Morning Brew Daily - First NCAA Athletes Vote to Unionize & Major Meta Outage on Super Tuesday

Episode Date: March 6, 2024

Episode 273: Neal and Toby explain how Dartmouth Basketball players voting to unionize will have major impacts on the business of the NCAA. Plus, there was a Meta platforms outage on Super Tuesday and Bitcoin hit an all-time high. Next, Tesla's Berlin factory had to be shut down after a suspected arson attack and why Taylor Swift's Singapore shows are the only ones in East Asia. Finally, why Miami doesn't want college students to spend spring break there. Use code MORNINGBREW50 to get 50% OFF your first Factor box at https://bit.ly/3UUZGG0 Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Options are not suitable for all investors and carry significant risk. Certain complex options strategies carry additional risk. Options can be risky and are not suitable for all investors. See the Characteristics and Risks of Standardized Options to learn more. For each options transaction, Public Investing shares 50% of their order flow revenue as a rebate to help reduce your trading costs. This rebate will be displayed as a negative number in the “Additional Fees” column of your Trade Confirmation Statement and will be immediately reflected in the total dollars paid or received for the transaction. Order flow rebates are only issued for options trades and not for transactions involving other assets, including equities. For more information, refer to the Fee Schedule. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, Inc., member FINRA & SIPC. See public.com/#disclosures-main for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Many employees can't afford a hefty medical bill that pops up out of the blue, but it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, AFLAC plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morningbruedaily. That's aflack.com slash morning brewdaily. Good morning brew daily show. I'm Neil Fryman.

And I'm Toby Howell. Today, Bitcoin hit an all-time high of 69,000. Nice. Then are college athletes employees? One men's basketball team certainly thinks so and has voted to unionize. It's Wednesday, March 6. Let's ride. Man, 2024 is flying by. We're less than one expired milk carton away from March Madness. And the evenings are about to get a lot lighter once daylight saving time begins on Sunday.

For some more metaphors on where we stand this year, this guy, Jay Kuda, put some together on Twitter. If 2024 was an NFL game, there'd be four minutes left in the first quarter. If it was a 9 to 5 day at work, it'd be 10.24 a.m. And if 2024 was us reciting the alphabet, we'd be finishing up E and about to say the letter F. Thank you so much for those helpful contextualizing tidbits, Jay Kuda. But I think I'll just stick with March 6 if it's okay with you. But wait, I actually just realized something. If the year was a 24-minute Morning Brew Daily podcast,

I think we'd just be finishing up our Factor ad. Oh, my God. Great segue, though. Thank you. Speaking of, let's hear a word from our sponsor, Factor. So we get emails from you guys all the time, usually to point out that we said Nvidia or Chipotle wrong. But my favorite part of listener emails is seeing where some of you guys works.

So impressive, big tech, small tech, teachers, working parents, CEOs, entrepreneurs. The list goes on. always gets Toby and me thinking, these people must be strapped for time. And that's why we want to tell you about Factor today. Factor is perfect for working pros like you. Long day at the office, Factor, Chef Made, never frozen meals are waiting for you at home. They are ready to heat and ready to eat. No prepping, cooking, or clean up needed. If that sounds tasty, head to FactorMeals.com slash Morning Brew 50, then use code morning brew 50 to get 50% off. It's time to refresh you. your yard during spring backyard days at the Home Depot.

Get low prices guaranteed on propane grills starting at $179, like the next grill three-burner gas grill. Or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th. Exclusion supplies to homedipo.com slash price match for details. Dartmouth's men's basketball team is 5 and 22 right now. They haven't recorded a winning season since the 90s,

and they haven't reached the NCAA tournament since 1959, but this year's squad just might be the most consequential team in college basketball history. Yesterday, Dartmouth's players voted 13 to 2 to unionize a major step towards forming the first labor union ever for college athletes. The key question players were voting on was the issue of whether college athletes should be considered employees. And if so, have the right under federal law

to collectively bargain about things like pay or benefits. It would be a massive shakeup for the already very shaken up NCAA system, which only recently allowed their players to profit off their name, image, and likeness. So yes, Dartmouth's men's basketball team may have the longest active March Madness down in the NCAA right now, but they're suddenly the most relevant team in basketball. They really are.

