The Not So Super League

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S1: This ad free podcast is part of your Slate plus membership.

S2: Hello. Welcome to the not so

S3: Superleague episode of Slate Money, your guide to the Business and Finance News of the Week, which this week means football, real football, not American football. I am Felix Salmon of Axios. I am joined by Emily Peck. Hello. And I’m also joined I’m quite excited about this by Peter Thal Larsen. Peter, introduce yourself. Who are you and what is your affiliation?

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S1: So far as I’m the media editor at Reuters Breakingviews, which is the commentary of the global news organization.

S3: And you are an Arsenal supporter.

S1: I am. For my sins, yes.

S3: I do not understand this, but we will talk about any neither. We will talk about soccer arsenal and the crazy plan they cooked up with eleven other teams to break off and form a Super League. Very supportive plan. We have to say it didn’t last very long. We’re going to talk about that. We’re going to talk about Lex Greensill, the financier who went spectacularly belly up in the UK and all across Europe, and try and work out what the hell happened there. We are going to talk about covid in Europe and why and whether the European countries are going to be able to get it under control. We are going to talk about the most popular, immersive experiential artist in the world in the slate. Plus, it’s a lot coming up this week, all on Slate Money. Let’s talk about the Superleague. I love the Super League. It’s super. It’s the most super thing to happen in the history of soccer, which I have to call it, because I’m now American and most of our listeners are American. And if I call that football, they would think I was talking about something with no football.

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S4: The Superleague is not a Marvel movie, which is what I thought it was for several

S3: things actually true. When I was emailing Emily and Peter about this, she’s like, what is this Super League? And I honestly, she just seen it passing by on Twitter and thought it was like some new comic universe. Exactly.

S4: I was like, what’s Marvel got in store for me now? And actually it has some elements of a Marvel movie. It has like billionaire villains. Right. And has the heroes

S3: and it has the entire planet coming together to defeat the billionaire villain. Right. Like it was like and there was even an element piece that told me if I’m right about this, of self-sacrifice, that the fans of the clubs involved, the Chelsea fans and the Liverpool fans all said, well, yeah, actually, you know, even if it would be kind of cool if we got to play Juventus in Barcelona all the time, we will fight against that for the glory of the greater good. It was their self-sacrifice going on, I think.

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S1: Yeah, probably. I mean, I don’t know if anybody actually thought of it that way, partly because nobody really has gone public and actually explained what they were trying to do yet. I mean, these billionaire villains that we keep talking about and there’s a dozen of them, right?

S3: It’s such a comic universe. No. As well. The dozen billionaires.

S4: Before we dig in, let’s just explain to other people who maybe like me, didn’t listen to The Daily on Friday or thought it was a Marvel movie. I’m just ignored. It was what the Super League was. What happened? Let’s give the little summary.

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S3: Give give us the LDI. Can you do this in ninety seconds?

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S1: So very simply, there are a bunch of big soccer clubs in Europe and at the moment they play each other in midweek and then they play their national opponents during the weekend. And soccer is very expensive for the owners. They spend lots of money on players. And the real problem, if you think about it from an owner’s point of view, is that the amount of money you get is not certain. It depends on how you perform, whether you qualify for these competitions. And so the thinking has been for a while, wouldn’t it be great for us, the owners, if we could organize and act like a closed cartel where we all just play each other every year and we all get to distribute the money to each other? It’s basically a an attempt to recreate in Europe what the National Football League is in the US. A group of people, the same people play each other every year and the money gets distributed and everybody’s happy.

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S3: And this would be like in terms of the revealed preferences of what football matches people like to watch on the telly. This would be what people want. It’s the big matches between Manchester United and Barcelona rather than the smaller matches at the bottom of the league or something like that. And so it would get more bigger audiences and they’d be more engaged audiences and the TV companies would pay more money. And the reason the TV companies would pay more money is because more of the world would be interested in it. And this is how capitalism works, is that it fulfills the. And what is not to like about this?

