It’s February 14 and all of you know what that means. That’s right, it’s the birthday of the late Edward Platt, the actor who played “the Chief” of Control on the 1960’s TV series, Get Smart: https://en.wikipedia.org/wiki/Edward_Platt. Whenever you speak under a Cone of Silence you have Ed Platt to thank.
Oh, and it’s Valentine’s Day, the day of romance when we shower friends and lovers with cards and candies, dinners and diamonds, or maybe just a little “us time” to show our love. Yesterday, Dave and I had a chance to explore the business side of this holiday with help from Hope Wixon of Wixon Jewelers and Carlson School professor and marketing expert Vlad Griskevicius. It was a great discussion of how sentiments, romantic and otherwise, can drive sales around February 14th that likely top $20 billion this year. Here’s where you can hear the podcast if you missed it live from yesterday: https://minnesota.cbslocal.com/audio/business-by-carlson/. Jewelry sales comprise the biggest single chunk of Valentine’s Day sales (+$5 billion) followed by restaurant (dinner) sales, and then flowers, candy, clothing and greeting cards. Here’s some 2016 data on Valentine’s Day purchasing trends running up to 2016: https://www.fundivo.com/stats/valentines-day-spending-statistics/. My favorite stats are about where V-Day consumers buy their goods. By 2016, almost 30% of all V-Day sales are online sales. That’s about twice the rate of retail purchases generally. I think it reflects the ease online associated with buying flowers and candy and (electronic) cards. Will digital sales channels take ever bigger chunks of other V-Day goods like jewelry? That’s a question Hope Wixon and other jewelers around the country are trying to answer. The business of romance is increasingly digital.
Now for some shameless self-promotion. Thanks to my association with Carlson and WCCO over the years, I now get asked by other media outlets to comment on local business trends and events. And the biggest one recently was Super Bowl LII last February 5. After the players went home, the various stages were broken down, and the media experts checked out of their overpriced –no “specially-priced”– hotel accommodations, the question that came to me from an Associated Press reporter was this: When’s the next Super Bowl coming to Minnesota? Here’s where you can read my response: https://www.usatoday.com/story/sports/nfl/2018/02/05/frigid-super-bowl-raises-questions-about-northern-venues/110138462/. The answer is “not for a long time.” The Super Bowl was a carrot to go with the stick of threatened departure of the Vikings from the Twin Cities a few years ago. The carrot and stick were there to prompt Minneapolis and Minnesota to pony up hundreds of millions of your tax dollars –about $500 million in all– to build a new football stadium. US Bank stadium looked great in the glistening winter skyline earlier this month, when temperatures also dipped below 0 Fahrenheit on game day. Now that the stadium is built and the carrot eaten, the NFL can move on to other northern climate cities with franchises that “need” a new stadium and can threaten to leave if they don’t get their way from local and state governments. To see where the NFL is likely to offer the Super Bowl carrot next, just pull out a map and look at northern climate franchises with stadiums more than 15 years old. Maybe pair that with recent mediocre performance by the NFL franchise. After all, isn’t the cause of that mediocrity the absence of a billion-dollar stadium funded largely by the public rather than the franshise owners? When I look at the map, I think about Cincinnati and Denver. Their stadiums were built in the late 1990s and early 2000s. In a few years, that’ll put them in the +20 year-old range. Add some mediocre records from both teams (Bengals finished 7-9 in 2017 while the Broncos finished 5-11 in 2017) and I think you have the making of a future Super Bowl venue…if they get new stadiums. Meanwhile, Minneapolis, don’t hold your breath. It will be more than 25 years before we come up in the rotation again. And guess what the NFL might want in return?
Did I say there were a few interesting business developments in Minnesota other than the Super Bowl? Well there are. Here are two that mix law and business…and Eden Prarie. Eden Prairie-based United Healthcare is defending itself in a “whistleblower” lawsuit involving a former employee claiming that United over-billed Medicare and failed to return over-payments from Medicare. The latest ruling from US District Court Judge Michael Fitzgerald dismissed some but not all of the whistleblower’s claims, which the federal government has joined. Here is where you can learn more about this development: http://www.startribune.com/federal-judge-says-unitedhealthcare-medicare-fraud-case-can-move-forward/473851213/.So some of the claims are still heading to trial. If the plaintiff proves up the case, then whistleblower statutes let him collect a percentage of those overages. That’s a lot at United Healthcare, a company with revenues roughly equivalent to the GDP of Morocco. It’s why United is vigorously defending it’s position that the claims are baseless. Stay tuned there. Also stay tuned to the criminal trial here in Minneapolis before US District (Chief) Judge John Tunheim. Eden Prairie-based Starkey Technologies is one of the biggest hearing aid manufacturers in the US. Former executives at Starkey are being tried right now for alleged fraud and embezzlement of funds from Starkey. Much of the case against those executives relies on the testimony of the former CFO, who was indicted but has now become a witness for the prosecution. And the prosecution’s case relies on the testimony of Starkey CEO and owner, Bill Austin, who claims he was duped by the executives on trial. Here’s where you can learn the latest on that trial: http://www.startribune.com/starkey-s-bill-austin-questioned-about-key-company-documents/473861763/. It’s a case study in corporate governance and management gone terribly wrong. It’s worth watching.
Enjoy the milder (for February) weather and bring a little romance to someone you love. Happy Valentine’s Day!
Here is the podcast for Today’s Episode….