this year. Two, it's a huge blow to D.C.'s struggling downtown. And lastly, it's another sports team that is using their stadium to anchor a large mixed-use development following in the footsteps of the LA Rams and Mark Cuban's vision for the Dallas Mavericks. Neil, this seems to be a theme that's emerging in new sports stadiums these days. Owners envision them as a central piece of very, very large mixed-use development. Yeah, the one example I want to point out is Mavericks.

3:59So Mark Cuban just sold his stake, his majority stake in the Dallas Mavericks to the Adelson family, casino magnets. They own Las Vegas Sands. The whole plan this entire time for years, Cuban's been very overt about it, is to have a new Mavericks arena that's anchored by a massive casino. Now, gambling is not legal in Texas yet, but with Las Vegas Sands, with Cuban, you know they're going to be pushing for it. And you just see this all over from Atlanta with the new Braves Stadium to what Steve Cohen is trying to do with the Mets. is a stadium is supposed to be a 365-day experience that's anchored by a performing arts center.

4:39You have practice fields. You have all restaurants and bars and all these things going on, and it seems like what Virginia was able to offer exceeded what D.C. had. This is just a massive blow for D.C. It is very raw. You can sense there's a lot of emotions because Capital One Arena anchored this Chinatown downtown area, and it was kind of declining in the past few years, especially with remote work kind of gutting dc downtown and this is kind of just pretty brutal for them to see it go to the rival virginia yeah dc has one of the highest rates of people working remotely in the u.s so they're kind of once buzzing downtown has really been struggling to recover post-covid and late on tuesday dc's mayor tried to get a last minute 500 million in public funding bill passed it looks like it was too little too late they were looking for 600 million and you just can't really compete with what this new location has to offer.

5:33It's going to be a$2 billion kind of public-private partnership, 9 million square foot of sports and entertainment. It's sitting on 70 acres. So it's just a much more expansive, robust, and much more modern in terms of what sports owners are looking for from their stadiums these days. Nova rising for sure. I mean, we had this big HQ2 search that Amazon conducted a few years ago. And where did they land for their east coast headquarters was in northern virginia and uh so yeah alexandria arlington that whole area is just kind of blowing up and it is pretty crazy that virginia does not have uh any sports team it's the most populous state without one they could get two now coming in 2028 and then the commanders which are over in maryland have new ownership under uh josh what's his name harris josh harris right we don't like him uh in terms of the philly sports fans so i've just like banished his name from my memory, but they're going to look for a new stadium because FedEx Field in Landover, Maryland is not so great.

6:33So Virginia could get a third sports team. There's always an interesting debate too, because all of these sports owners, when they are presenting these big projects, they say it's going to stimulate economic development. It's going to really help the surrounding area. But most economists who actually studied the impact of these sports stadiums on cities consistently find that there's little to no tangible impact on the actual community and that most of those public subsidies end up just helping the owners more so than the actual community. This same conversation is going on right now in Oklahoma City, who just passed a 1 % sales tax increase to help fund construction of a new arena for them.

7:10So this is always going to be one of those things where owners will make the case that, hey, we're bringing economic development to the area. But once you dig into the numbers, it doesn't end up kind of playing out as they say. And I think that's why they're creating these entertainment complexes. They're basically building new cities around stadiums to try to prove that there will be a tangible economic impact because a stadium, a football stadium is only populated 16 days of or eight days of the year, I should say, a baseball stadium a little bit more, but it's still empty for the vast majority of days.

7:40So if you can build an ecosystem around it, and I would point to maybe Atlanta, which I went to a game there last year where they built basically a city out of scratch at the intersection of two highways as a possible way to say we're going to use this stadium as just an anchor tenant for a broader sort of urban landscape that we're going to build from scratch. It doesn't really have a lot of soul, but it's there and people go to bars there. Okay, if you're an American who owns a Tesla, your car is going to get a big update. Tesla is recalling nearly all of the vehicles it's ever produced in the U.S., more than 2 million, to improve its autopilot driver assist software that can steer, accelerate, and brake automatically in its lane.

8:20The recall comes after a two-year investigation into autopilot by federal auto safety regulators who've been looking into hundreds of crashes, sometimes deadly ones, that have occurred while the system was engaged. Tesla owners will not have to turn their car in, but instead receive a free software update that specifically tightens up restrictions on what's called auto steer, a feature that's only supposed to work on certain highways but can be misused. As intense as this recall sounds, though, it seems like Tesla mostly dodged a bullet because the crackdown could have been, and in the eyes of some safety experts, should have been far worse.