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S1: Well, I think it depends what you say, people, you have to be clear about what kinds of people and in the lingo that the soccer club owners use, they talk about new fans and legacy fans and the legacy fans of the people in Britain and Spain and Italy and who like to do grown up watching their clubs play other clubs in their country, occasionally playing other European European clubs. But who really care actually about whether Real Madrid beats Barcelona or about whether, you know, Manchester United beats Manchester City or for my club Arsenal. How do we do against Tottenham? That’s what really matters. And but obviously, for the new audiences in China, in India, the idea is that actually these people, they have a choice of all kinds of sports. These clubs are a million miles away. Nobody’s ever going to go and actually visit see one of these games live. So they’re interested in the spectacle. And the spectacle is when you ventus with Cristiano Ronaldo plays against Paris, Sangoma with Kilgannon, Bapak, that’s what you want to see. And so you want to try to engineer more of those kind of competitions. And that will appeal to the new fans who are going to pay to watch for the rights and for the streaming and so forth, which will then bring in more money for these clubs.

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S3: But the problem is that France and the UK and everyone else is all run by, you know, Gen Xers like Emmanuel Macron and Boris Johnson, who are not new fans. They’re stuck in the mud, old fashioned folks who are like, take one look at this plan and say, oh, no, not just them. All the existing fans and even the players and virtually everyone, as far as I can make out, who wasn’t a club owner. And even some of the club owners didn’t seem to be very vocal in favour. This is the one of the weird things that I didn’t understand about the Super League had a good name, super. That’s good. But it didn’t seem to have a great PR rollout where they got a whole bunch of celebrities to come out and go Super League. And then it was like this new universe and everyone was excited about it. It just kind of dropped. There was a leak in The New York Times on Sunday night, and then it kind of leaked out and no one was in favor of it, even at the beginning

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S1: as a corporate rollout. It’s the most catastrophic product announcement I’ve ever seen. It’s really quite extraordinary. I mean, you would think if you were going to do this, if you were up and, you know, generations of European soccer practice, you would think, well, you need to have you need to have a bunch of politicians on board. You know, basically some of them need to be sold on the idea. You need to have a bunch of people who are going to go out and sell this to the public and to the fans. You’d want to have some former players, some former managers, some big names from the sport coming out and saying, well, we’ve got to keep up with the times or whatever. And there was nothing, literally nothing. The other thing you would do, presumably, is you’d say, well, here’s some money that’s going to go to grassroots football so that poor kids can get a better chance to practice the game or something like that. Just something to give some sense that actually you’re putting something back into the game. And there was absolutely nothing. The only person within the first 24 hours of this this thing leaking out, the only person who actually went public to talk about it was the Real Madrid president. And in his interview on Spanish television, he also introduced ideas like, well, maybe, you know, to appeal to the fans in China and India. We need to make the game shorter and things like that. That was kind of we’re talking about it. So, yeah, everybody was united against it. Even Boris Johnson, who I’m pretty sure even admitted he couldn’t remember the last time he’d been to see a live soccer game. He’s not a big soccer fan. Even he was straight out against it. Emmanuel Macron, again, not a natural lover of the sport, came straight out against it. It was just extraordinary. The opposition that lined up against it seems like

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S4: one of the key issues in my understanding of what happened was just simple fairness, because the league would be close to the 12 teams and they would all be guaranteed a spot to play each other. There is no like like with sports, it’s fun to see people qualify for a championship are qualified.

S3: There would be some there would like was it five teams would be allowed to qualify every year, but then there’d be fifteen teams that would be like the permanent seats at the Security Council who would basically govern the whole thing. Yeah.

S4: So that that just comes across as fundamentally unfair. Like you could see if there was more sophisticated roll out and PR and like thought put into this by the millionaires, that they could have come up with a system that maybe could have worked.

