We need an economic reset of some kind, like a depression, to shake the bad money out of the system, kill zombie organizations, force economic austerity, devalue inflated assets, encourage downsizing, and create investment and arbitrage opportunities for ambitious young people. But we've created a scenario where the elites cannot allow a slackening in the pace of growth otherwise it will trigger a collapse of the whole system and a revolt of the retirees living on pensions, 401(k)s, social security, and home equity. We've inflated the system to the point where everything is too big to fail, so the only course of action anyone can agree on is to just keep squeezing the middle and lower classes for their time, money, resources, and attention.
I think it's a mixture of home purchase and where you are able to purchase a home. There's a lot of locational inequality today in terms both having a functional community and economic opportunity.
This has a lot to do with policy decisions and taxes. To simplify, the transformation from the Greenspan put to the 2000s bailouts to COVID policy signaled a commitment to abolish stock market downturns. 1929 can’t happen again in the asset markets generally.
This risk gets shifted to the income generating but asset limited population (middle class). This type of arrangement, broadly speaking, can get more extreme; aristocracies of 10% or less have and can wind up with almost all the valuable assets. Effectively one class of person can just say like a bratty child “it’s against the rules for me to lose” and then make it so. Then when someone else says “the game should be fair” they can say “nuh-uh, I’m the best and I can never lose.”
Speaking of college football and sports, I came across two old ticket stubs while going through things at the house.
The first stub was from the 2006 Ohio State-Michigan game, 19 years ago today. That was a 1 vs. 2 game. Face value was $59 in section 26A. In 2024, that same ticket was $347.
The second stub was a 1997 ticket for the Cleveland Indians-New York Yankees game in Cleveland. I went with my grandma to that game and sat in the upper deck in right field. The face value of that ticket of the two prior American League champions: $6. That section is now a party plaza for large groups.
You want to see price inflation, old ticket stubs will show it.
One gets a very strong sense of The Tale of Two Cities with these kinds of things. The Gilded Age is rather repeating itself, even down to the eugenics and eschatological sensibilities of the uber-rich.
I'll be honest that I played a small role on the college sports front. As a favor, I helped a friend, a D1 college baseball coach, conduct a review of his program to try to bring it closer to breakeven for the university. The conclusion I arrived at was he needed to add an expanded luxury seating area, which he did, and the ROI instantly exceeded even my optimistic expectations. The groundwork had already been laid by a new luxury area created for the football team, so many of those same fans, who might have skipped the baseball games in the past, started flocking to them.
The math there is pretty simple: baseball wasn't selling out its seats and couldn't realistically raise prices much for the typical seats. They could tweak a few things, but it was hard to make the mass market product better. But people will pay up for a luxury experience. At the price point we arrived at, it's competitive with standard seating at the closest MLB stadium, especially if you buy food there. You're probably still paying a little more, and of course seeing worse baseball, but the rest of the experience is much better.
But now, let's talk about the real success story in the space: the Savannah Bananas. I really admire its founder, Jesse Cole: the man built Banana Ball out of nothing but an idea, and now it has become a phenomenon. It's also heavily under-monetized at this point. The games now sell out years in advance, with anti-scalping measures in place. So I suppose it's a rare example of a quality mass market product -- and from the few games I've been to, the quality has improved significantly over time -- except you can't actually get tickets anymore. That low pricing has earned it some fanatical fans, for sure, at the expense of a lot of potential earnings. We'll see how that all works out in the end, but I can admire the spirit that made that choice, even though I don't think I have it in me as a businessman to leave that much money on the table.
The Financial Times itself is an example of this, is it not? In an age where most people expect news to be free, and in an age where many people don’t even read news articles anymore, the FT can still charge $45-75 a month for access to their articles.
I would much MUCH rather watch a football game in the bleachers with "The Masses"....Just my 2 cents. (And Heaven will make the richest mansion on earth look like a dump)
This whole scenario reminds me of all of the Depression-era movies that showed the ultra-haves being forced to interact with the ultra-have-nots (Hoi Polloi). I'm trying to keep eyes open for the current reality as it unfolds and not just assume that this divide is a harbinger of the same kind of crash as in 1929. But it unsettles me nevertheless.