This is a huge deal. I mean, for the NCAA's nearly century-long existence, it is contended that these athletes are players. They're not working for schools, but it does feel like that the NCAA's big Jenga blocks are starting to fall. They started to allow athletes to collect endorsements for their name, image, and likeness. There are a number of antitrust lawsuits working their way through courts right now against the NCAA. These Jenga blocks are slowly being.

pulled and feels like at some point things are going to be come crumbling down if they don't make drastic changes. Yeah, I mean, if it walks like an employee, talks on an employee, it just might be an employee. And they ruling last month, the National Labor Relations Board, regional director included that there was an employer

employee relationship between a school and their basketball players. She concluded that if the players are performing benefits for their school and accruing benefits like alumni donations, publicity, and they are compensated in non-monetary ways that in Dartmouth also controls a lot, exercises a lot of

control over the way that they work and play, then that is what constitutes an employer-employee relationship, which is why the NLRB has kind of thrown their weight and said, like, yes, Dartmouth, you can go ahead and conduct this vote and we are behind you. Dartmouth, the school is very opposed to this decision. In a statement after the unionization vote, they say that the men's basketball team is not in any way employed by Dartmouth. Academics are of primary importance and athletic pursuit is part of the educational experience. They are expected to fight this tooth and nail, which means that any collective bargaining

agreement or any finalization of this union is not expected for months, probably even years. So by the time this men's basketball team actually becomes a certified union, all the players on it will probably be working on Wall Street. Yeah, absolutely. Or maybe you never know, a nice upcoming media company like Morning There's also the question of how these schools would kind of comply with Title IX, which is the federal law requiring equal opportunity for men and women. So the question is, if one gender team unionizes something like that and accrues benefits, would the other gender immediately get that as well? There's just a lot of murkiness around this particular kind of sector of the unionization that we're about to see.

And then the other thing is that a lot of people have pushed back against unions because they would say that it would create vast imbalances in some non-revenue versus revenue driving sports. So, I mean, if Alabama's football team unionized versus Dartmouth men's basketball team, for instance, there's a lot more money at play and a lot more bargaining power for one of those teams versus a non-revenue driving sport. But then you could also push back and say, hey, those imbalances already exist at a lot of colleges these days. and it wouldn't necessarily get any better or worse if these teams had collective bargaining power. I think in general this decision just leads to even more uncertainty for the NCAA. No one really knows what's going on. There's a bigger, probably a bigger case going winding through California right now, and a judge has to determine whether USC basketball and football players are employees under that state's law.

And that is more important because USC is a public school, so that would govern a lot more schools rather than Dartmouth, which is a private school. But I'm going to put you on the spot, Toby. You were a D1 athlete. Did you consider yourself an employee? I don't think so. And I don't think I would have necessarily voted to unionize either just because the amount of time you have in college and the amount of games you have is so finite that doing things like striking or something like that. I don't think a lot of players would actually want that because most 99% of players are not going pro.

This is your last time to play like high level competitive sports. So if you, someone came together and said, we're going to strike for the next four games, I'd be against that. You want to cherish your time on the field. So you put me on the spot. I don't think I would be before this. Okay. Well, it is fascinating nonetheless. Workers had their most productive morning in years yesterday when a massive outage took out of meta apps, including Facebook, Instagram, Facebook Messenger, and threads for hundreds of thousands of users across the globe.

While everyone's star for content was mindlessly scrolling LinkedIn, meta was trying to find out. happened and fix it, which it did about two hours later when the app started to come back online. A meta spokesperson later said it was a technical issue, not a cyber attack or anything nefarious. Glitches aren't infrequent, but the timing for this one probably couldn't have been any worse because in addition to being a regular workday, yesterday was super Tuesday, the electoral extravaganza when 16 states cast their vote in the presidential primaries and other races. Meta's platforms play a key role in helping candidates reach potential voters and officials were already on high alert for any cyber shenanigans ahead of Tuesday's vote.

Toby, you couldn't go on Instagram for two hours. I'm surprised you're still alive. I know we gave everyone the day off yesterday on the social media team at Morning Brew, at least for those two hours. Yeah, this event immediately spawned conspiracy theories when these platforms go down, especially on a day like Super Tuesday, you immediately start to think, is it a bad actor targeting the U.S. in some way? It turns out that it looks like it was much more benign than that. But it really was also a big win for X, obviously, because, I mean, you mentioned LinkedIn, but X was also up and running still. So Linda Yakorino, CEO, Elon Musk all jumped on X and started saying, hey, our servers are working. Like, we know why everyone's here. Elon started

posting memes, et cetera. So it wasn't like everything went dark, but it was kind of a weird time on the internet for a while as a lot of these platforms were down. This happens a decent amount, though. back in 2021, META's platforms went, I guess it was Facebook then. They went down for six hours, and it led to Mark Zuckerberg issuing a public apology saying, sorry, that was kind of a big deal. Six hours is a long time for these platforms to go offline, especially if you're conducting business on Facebook and Instagram and WhatsApp and things like that. My favorite tweet, though, actually came from Ryanair, which is the budget airline in Ireland,

said, no Instagram, no problem. We don't have Wi-Fi anyway, and we love self-deprecating humor. That was very on brand for them. If we look at Super Tuesday a little more closely, both Biden and Trump kind of romped as expected yesterday. So right now we're kind of looking forward to the general election. Looking forward? Or looking ahead at the general election. But yeah, if we look kind of at the interesting storylines because it's not necessarily who is going to gain the nomination.