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S3: Remember that the millionaires are the players, right. Because well, yeah, that’s the other one. They’re the ones who would actually lose because there was this wonderful clause in the league contract which basically said we’re going to create this cartel that caps the amount of money that the players get. So the players were not going to benefit from this at all. The only people who are going to benefit from this economically were the owners. And literally no one has a lot of sympathy for, you know, John Henry,

S4: as far as I understand, it’s not like soccer. Football is that. Fair to begin with, there are all these billionaires that own teams that have made the sport or helped the sport go global and paid a certain cadre of certain players millions of dollars to play and are making all the money anyway. And they’re the system is already seems like it’s pretty unfair. And it’s not like the NFL in the United States where there’s like a draft and like the worst team gets the first pick and la, la, la, like there’s nothing. It’s kind of a mess, right?

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S1: It’s a really good point, Emily. I think you’re absolutely right. I mean, the current system is not fair. The big clubs are the ones who get the most TV money, who compete in the big European competitions, who then sign the best players. And so, you know, and it’s a self-perpetuating I mean, it already is kind of a cartel. There was some discussion around the edges about should Arsenal be in this 12 and shouldn’t Leicester City or something. But you can argue about which clubs should have been in it. But there is a sort of self-selecting group, and it’s very hard for any smaller clubs to to break into that. And you’re right, in the US, which is essentially what they were trying to recreate, they were trying to recreate something like the NFL. The money gets distributed more evenly. There’s a draft system so the bad teams can pick the best players. And so, you know, they have a chance. You end up in a situation actually where the people who are in the in the close cartel, it’s a more even competition. And actually there’s a chance that the team that came bottom last year might win it this year. That’s very unlikely to happen in European soccer as it’s currently configured. What was unfair about it, though, was the idea that you can exclude all these other clubs who in theory have a chance of winning their National League, qualifying for the Champions League, getting through the various rounds, and then playing Paris Saint-Germain, Real Madrid at some stage and probably losing. But still, it’s the idea of that possibility and the idea that possibility was going to be completely removed completely.

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S3: I keep on saying like there was going to be massively reduced. They were still going to have a quarter of the spots for those, but the league was only going to be 20 teams as opposed to thirty six. And I think the big picture was really what is football going to be? Is football going to be like the English Premier League, La Liga, the Syria, the Bundesliga, or is it going to be first and foremost the Super League and everything else is going to be second fiddle? Because right now, you know, if you talk to Americans about what sports they like, they generally don’t say, I like baseball, I like basketball. What they say is I like NFL, I like NBA. They mentioned the leagues rather than the sports. And if you talk to a football fan, what do you like? They’ll say Premier League, Business League or whatever. Almost no one, when you say what you like is the first thing out of their mouth, it’s Champion’s League. That’s not where your heart lies. And I think the idea here was to really make turn the Champions League into something where, you know, the global love of football would reside in this new league.

S1: Yeah, I think that’s I think that’s probably right. But it was just incredibly badly conceived and designed. But I think the other thing to bear in mind is that the financial imperative to do this is still very much there, because clearly at the moment this we talk about these big clubs as if they’re successful, but actually they are and some of them are and financially they are. But they’re still quite precarious in terms of their finances. And they spend an awful lot of money every year buying and compensating the players. Manchester United pays, I think roughly three quarters of its revenue goes out the door to the players. And so if you can design a league that says, let’s reduce that number to 55 percent, that makes a huge difference to the Glazer family right here in Manchester United. That’s a big increase in their bottom line. And so there’s still this sense in particular to become particularly pronounced with the pandemic, because obviously they’re not selling any ticket. They haven’t sold me tickets for a year. But there is a sense that somehow they need to put it on a more stable financial footing and whether they can still find it to they.

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S3: That’s my question for you, Peter. It’s like in my head, there are two reasons why you buy a football team if you’re a billionaire. One is because you think that the sport is going global and the value of your team will go up over time. And in 10 or 20 or 30 years time, you’ll be able to sell it for a hell of a lot more than you bought it for. And that historically has been a pretty strong investment thesis that the value of the teams when they change hands really has been going up quite strikingly. But the second one, and probably the more important one, is just what my old friend Ryan McCarthy, we’ve called billionaire whimsy. You know, it’s an amazing toy to have. And there were not that many top teams. And you want to own a football team and you get to own a football team. And, you know, if anyone has ever heard of Roman Abramovich, it’s not really because of however he made his money. It’s because he owns Chelsea and you get a certain amount of cash and status for that. And so I feel like the discounted cash flow, like, is my team going to make a profit this year or not? It’s like. Eastern third, is that becoming more important?