We need an economic reset of some kind, like a depression, to shake the bad money out of the system, kill zombie organizations, force economic austerity, devalue inflated assets, encourage downsizing, and create investment and arbitrage opportunities for ambitious young people. But we've created a scenario where the elites cannot allow a slackening in the pace of growth otherwise it will trigger a collapse of the whole system and a revolt of the retirees living on pensions, 401(k)s, social security, and home equity. We've inflated the system to the point where everything is too big to fail, so the only course of action anyone can agree on is to just keep squeezing the middle and lower classes for their time, money, resources, and attention.
Home purchasing seems to be part of the "haves" as well.
The economic divide is concerning - this reminds me of the 2008 crash when there was a "lost generation". It's now more than a single generation.
I think it's a mixture of home purchase and where you are able to purchase a home. There's a lot of locational inequality today in terms both having a functional community and economic opportunity.
This has a lot to do with policy decisions and taxes. To simplify, the transformation from the Greenspan put to the 2000s bailouts to COVID policy signaled a commitment to abolish stock market downturns. 1929 can’t happen again in the asset markets generally.
This risk gets shifted to the income generating but asset limited population (middle class). This type of arrangement, broadly speaking, can get more extreme; aristocracies of 10% or less have and can wind up with almost all the valuable assets. Effectively one class of person can just say like a bratty child “it’s against the rules for me to lose” and then make it so. Then when someone else says “the game should be fair” they can say “nuh-uh, I’m the best and I can never lose.”
Speaking of college football and sports, I came across two old ticket stubs while going through things at the house.
The first stub was from the 2006 Ohio State-Michigan game, 19 years ago today. That was a 1 vs. 2 game. Face value was $59 in section 26A. In 2024, that same ticket was $347.
The second stub was a 1997 ticket for the Cleveland Indians-New York Yankees game in Cleveland. I went with my grandma to that game and sat in the upper deck in right field. The face value of that ticket of the two prior American League champions: $6. That section is now a party plaza for large groups.
You want to see price inflation, old ticket stubs will show it.
Wow
One gets a very strong sense of The Tale of Two Cities with these kinds of things. The Gilded Age is rather repeating itself, even down to the eugenics and eschatological sensibilities of the uber-rich.
I'll be honest that I played a small role on the college sports front. As a favor, I helped a friend, a D1 college baseball coach, conduct a review of his program to try to bring it closer to breakeven for the university. The conclusion I arrived at was he needed to add an expanded luxury seating area, which he did, and the ROI instantly exceeded even my optimistic expectations. The groundwork had already been laid by a new luxury area created for the football team, so many of those same fans, who might have skipped the baseball games in the past, started flocking to them.
The math there is pretty simple: baseball wasn't selling out its seats and couldn't realistically raise prices much for the typical seats. They could tweak a few things, but it was hard to make the mass market product better. But people will pay up for a luxury experience. At the price point we arrived at, it's competitive with standard seating at the closest MLB stadium, especially if you buy food there. You're probably still paying a little more, and of course seeing worse baseball, but the rest of the experience is much better.
But now, let's talk about the real success story in the space: the Savannah Bananas. I really admire its founder, Jesse Cole: the man built Banana Ball out of nothing but an idea, and now it has become a phenomenon. It's also heavily under-monetized at this point. The games now sell out years in advance, with anti-scalping measures in place. So I suppose it's a rare example of a quality mass market product -- and from the few games I've been to, the quality has improved significantly over time -- except you can't actually get tickets anymore. That low pricing has earned it some fanatical fans, for sure, at the expense of a lot of potential earnings. We'll see how that all works out in the end, but I can admire the spirit that made that choice, even though I don't think I have it in me as a businessman to leave that much money on the table.
Yes - the choices are rational, but I love the Savannah Bananas model.
The Financial Times itself is an example of this, is it not? In an age where most people expect news to be free, and in an age where many people don’t even read news articles anymore, the FT can still charge $45-75 a month for access to their articles.
80% of FT subscriptions are part of corporate group packages. Probably part of the remaining 20% are expensed as well.
I would much MUCH rather watch a football game in the bleachers with "The Masses"....Just my 2 cents. (And Heaven will make the richest mansion on earth look like a dump)
Great article Aaron...Jim
This whole scenario reminds me of all of the Depression-era movies that showed the ultra-haves being forced to interact with the ultra-have-nots (Hoi Polloi). I'm trying to keep eyes open for the current reality as it unfolds and not just assume that this divide is a harbinger of the same kind of crash as in 1929. But it unsettles me nevertheless.