It's kind of who these nominees, presumptive nominees are looking to woo to their cause. on Biden's side of things, he definitely wants Taylor Swift to exert her massive influence and explicitly come out and endorse him or at least encourage young people to get out and vote. And then on Trump's side of things, he is working to Wu Elon Musk to his cause. He met with him and a few other wealthy Republican donors on Sunday. It's a very complicated relationship, those two, though, because in the past, must have been pretty vocally anti-Trump. He did not like when Trump pulled out of the Paris Climate Accords, for instance.

So now this is not exactly a match made in heaven, but it might be a match made of convenience. Yeah, convenience. Thank you. Let's move on. For about 10 minutes yesterday, it really felt like Bitcoin was back. X was buzzing. Means were flying. Random friends were texting me rocket ship emojis. And the cryptocurrency that started at all zoomed past its previous all-time high, finally crossing that $69,000 threshold that we hadn't seen in over two years. As always, it's difficult to pin down exactly why Bitcoin was ripping again. It has no earnings calls or so-called fundamentals. But the hype around the new spot Bitcoin ETFs approved by the SEC, which allowed more

traditional investors to get in on the action, is definitely playing its part. So too is the upcoming halving, which is a baked-in part of Bitcoin's code that cuts how much Bitcoin miners get rewarded in half every four years or so, which drives up scarcity. Eventually, gravity took hold, and it did dip back into the, $62,000 range to close the day out. It makes sense that some people took profits when you consider that for a brief moment. Everyone who ever bought Bitcoin was in the green, but still, the rarefied era of a new all-time high was tasted, and already 2024 feels like a major

rebound year for the crypto market. Totally. Go back just two years ago. Bitcoin was sitting at $16,000. Crypto firms were going bankrupt, left and right. Their CEOs were being arrested. The entire industry in shambles. I'm not sure many people. expected it maybe outside of the Salvadorian president and Michael Saylor of micro strategy to come back this way. And it just hasn't. It's proven extremely resilient. Bitcoin has seen four drawdowns of 75% or more. And it's come back each and every time. So this is a very resilient asset. Yeah, it's a cockroach. It's very difficult to kill. In a very ironic twist, Bitcoin does owe a lot of this recent run-up to the very fact that the industry that they were

supposed to disrupt have jumped on board. I mean, the U.S. Securities and Exchange Commission and Bitcoin have never really gotten along, but eventually the SEC approved these exchange trader funds, and they have been ripping, honestly. There's been a net inflow of almost $8 billion into these in the last two months. Everyone wants a piece of these more traditionally financed-backed ETFs. the likes of BlackRock and other issuers. Fidelity are definitely kind of reaping the rewards of that, and it's helping drive the price up.

I think the BlackRock effect is so underrated. I mean, this ETF, their I shares Bitcoin trust. BlackRock is one of the world's biggest finance firms. It is, it is massive. Their I shares Bitcoin trust eclips $10 billion in assets last Thursday. That's the fastest a new ETF has ever reached that milestone. And it's also just one of four percent of all U.S. ETFs that have more than $10 billion in assets. So it's a pretty big ETF, and BlackRock is

reaping the rewards of this ETF hype around Bitcoin. Also, in another semi-ironic twist of fate, gold hit an all-time high yesterday, and that we usually do have an answer for. It's the geopolitical and financial risks that are kind of propping up the recent financial rally of gold. It's usually the same sort of mixture of uncertainty about also the Fed rate hikes, is, is the recent financial rally of gold. the stock market going to overheat, and so you want to kind of pile into the safer asset of gold. But it is interesting to see digital gold, aka Bitcoin, who a lot of people have said that it could be a better long-term store value than the precious metal. But then also the precious metal itself, hitting all-time highs on the same day. It is poetic and a little ironic at the same

time. All right, before we move on to a story about a sabotage at a Tesla factory, we're going to take a quick break. right, so I can tune out travel advice that's just plain wrong. Bro, Skycoin, way better than points. Never fly during a Scorpio full moon. Just tell the manager you'll sue. Instant room upgrade. Stop taking bad travel advice.