S1: I think it’s changed, I think you’re right. I mean, I think, you know, the old line was it used to be that you’d make a lot of money selling used cars or whatever, and then you’d buy your local team. And that was, you know, sort of like retirement, a hobby that you did if you were a successful businessman. And then the game professionalized quite a lot. And you got a load of basically corporate owners that came in. If you remember, Rupert Murdoch tried to buy Manchester United back in the day and there were various media companies on the board, sports franchises and stuff like that. But what really happened in Europe was that and particularly in the U.K., was you had these sort of foreign owners who were basically laundering their reputations. Roman Abramovich is a great example of Chelsea Sheikh Mansour of Abu Dhabi. Manchester City is another example. It’s really just like a it’s a sort of a thing to do that kind of gets you a name and means that you are less associated with whatever slightly unsavory sort of thing you used to do back at home. But then you had these American sports owners that came in. And so the Glazers were the first. And then John Henry bought Liverpool and Stankovce eventually wrestled control of Arsenal. And there’s a few others and they are in it to make a return on their investment. And they’re trying to increase the equity value of these franchises, which is what they call them. And then, you know, and John Henry is talking about doing a spack deal with his company, which also owns the Red Sox. And they’re trying to you know, they’re trying to increase the equity value of their investment. And the only way you’re going to do that with European soccer is if you get a lot more fans to watch it and you get them to pay to watch it on their phones or on TV or whatever, because basically the media rights in the countries are kind of maxed out. And so you need to kind of attract a whole lot more eyeballs, sell them a little more sort of streaming product of some form, and then you can get more income. And then also, if you can cap the costs of the players, then you have something that’s valuable. And that’s what they were trying to do.

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S4: Just so sloppy and embarrassing the teams.

S3: What struck me in particular was like this super league didn’t come together in like a drunken, you know, overnight meeting. It’s been years in the making. You would think that if they’d spent this many years trying to put it together, it would have been less sloppy. But what really struck me was that, you know, about 24 hours in not quite, you know, about halfway to the 48 hours point when they’re all just completely fell apart. There was a statement from Amazon, which was like the obvious media company that was just going to buy up the global rights and stream football globally to everyone in the world saying, heck, no, we are not going to touch this with a ten foot pole. And you’re like, huh? You know, if you’ve been trying to put this together for however many years, you’d think that the first thing you would do would like knock down a big deal with some kind of trillion dollar US media company that would give you all of the money you could ever dream of. And instead, they had to cobble together some kind of bridge loan from JPMorgan and no one even knew what it was a bridge to. But they kind of assumed that somehow they would be able to sell some TV rights somehow. And you’re like, wow, this was so far from being fully baked. It was kind of ridiculous.

S1: And I think that seems to be part of the problem is that actually there are so many different interests at stake there, the national leagues or the different clubs and their owners, the fans, the politicians, the umbrella organizations like UEFA in Europe and FIFA, who amazingly out of all of this have sort of emerged as kind of the good guys, you know, the defenders of football tradition, which is extraordinary. If you fought a battle and FIFA, the good guys, then, you know, you’ve really screwed it up and they all have their interests. And then there are the meteoroids. And if you think about Amazon, you know, Amazon already has a deal to stream some Premier League games in the UK and there are legal contracts around that and stuff. So it’s been difficult for them to just kind of like say, ah, we’re going to jump over here because then they get in trouble with the Premier League. So everybody has different interests that they need to keep happy and players, they need to keep spinning. And it makes it very hard to just create something like this from scratch.

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S4: It’s also such a great example of sort of the competing forces in the world right now, like globalisation versus populism and nationalism. And it all seem to come to a head in this fight over football that I don’t even know what it was on Monday and now feel like I’m super familiar with.

S1: You’re even saying football.