8:54This Tesla recall discourse always gets the Tesla fans fired up because you see the headlines saying 2 million Tesla vehicles being recalled, and then they fire back with, actually, it's being recalled. It's just my car sitting in my garage right now. I don't have to recall it at all. So it is a little bit of a misnomer because this is ending up just being a software update. but talking about terminology and talking about semantics has always been my big gripe with full self-driving to begin with a long time listeners of the show might know that my stance on this is that they should never have called it full self-driving at all because it's a misnomer it's not actually that at all it requires an alert and attentive driver ready to assume control so i think there's always going to be this tension with just the way they branded it from a transportation safety perspective.

9:40Yeah, but this is autopilot. Full self-driving is an additional feature. But still, I mean, I think your point stands that autopilot makes it seem like the car can drive itself when it is actually just a driver assist feature and regulators have a lot of beef with it because you can kind of abuse the system. There are a lot of one issue that they had, one particular gripe was in terms of monitoring drivers at night. There are these cameras in the car that try to pinpoint drivers to make sure that they have their eyes open, their hands on the wheel, and they don't function at night. It doesn't work at night.

10:14So you have a lot of auto safety experts looking at this recall or the software update, whatever you want to call it, and saying it doesn't really address that problem of the particular hardware. It makes incremental updates to the software, but it doesn't address the root of the problem. This is bad for Tesla, Let's not gloss over the fact that so much of its allure as a company comes from a future where autopilot is a thing. So no doubt about it, this is a blow to Tesla's efforts to market its vehicles to buyers and have them willing to pay extra for these software updates. It charges$6 ,000 for what they call enhanced autopilot and$12 ,000 for the full self-driving feature.

10:55So this is definitely one of those things. Tesla is by far the most valuable auto company in the world, and a lot of it comes down to the promise of autopilot. So anytime you see some sort of regulatory crackdown on it, kind of is a blow to Tesla's entire thesis. All right. Another key abortion drug will be ruled on by the Supreme Court this term, which puts reproductive rights back in the high court for the first time since Roe v. Wade was overturned. Mifepristone is a prescription medication that is used in more than half of all abortions in the U.S. The Biden administration and the drugs manufacturer asked the Supreme Court to overturn a lower court ruling that would make it more difficult to obtain.

11:35And the justices have obliged, announcing yesterday that they will review a decision from the U.S. Court of Appeals that said the FDA did not follow the appropriate procedures when it began loosening regulations for getting mifepristone. Neil, this is a drug that has been around for over 20 years at this point, but recent changes over the last few years allow the drug to be taken later in pregnancy. mailed directly to patients and prescribed by medical professionals other than doctors. The justices are not considering a separate challenge to the FDA's initial approval of mifepristone back in 2000, just the expansion of its access.

12:11This is set up to be a high-stakes battle that could result in the pill's access being curbed, even in states where abortion remains legal. Right. It should stay on the market, but what's at question is the restrictions on it. How we got here is pretty wild. So after Roe v. Wade was overturned, there was a group of anti-abortion doctors that tried to say the FDA's approval process back in 2000 was flawed, and they had a judge in Texas who agreed with them and kind of upended the entire FDA's authority. And remember, you had all of these pharma execs and pharma industry trade groups come in and say, look, we can't have the FDA's approval process being questioned here because that could kind of revolutionize, overturn, upend the entire drug approval process.

13:02Any drug that is approved by the FDA could now be subject to a legal challenge. So that was cause for alarm across the entire pharma industry. Yeah, you need the integrity of the FDA in order for the industry to work as it should. So that is kind of what is at stake here with this case. Also, a lot of major retailers, including CVS and Walgreens, largely agreed to carry Mifepristone in states where abortion is legal. But then once these cases started popping up, some of the backlash led them to walk back its decision in some states. So there's definitely a pharmaceutical and pharmacy angle, too, to will these massive pharmacy chains end up carrying this widely used abortion pill as well.

13:41So definitely a lot of business implications on the line from a regulatory perspective and also from the CVS and Walgreens of the world. I mean, business implications and political implications as we come into an election year and this abortion issue has not been good for Republicans in midterm elections since Roe v. Wade has been overturned. So we will keep a close eye on what happens with Mifepristown. All right, before we jump into our next story, we're going to take a quick break. I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the internet last year and I think this season's lineup is even cooler and so does my wife who keeps stealing all my hoodies stay fit for the season and Abercrombie's newest arrivals shop NFL by Abercrombie in the app online and in store

14:39when did making plans get this complicated It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Welcome to Neil's Numbers, where I share three stats from the week's news that will make you more enlightened than the Buddha. For my first number, the price of cardboard is going up by at least$70 a ton.