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The Hilton sale is on now. Book on Hilton.com or the Hilton app and save up to 20% to get the stay you expected. When you want savings, not surprises. It matters where you stay. Hilton for the stay. Elon Musk recently lost the title of the world's richest person to Jeff Bezos, but that wasn't even his biggest problem this week. Tesla's gigafactory outside of Berlin won't be producing any cars until further notice after a suspected eco-terrorist attack took out power to the plant by setting fire to an electricity pylon close to the building.

The left-wing extremist Volcano Group claimed responsibility for the arson, boasting in a note, we sabotage Tesla. The group said Tesla consumes Earth, resources, people, workers, and in return spits out 6,000 SUVs, killer cars, and monster trucks each week. Musk responded by calling them either the stupidest ego terrorists on Earth or puppets of those who don't have good environmental goals, saying it was, quote, extremely dumb to stop the production of electric vehicles.

Still, the attack reflects years-long local opposition to Tesla's Berlin factory. It's only a plant in Europe and adds to the automakers' problems to kick off the year. Yeah, add it to the list of stuff that Tesla is dealing with, specifically in Europe.

Remember, for months, Tesla's been locked in this big labor, standoff with unions in Sweden, which has basically impeded its ability to deliver vehicles in those countries. And then in Germany, these environmental groups have long had concerns around like the pollution and potential damage to drinking water. There's also these protests going on in the forest that Tesla plans to cut down in order to expand the factory. There's people literally living in trees there, which is, I don't know if anyone's read overstory out there, But it's a type of kind of protest that if you want to cut down these trees, we're in them right now, so we don't want you to do that.

Also, last month, 65% of voters in kind of the surrounding area voted against the Tesla expansion factory, expanding its factory. So lots of headaches and lots of things piling up that is making Elon Musk's German factory experience. Not very fun. No, it is not. I mean, it's been a slog ever since they wanted to open this thing back in the early 2020s. There are a lot of concerns about drinking water, but they did open the plant in 2022, and now they want to expand its capacity, double its capacity from 500,000 cars a year to 1 million cars per year. That's going to require them to chop down some of the forest nearby.

So as you mentioned, there are people building tree houses. There are about 100 activists living in the forest next to the Tesla factory to prevent it from expanding. We'll see what happens there. But if Tesla does manage to expand this factory to 1 million cars per day, that is huge. That's one of the biggest factories on the continent because Volkswagen's Wolfsburg plant, which is considered to, I mean, it's been there forever. This is its crown jewel. That produces 800,000 cars per year. So if Tesla is able to ramp up to one million, that's a huge question.

Still, that is a massive, massive plant in Germany. Yeah, and I do just want to highlight before we move on just how big. We keep calling it a headache or something like that. But this is a massive disruption. It's going to cost the automaker an estimated $100 million dollars just from the same. to shut down alone. So it is a brutal, brutal loss. And I just want to know, how is their electrical grid so fragile that a single kind of

electric pylon can take down the whole grid? Someone's got to get out there and start rerouting some stuff. You can go ahead and reset the Taylor Swift mentioned calendar to zero for the second time today because I knew to explain why some fans have bad blood with her latest decision regarding the Ares Tour. Taylor has taken her talents to East Asia, but she's not spreading. her talents very far. In fact, all six of her shows are being held in Singapore, the wealthiest nation in the region. This has rubbed a lot of fans and leaders from neighboring countries the

wrong way. When word came out that Singapore had paid Swift, somewhere in the two to three million dollar a night range to stay put, a lawmaker in the Philippines fired back saying that's, quote, not what good neighbors do. Neil, the New York Times described this as, quote, soft power coup for the country. That's how big a deal it is that Swift, and the economic tailwind she brings is choosing to only awkwardly dance on Singapore

stages. It's causing an international incident. It really is. I mean, this is a pretty savage move by Singapore. This region is 600 million people. They obviously cut a deal with Swift. They acknowledged it, too. They cut a deal with her people to just perform in Singapore for six nights and

not go anywhere else, Indonesia, Philippines, Thailand. There's actually a big summit going on right now of 10 of these Southeast Asian countries. They have to deal with very serious issues like a humanitarian crisis in Myanmar and China's encroachment on the South China Sea. But guess what overtook this entire conference was the question of Taylor Swift and Singapore because of her huge economic benefit to the places she goes on the tour. So this is kind of taken over the summit. No, analysts who cover the region were saying that it is nice to take a break from the more serious things to talk about Taylor Swift. But it is a very very,

serious economic thing. I mean, if we go back to look at her Australian leg of her tour, which she just left, there was a study that showed a nearly $100 million uplift in consumer spending. She sold more than $570,000 tickets across seven nights in Sydney in Melbourne. So when we say economic tailwinds, I mean, we've talked about it a lot on this podcast already, but that is spreading internationally as well. So if you are some of the other nations in that massively populated region, of course you're mad that she's only staying in single. The responses from the other leaders have actually been pretty funny because I think they're mad, but they also have publicly admitted like, I wish I thought of that idea.