S4: I’m even saying that. I learned actually, I learned on the daily today that in Europe this is what they said. OK, so I don’t know if it’s true. Haven’t fact checked it. But it used to be called soccer, like in the 1970s, even over there. And then it changed. Peter, can you

S3: stand up in England in the 1970s? I’m going to I’m going to the verdict. Full stop. Peter is shaking his head. Peter is not on the door, but he is shaking his head as well. And I trust him on the phone.

S4: All right. Fine and fine and fair enough. But anyway, yeah, I think this is a great example of, you know, globalisation may be inevitable, but there’s a lot of people standing in its way, real, actual people that are upset about their little football teams or big ones. Right. Felix, what’s your do you have a team? Everyone seems to have a team

S3: that they’re into. So I posted my vaccine selfie on Wednesday, which was my second shot, and I was very happy and I was wearing the shirt of my beloved football club. And so I’m out on Twitter as representing as being a big fan of college football club.

S4: What was that

S3: like? Well, it’s hard to explain.

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S1: It’s the set of South London Hipster Football Club, of course,

S4: is owned by a billionaire.

S3: It’s financially extremely struggling. The players barely get paid. We’re always on the verge of going bust or losing a football ground or something. But we do have a great pink and purple stripy kit and we have great songs as well.

S4: You have like a tad LASO vibe

S3: and no one knows us. We don’t care. So, Peter, I need to switch gears to something which actually matters. Apropos me getting my coat, which I walked out of my front door literally outside my front door on Thursday. There was a big tent of people just saying, come in and get a vaccine. Anyone who is 16 years old could just get vaccinated on the spot. They were trying to grab people off the street to get vaccinated. They were they weren’t seemingly having a lot of luck. But we are now at the point in suddenly in New York City, but more or less in most of America, that we’re struggling to find people to vaccinate as opposed to struggling to find vaccine to go into arms. This I feel safe and saying is not the case where you live.

S1: I’m in London, so it is the case where I live.

S3: So anyone in London can get vaccinated.

S1: I wouldn’t say we’re quite at that point yet, but we’re definitely I think the UK is at like 50 percent of the population has received at least one dose. So it’s it’s pretty good. But they basically they’ve been through all the old people. They’ve worked their way down to the set of the 50 plus. They’re now working their way through the 40 somethings. And I think they reckon they’re going to be doing teenagers by August. So it’s going very quickly, but it’s very different here than it is really anywhere in the EU. Most EU countries, Germany, Italy, France, Spain are at about 20 percent with one dose in terms of being fully vaccinated, it’s 78 percent.

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S3: So why is that?

S1: Well, there’s two reasons. Two big reasons, I think, really. One is that the EU was slow to jump on the vaccine bandwagon. They basically, I think, viewed it rather cautiously and approach it rather cautiously and viewed it as a sort of process of approving vaccines and making sure that they worked and all this kind of stuff and doing things properly. And it’s been the EU even without the UK. Twenty seven countries trying to get them all to agree to work together. It takes time. So it took them longer to approve vaccines and it took them longer to sign up the supply deals that they needed. And they to the extent they tried, they also failed to produce any vaccines domestically unless you count the Pfizer biotech vaccine, which was developed obviously with technology from a biotech company in Germany. So that was already a bad start. And then they they got themselves in a real mess, actually, with the AstraZeneca vaccine, which was partly AstraZeneca fault, because the way they as we all know, the way that they announced the results of their trials was a bit confusing. And they fiddled around with some numbers and people were a bit suspicious. And so a number of politicians in the EU, not the European Commission, which is organising this process, but some of the EU leaders like Angela Merkel, Emmanuel Macron made various statements where they were saying, we’re a bit skeptical of AstraZeneca. We’re not sure it works. We don’t think we should use it in old people, etc. And so that also slowed things down and also just made people a bit sceptical about this AstraZeneca vaccine, which for a while was the main one that they had. So it’s been a process where everything has just gone slower than it should have done. And it’s getting going now. But they are I don’t know, there are probably at least a couple of months behind, I would say the US and the UK.

