New Balance’s Big Basketball Ambitions & The Rich Are Ditching The UK
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It's your turn. Visit servicenow.com. Good morning, Brew Daily Show. I'm Neil Priman. 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.

Any 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 two 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. I 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. And then finally, drop the the. Just Facebook. Great movie. Hope the second one can match it.

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Oil and water may not mix, but oil and oil could make for a smooth combination. That 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. But

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's been going through it, Shell has kept on pumping lucrative oil and gas, giving it a market value more than twice BP's 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. No 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 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. So BP has been trying to turn the ship around recently and announced plans earlier this year that we're going back

the 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, you

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. There'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

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, you know, there might be a alternative bid for, uh, 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 bit of its own. There's other speculation that it's simply waiting for BP to get even more cheap. We mentioned how much the stock has fallen. Uh,

over the recent years, perhaps it's just waiting for, 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, you know, month month lows, uh,

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, the

That just hasn't been the case. The average cost for a gallon of regular gas in the U.S. right now is $3.21. That is $0.23 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 2008.

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. But 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. Flag 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 Lokesh, New Balance's

basketball and football director pitched Flagg 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 brands courting Flagg. And Flagg joins a small but mighty roster of athletes rocking New Balance these days.

that spans from tennis superstar Coco Gauff 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 Flagg 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. It's one of the best. He's one of the best basketball prospects, you know, 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. Now 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, you know, very particular high value prospects and just riding them has been, 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. I mean, Gabby Thomas, Olympic athlete,

Sprinter, Shohei Otani, obviously one of the greatest baseball players of all time. Coco Gauff. 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 them 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. We have this big race that's going on Nike and their athlete, Faith Kip Yegan, who is a longer, 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 W has nothing to do with Wales and everything to do with the wealth the UK is poised to lose this year more than any other country. The Great Wealth Exit, aka Wexit, 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. It'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. So they are going back maybe to the Middle East or India or places where they came from. And that is because

The UK once had these very favorable tax laws where you could come and live in the UK 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 are better?

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. Along with the UK, France, Spain, and Germany are migrating.

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. Uh, 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 where it will always be a major player, but also to the UAE because of their, you know, very beneficial tax structure. And 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, uh,

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 Neil's Numbers.

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Welcome 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. Other 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 chat.

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 chat GPT. Toby, it's compelling evidence that AI chatbots are profoundly changing the way we communicate, but I got to know, are you a big delveder?

Delve guy. It'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

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. So 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 and

an existential challenge for President Trump's goal to revive America's industrial base. Why 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. They 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 pickings. 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. There is this force of bringing a lot of manufacturing business

back to the United States, which these owners like, but they're saying we don't have the people to actually satisfy that demand. 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 gonna come from? So 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 years ago, Tim Cook was responding to someone asking, why don't we make iPhones in the United States? Well, he said, in the US, 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

And 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.

For 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. With any commercial success, Elio joins a long list of other original animated dumpster fires in recent years, including DreamWorks' Ruby Guildman, Teenage Kraken, and Illumination's Migration. You probably haven't heard of either of those, which is 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. 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. So 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 yesterday.

- 500 million dollars. - 500 million dollars, it's 2023's ninth most profitable film, so it got off to this really, really slow start, but people started coming around to it and it had a great life on Disney+ as well, so even though these movies start slow, it doesn't mean they're gonna 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. CEO Whitney Wolf Hurd, 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%, and Bumble shares going up is something you do not hear often.

Not at all. Whitney Wolfe 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. In 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

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. But it's been a struggle for Bumble

Finally, I guess they're trying to turn things around. I don't know if this is the best way to do it. There is one good piece of news for dating apps recently is that the front runner to become New York City Mayor Zoran Ramdani met his wife on a hinge. Probably the first mayor in New York City would be to meet on hinge. Yeah.

To some, Monster is an energy drink. To others, it's a song with a great Nicki Minaj verse. But if you entered the workforce in the early 2000s, it was a website that might have helped you land your job, a website that is now no more. Monster and CareerBuilder, who merged last year, filed for bankruptcy yesterday, marking the end of an era for the dot-com darlings.

In the late 90s and early 2000s, Monster became one of the early success stories of the internet, with them running a Super Bowl ad and reaching an $8 billion valuation by 2000. But after the dot-com bubble burst, the pair couldn't keep their nose in the front of competition from the likes of Indeed and LinkedIn. And toss in the ways AI are upending recruiting now too, Neil, and it was too much for the once iconic brands to bear. You can maybe call it the MySpace of the job board industry. These, uh,

kind of companies really rely on network effects because unlike Bumble, according to Whitney Wilford, the more people and the more job, uh, you know, more hirers on these sites, the better, because that just creates this upward spiral. The more job seekers who go on is you're going to get more companies looking to hire them. And the more companies that go on, the more job seekers, uh, that will go onto these sites as well. They just got lapped and out innovated by LinkedIn indeed in glass door. Yeah.

Someone is getting a raise at the Dallas Cowboys, and it's not their interception-prone quarterback. The iconic Dallas Cowboys cheerleaders are getting a raise and a 400% one at that. Despite their role in shaping the Cowboys' brand and game day experience, cheerleader compensation has lagged far behind. In 2019, cheerleaders successfully pushed for a modest raise, but the Cowboys'

But 2024 former cheerleader Jada McLean told the New York Times she was still earning just $15 an hour for practice and $500 per appearance, underscoring the slow pace of progress and the ongoing financial stress felt by many of the team members. That changed dramatically last year, as revealed in Netflix's America's Sweethearts Dallas Cowboys Cheerleaders.

A four-year veteran shared that the team finally received a 400% raise with practice pay reportedly jumping from $15 an hour to $60 an hour and appearance fees rising substantially as well. Neil, it's good to see some of the people at the heart of the Cowboys' $10.1 billion brand are finally starting to get paid.

pay to like it. And another example of a documentary on a streaming service making change in the real world. Obviously, you can't draw an exact line from point A to point B with this documentary leading precisely to these pay increases, but this is a

Very, very popular show. Currently ranks in the top 10 programs globally, more than 3.3 million views in a week. And we've seen documentaries mostly across the pond in Britain twice now lead to policy change at the legislative level. This seems to have led to a more modest change, but a very significant one is that. And I know a lot of people were happy for them because they followed their story across two seasons in this show. And they're finally getting their raise.

That is all the time we have. Thanks so much for starting your morning with us and have a wonderful Thursday. Good news, it's not going to be 100 degrees today, high of 81 in New York City. If you have thoughts on today's episode, send an email with questions, comments, or feedback to morningbrewdaily at morningbrew.com.

Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and Makeup is delving into their work. Devin Emery is our president, and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.