15:19You're probably thinking, how on earth is the price of cardboard relevant to me? It's probably not the first aisle in Home Depot I visit. Well, the price of cardboard is one of those sneaky indicators used for the economy in general. Since pretty much everything is sold in cardboard boxes, pizza, sneakers, ovens, when cardboard prices go up, it typically means there's an uptick in demand for goods, and it's a sign that the economy is picking up overall. The cardboard price hike is the first since the Fed began raising interest rates last year when producers slashed prices in the face of higher borrowing costs.

15:51So there's a stat you can drop at your office holiday party. Corrugated packaging prices are rising and why that's a bullish sign for the economy. If you can fit that into small talk at your office party, come to my party because I know you're a great conversationalist. Also, I do love that there is a trade publication that surveys buyers and sellers of cardboard, and it's called Pulp and Paper Week. Fantastic name for it. I love these niche kind of industry publications. Okay, for our second number, I've got data on cheating in high school over the past year when ChatGPT was first introduced.

16:25You're probably thinking that cheating skyrocketed as teens turned to the chatbot to do all their homework for them. But actually, overall cheating rates did not rise at all. According to a Stanford survey of more than 40 U.S. high schools, about 60 to 70 percent of students said they recently cheated, which is roughly on par with previous years. One explanation for this, it's possible that teens just don't know that much about ChatGBT. In a recent Pew survey, almost one third of teens said they hadn't heard anything about the chatbot, while another 44 % said they had heard a little. My conclusion, the whole panic over chat GBT leading to mass cheating appears to be overblown and kids are always going to find a way to skirt the rules, whether with a chatbot or with the old under the bill of the baseball cap move.

17:09maybe I'm just cynical, but I feel like the teens might be under reporting here because I mean, they were literally handed one of the greatest tools for helping with your home. I'm not going to say cheating, but helping with your homework ever. And here they are saying, I've never even heard of chat GPT. I don't know. Some of these surveys, I always, I bring a skeptical lens to it too, because like, there's no way that like the youths haven't figured out that it can help expediate the math homework. I think there's a barrier to entry for chat GPT. It's not the most intuitive thing. You have to load it up.

17:41Now you have to pay for all of the best features. So I can see that. And maybe it's not that ChatGPT has skyrocketed cheating or cheating is at such a high rate now. It's just always been at a high rate. Like people have just always cheated a lot. So maybe they don't really need another tool to cheat because it was already at 60 % to 70 % from 2002 to 2015. So it's not like people did not have a way to cheat. So maybe they're just swapping out one way with ChatGPT. That is high, 60 to 70%. And then when you take into account too, that most people under self-report on surveys, that is very high, but I don't know.

18:17The kids are all right. For my final number, I've got a pop quiz for you and feel free to pause the recording after the question. Do you know where the largest population of French speakers live? The answer is Africa. Yes, more than 60 % of French speakers live in Africa and that number is expected to grow to 85 % by 2060 according to the New York Times. There are as many French speakers in Kinshasa, the capital of the Democratic Republic of the Congo, as in Paris. This is a stunning reversal from the 1960s when 90 % of all French speakers lived in European and other Western countries. But it's another sign that demographics is destiny.

18:57At a time when European populations are stagnating, the population of Africa is young and growing. And considering that nearly half of the countries in Africa were at one time French colonies or protectorates, Most of them use French as their official language. What's most interesting to me about this is that kids in Africa are now essentially the trendsetters when it comes to the French language, creating their own slang words and popularizing them through music or on social media. Ivorians, for example, like to wonder when people in Paris will start to use the French terms they themselves created, perhaps even years later.

19:29So I think it's pretty evident from this that the future of French is not in Paris, but on West African TikTok feeds. First of all, I've already quizzed multiple people on that stat, and everyone invariably gets annoyed because it's so open-ended. They're like, what do you mean? What are you asking me right now? But again, if you've got a holiday party coming up, work that stat in. I do also love seeing how dialect influences culture in certain ways. One of the slang terms that is popular right now in Ivory Coast is that you call kind of your boyfriend bread for some reason, or like sweet bread and just saying, hey, that's my bread.

20:07And apparently some kids went to a church session and the preacher said, share your bread with neighbors and everyone starts laughing in it. So it is one of those things that words change over time. Words have different meanings over time. And especially when the two cultures are kind of combining to create new words. So that is just one of my personal favorite things to see how language evolves over time. Turns out that artificial intelligence is a lot like you all listening at home because it just wants to get the news. OpenAI announced yesterday that it had signed a multi-year deal with the news publishing conglomerate Axel Springer to use content from its publications to train its AI tools.