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S4: There was something with the contract negotiations with the EU

S3: like, yeah, they tried to save money on the vaccines.

S4: Yeah, they tried to save money. They’re not used to these kinds of they’re more, you know, good at trade deals and less good at strong arming pharmaceutical companies into giving the first shot at the shots.

S1: I think, yes, they probably were a little hesitant in terms of how they how aggressive they were about trying to sign up some of these deals. And so basically what happened was when it came to the crunch, AstraZeneca gave priority to the UK, who they had signed the deal with first over supplying the EU. They were then having signed a deal with the EU. They then they were then slow on on the deal. And actually, we’re getting to a point now where there’s a story out there this afternoon, Friday afternoon, saying the EU is about to sign a. With Pfizer for one point eight billion doses and and when they do that, they will basically, I think, phase out the AstraZeneca vaccine entirely. And Johnson Johnson has also been paused, I think, as it has in the US because of some of these concerns.

S3: So one point eight billion, like just doing the math for a block of, what, like 400 million people that they’re counting on a lot of, like, booster shots in the future.

S1: My guess is two doses per person. Right. But, yeah, it’s more than they need clearly to do. Everybody wants I would say

S3: they’re going to export the stuff they don’t need because, I mean, clearly the rest of the world needs vaccine, too.

S1: This is the debate. I know it’s the debate in the US and in other places as well. I don’t think there’s really much discussion. I mean, some vaccines have been exported from the EU, but there is not a huge amount of discussion about exporting from the E.U. because the pressure is such to vaccinate the population first. And it’s particularly for some of these politicians, for Emmanuel Macron, who’s facing an election next year, getting people in France vaccinated by the summer is really quite important for him because everything is going through the European Commission, through the E.U. He’s having to rely on the commission to deliver that for him.

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S4: It’s interesting to think about this conversation in light of the last time we had about the Superleague and thinking about fairness and nationalism, because probably one reason the EU is behind the UK is the EU. Like you said, Peter had to negotiate for twenty seven countries. It’s far more complex and maybe more fair because, you know, if Germany went it alone, maybe Germany would be moving much faster on vaccination. But instead of doing that, you know, it’s one of many countries all kind of trying to work together and do something more for the greater good and then but then pulling back even more. And you look at what’s happened with the AstraZeneca vaccine and how the public now kind of has so many doubts about it and how that has a ripple effects beyond the EU into like South Africa, which is like desperate to vaccinate its residents. And Europe has made them think, well, I don’t want that AstraZeneca. That’s just like garbage that they’re trying to sell to us again, like, you know, that the rich countries are trying to pass off onto the poor countries. And just so much about the vaccination efforts, it’s like it’s nationalism and globalization sort of intention makes it sort of interesting.

S3: The nationalities of these things is fascinating. AstraZeneca, you know, used to be known as the Oxford vaccine. It was, you know, associated with Oxford University, which then licensed it to AstraZeneca, partly because of the Oxford connection. The UK got a good deal, but they also licensed it to the Serum Institute of India, which is trying to produce a lot of vaccine. But if you look at the numbers in India, it’s you know, that’s really the big hotspot, worst place in the world right now. And then, you know, if you look at what happened in Chile, you know, they managed to vaccinate everyone very much with, I think, the sign of a vaccine from China, which it turns out just isn’t as good. And it really is a kind of second best vaccine. And they still have quite a lot of covid because the vaccine just isn’t as good. And everyone’s like there was a wonderful piece actually in Slate about how Pfizer is like the gold medal vaccine. Everyone wants five.