Right. So the prime minister of Thailand was like, you know, we're taking notes. You know, Singapore also said if we didn't do it, then other countries would. And all the other countries said, yeah, we probably would have done that. And the other funny thing is Singapore, one official was being very defensive saying, I don't think she needs Singapore's money at this point. So it was kind of her choice to, she had other. decisions in $2 to $3 million a night. I know it sounds absurd.

Isn't going to really move the needle for Taylor Swift at this point. So I think it was funny how Singapore is like, don't blame us. Like she still had autonomy in the decision in this decision to stay in Singapore. I mean, if I'm her, it's a less travel, so I'm going to do with it. Yeah. It is less travel. Plus, Singapore

is the richest country in the region. Also has the best travel links. But clearly a lot of people traveled in for the shows and their ongoing this week. Finally, spring break unofficially kicks off this weekend. end, and if you're thinking about heading down to Miami to get wasted, just know that Miami does not really want you.

The city of Miami Beach rolled out a new ad campaign on Friday telling spring breakers, we are breaking up with you. For the past three years, violence and mayhem from spring break visitors has driven Miami Beach to the point where it's just done. It doesn't want to deal with spring break anymore. And to get ahead of the inevitable debauchery this year, Miami Beach said visitors will face a number of strict measures trying to keep them in line like curfews. bag searches, early beach closures, DUI checkpoints, a huge spike in parking fees, and an increased

police presence. It doesn't sound like a lot of fun, to be honest, but those are the drastic steps Miami Beach feels like it needs to take to keep the situation from descending into chaos as it has been since COVID started. Yeah, the big question here is how business owners are going to kind of react to this breaking up with spring break campaign, because now considering they might lose money during one of the busiest times of years, but a lot of businesses, and up usually suffering anyways because if there's kind of these violent mass of people outside of your doors, you're forced to close anyway. And also the people who are primarily causing these incidents probably aren't spending money at those businesses anyway. So that's always kind of the

fine line you have to walk is you want to bring people, you want to bring tourists to your neck of the woods, but you also want them to behave responsibly and be respectful of the businesses that they're patronizing. There is some controversy to these policies. Civil rights advocates are saying that leaders are only cracking down because many of the visitors are black, and that is many of the people who have been going to this particular stretch of Miami Beach, South Beach, Ocean Drive over the past few decades. The leaders have responded, that's not true. I just have a moral obligation to protect citizens and keep things safe.

There have been two people were killed in shootings last year. So this is getting out of hand, but there also is some pushback saying, You wouldn't do this if it was mostly white people. Yeah, there also is precedent to this, though, if we go to another place in Florida, Panama City Beach, where kind of violence came to a head there back in 2015. There was this house party shooting that left several people dead and wounded. That city subsequently banned alcohol on the beach, cracked down on unpermitted events. A lot of the same playbook that we're seeing Miami Beach execute right now.

So this isn't out of the blue. And again, it's such a, it is a difficult relationship these cities. have with these spring breakers. You just want them to not tear the city apart, essentially. You want them to come bring their business, but not overindulge. I think Miami is fine with doing this because Miami is doing great. Right. I mean, people are going all over the course of the year. They're not relying on this few weekends in March for a lot of tourism. Miami is just booming in general, and the whole metro area is kind of growing. So I think they're okay with kind of tamping down the shenanigans on spring break specifically, because

their economy is booming and tourism is just spread across the year. We have to wrap it up there. Have a wonderful Wednesday, everyone. As always, don't hesitate to share your thoughts on the show or just say hi to our email address, Morning Brew Daily at Morningbrew.com, and you can sign off cheers. I'm rescinding my ban. Let's roll the credits. Emily Milliron is our executive producer.

Raymond Liu is our producer. Yuchenoa Ogu is our technical director. Billy Minino is on audio, hair and makeup is on spring break. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great, show you today, Neil. Let's run it back tomorrow. Yamava Resort and Casino at San Manuel is California's number one entertainment destination

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