20:46Axel Springer publications include Political, Business Insider, and yes, technically Morning Brew as well. So a few things you should know about the deal. One, this is huge for media companies because they are finally getting compensated for the use of their content. And two, Neil and I honestly have no idea if they're gonna be using Morning Brew content or not. But if they do and chat GBT spits out, let's ride at any point, we will be excited. But seriously, this is a massive step forward for media AI relations, if you wanna call it that, and offers a glimpse into how news and AI might interact in the future.

21:20Yeah, I was thinking about what is in this for open AI, right? Because they could just kind of scrape all the websites and then put it into ChatGPT and maybe not cite their sources. And I'm not sure anyone would actually care, but I think they want to up the quality of their content and they want to be able to cite their sources to show there's been criticism that ChatGPT and other chatbots kind of hallucinate or spit out wrong facts. So if they can draw from news articles that have been fact-checked that are from, publishers like Politico that have newsrooms and traditional news gathering information, then OpenAI can say, look, we have really quality.

21:59What ChatGPT spits out is actually really quality. It's not just making it up. Yeah, I was looking at all the stakeholders involved with it, and they do seem pretty aligned. This is good for ChatGPT users because they're getting the relevant info they need. It's good for Axel Springer because they're finally getting the credit, and most importantly, some web traffic too, because when ChatGPT spits out a citation, it will link to what it got it from. And then it's very good for OpenAI because yes, they're providing better answers. And I think this is their way into entering more real-time updated information, because remember right now, the data set that ChatGPT is trained on ends before the current moment.

22:38And so you can't get real-time updates. So I think this is them slowly dipping their toe into more relevant and more up-to-date information. It's also probably getting ahead of a lot of legal problems because writers, publishers are gearing up to sue OpenAI and other tech companies that have published chatbots for basically stealing their data, stealing their writing, training their chatbots on their writing. George R. R. Martin is one of many authors that is suing OpenAI for this. And you know that publishers, Wall Street Journal, all of them are probably planning to sue OpenAI if they don't come to some sort of monetization or revenue sharing agreement that allows, because OpenAI is making a lot of money off of their content.

23:21So this is probably getting ahead of the potential legal issues as well. Yeah, I am a little sad though, because the internet used to be an internet of webpages. You used to go to websites, you'd go to Grantland, you'd go to Politico, you'd go to these different websites, and now it's all being kind of funneled through one chatbot. I don't know what the long-term implications of having the internet kind of filtered all through the same AI chatbots, but it makes me a little sad that we're losing maybe the more diverse internet that we grew up on. I will not miss searching for something on Google and looking through all the links.

23:54It was fun, Neil. It's kind of like trick-or-treating or no, Easter egg hunting, not trick-or-treating. Yeah. So when you watch the Eagles play the Ravens in the Super Bowl this February, you're going to see something you've never seen before during the second quarter. The candy brand Nerds is buying a Super Bowl ad spot for the first time in order to capitalize on what's been ludicrous growth. Its annual revenue has surged from$50 million in 2019 to around 500 million today. And that is largely thanks to one new product, Nerds Gummy Clusters, which it launched in 2020. Nerds Gummy Clusters sales jumped 67 % this year to become the top selling brand in the US sugar candy market.

24:33To keep up with demand, Nerds has boosted its manufacturing capacity by 360 % and tripled its marketing spend over the past two years. And that is culminating with paying$7 million for 30 seconds of airtime at the Super Bowl. I had no idea Nerds was this popular. Have you had the Nerds gummy clusters? No. They are legitimately good. I'm a Nerds rope, truth or two, which is just a long gummy rope with Nerds attached to it. These are just kind of chopped up versions of it. I absolutely love it. The detail that blew me away was the manufacturing capacity piece. I feel like that's glossed over. How many other brands could increase capacity by 360 % in just one year?

25:11I need to look into the nerds' gummy manufacturing process, but that seems like a pretty sizable increase. They're owned by conglomerate Ferrara. So I think when you are owned by a massive consumer packaged good company or a candy company, they have a lot of manufacturing space that maybe one of their brands is not doing so well. And they say, nerds, you're killing it. like take over this assembly line on this other brand that's flailing. It's also interesting to me that in the year that Ozempic became really big and that snack makers have kind of been put on warning, we see candy companies increasing sales 70 % year over year.

25:48So it is going to be, it's the nerds versus the Ozempics of the world. Revenge of the nerds, I guess you could call it. But I am interested to see how that kind of battle plays out. All right, Toby, I'm a little worried for you. How many nerds are you eating? I hope not too many because there was an analysis of 50 pieces of Halloween candy. And you know what came out on top in terms of sugar content? Nerds. They led the ranking with 93 grams of sugar per 100 grams of candy. Oh, boy. Well, it is just pure sugar, right? But isn't that all candy? I guess nerds even more so. Even more so. I have some trivia for you, though.