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S1: That’s the gold. Yeah. And the Europeans the Europeans are sort of confirming that again. But there’s also there’s been this sort of weird double play where we’re at the European level. They’ve essentially been locked in this commercial battle with AstraZeneca because AstraZeneca wasn’t delivering what they had contracted to deliver and all these threats about stopping exports and so forth. But then at the national level, you have countries off there and back basically saying, well, some people who had blood clots. So we’re not sure about this. We’re just going to stop the roll out of the AstraZeneca vaccine altogether. And I think in Germany, where they initially having said we’re not going to give it to old people because it hasn’t been tested on them, they’ve now give it to they’ll give it to other people, but they’re going to stop giving it to the young people because they’re more likely to have blood clots relative to the dangers of dying from covid. So there’s been this sort of all these different things pulling in different directions. And as you said, Emily, the end result has been that loads of people are just like, I’m not sure about this. I don’t want that in my arm or wait for something else,

S3: especially in Germany, which really loves being old, like crunchy granola and BAEO. And, you know, like seriously, the number of Germans I know who are just like, you know, whack a doodle about this kind of stuff is intense.

S1: In other words, I would use, I guess, but I could do them. Yeah, I don’t know. I mean, I think there are certain admirable qualities in the sense of doing things by the book, doing properly, making sure, you know, applying the precautionary principle, not giving things to people if you’re not 100 percent sure that they’re going to work properly and so forth. But in a pandemic where actually the alternative is more people dying or covid, then you just have to kind of get a move on. There’s some things that have to be said, I think, about the US and the UK kind of getting that right and countries in Europe not.

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S4: Getting that right, I wanted to ask Felix this, I feel like it’s just going to make him mad, but like the fact that the UK has done a pretty good job with vaccines versus the EU, is this a win for Barack?

S3: I would say don’t say don’t say it.

S4: But I mean, what I mean is don’t say it. Really. Don’t say you have to think about it. Don’t you think about. I think about it. The UK comes off looking pretty good. Oh, well, maybe they made the right choice after all right.

S3: Felix could tell me actually. I mean, it is an interesting question. If the UK had not left the EU, could they have done the deals that they did with Oxford and AstraZeneca and Pfizer and everyone else?

S1: I think there’s a long answer to that. But I think the short answer is no. Obviously, they could have encouraged Oxford to develop a vaccine and all that kind of stuff. But all the sort of the contractual stuff would have the approvals would have gone through the European Medicines Agency, which is in the UN body. And I think the contractual negotiations would have gone through the European Commission. And there was a discussion at the beginning about the possibility of the UK still being part of that process, even though it left the EU and they decided to go their own way. And that is that bit of not being part of the EU, I will admit, has worked out for them.

S4: If you look at the charts to right now, the little covid charts on The New York Times say the UK is doing amazing. It’s like very you know, it’s shrinking down,

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S3: down, down into the right.

S4: The German chart, the Spain, the Italy. It’s all going up. Yeah, Spain.

S1: I think the question I have with this is in the grand scheme of things, how big a difference is this? Clearly, there is a human cost to this question. If the EU is vaccinating at the same speed as the US and UK, things would be a lot better in the EU. But it feels like we’re probably talking about a question of a few months and I suspect by the end of this year, everyone will pretty much be in the same place.

S3: All right, Peter, this is where your expertise as a financial journalist is going to really come in, because I’m going to start asking you some questions now about Greensill, which is this huge story, which, as far as I can make out, no one really understands. I have tried to understand it many times and just thrown up my hands. And I’m not going to try and get you to explain the whole thing. But what we do know is that a bunch of banks, foremost among them, Credit Suisse, lost a bunch of money in debt products at a time when no one’s defaulting on anything. So debt products should be doing really well and credit spreads are really low. There’s no debt crisis going on. There was a lender called Greensill which went bankrupt. And again, like, why are lenders going bankrupt in this bubblicious economy right now when no one is going bust and put to one side all of the weirdness about David Cameron and lobbying and all of that kind of stuff, was this what happened? Was it just pure fraud or was there actually a legitimate reason why a lender might go bust right now?

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S4: I think I know the answer, but I’m going to give you just a guess. But I think it’s because greensill their insurers stopped insuring them and then everything fell apart because once there was no insurance, then the banks were like, oh yeah. And then everything tumbled from that. Is that right, Peter?

S1: Tell us that is you’re right. That is that was the trigger that brought down the whole house of cards. But there is a behind that. There is a more complex question which Feliks kind of got to. And I think all we can really say is, you know, the many illegal investigations and regulatory investigations are ongoing and it will become clear at some point whether there was any real substance to this lending. But the story about Greensill really, I think, is a story about shadow banking after 2008. And so we’re as you know, there was a big financial crisis. The banks bailed out and reregulated and a lot of activity that had previously taken place in banks shifted into nonbank institutions. And Greensill in a very small way, is kind of part of that development because what they were essentially doing was giving a whole load of loans to companies supposedly to to finance their supply chains. And there’s various reasons about why you might do that, which are not coming up for question. But then rather than doing it off their own balance sheet like a bank would do, they were taking these loans and repackaging them into funds which were then being sold to investors. And obviously the biggest supplier of those funds was Credit Suisse. And then the insurance kicks in because in order to reassure those investors at Credit Suisse that this supply chain stuff that they couldn’t really tell what it was that they were buying, they basically went and got an insurance company to say, we will insure all of these loans, all these supply chain loans, which are short term and supposedly safe. We will assure them against default.

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S3: But if they were insured, Peter, until the insurance went away, how on earth did Credit Suisse lose four billion dollars on this? Wouldn’t the insurance kick in?

S1: Well, I think that’s going to be something that’s going to get litigated for a long time. We don’t know. Credit Suisse has lost four billion dollars. I mean, it might have lost four billion if I lost, too, but there’s a portion of the funds that weren’t insured. They’re on the hook for that. And again, these are Credit Suisse clients, right? These are investors in funds run by Credit Suisse. But there’s also a question about whether Credit Suisse should be compensating its investors for some of the losses or whether they should say to their clients, you were the clients of the fund. Do you take the loss? So that’s another thing where the lawyers are going to have a field day. But really, the point is kind of you have these loans, they’re insured and you sell them to investors. And then when it all falls apart, the insurers say we’re not going to insure this anymore and we may not even pay out on the insurance that you’re going to come to us for on some of these loans because we think they were fraudulent or we misled or something like that. And so but the minute that happens, of course, a business like Greensill stops, you know, because the minute they can’t get any funding from this site, then they can’t do their lending on the other side and it’s all over.

S4: Can you explain more about what a supply chain loan is? I felt like I understood it for a minute and then it slipped out of my brain. It has to do with temporary amounts of money so companies can

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S3: think about it this way. Now that you’re a freelancer, when you write an article for someone and you send in your invoice for a thousand dollars. This being the media world have no idea when you know Hearst or whoever is going to pay you that thousand dollars. But if I’m Lex Greensill, I will pay you like nine hundred and ninety dollars right now, just as long as you give me the thousand dollars when it comes at it.

S4: And why is that risky or dodgy? I mean, that seems pretty chill.

S1: Hang on, there’s a bit of a wrinkle on that. That’s a very good way of describing it, Felix, but it’s so old fashioned supply chain finance, is that right? It’s like I’m owed a thousand dollars by Hearst. I need the money now. They are going to pay me in three months ago to a bank. They’ll give me some of the money now and they’ll take my invoice and then they’ll go and get it off. Hearst And they think that’s a good risk for us because Hearst is a big company and they’ll pay their bills eventually. That’s as old as the hills that goes on all the time. But that’s not quite what’s happening here. What was happening here was Hearst in this particular example was going to a business like Greensill or Greensill was going to Hearst and saying, you know what, you currently pay Emily. After three months, we can do you a deal where we will pay Emily nine hundred and ninety dollars of the thousand after a month. So she gets her money even faster than she does at the moment with a bit of a discount. And the you don’t have to pay us back until six months. So we’re basically going to kind of we’re going to stretch out to payables and receivables so that you have less working capital and we’re going to basically replace it with this debt. And the way we will charge for the debt is we will take a little bit of the amount that goes to the suppliers, but they’ll be happy because they get the money earlier. And the aha moment, I think that I arrived at with this with someone when I basically said someone will hang on, but that’s just a loan. Why would you do that? And the answer was it’s not accounted for is a loan. So Hearst in this example, obviously hypothetical example, Hearst is borrowing money from Greensill. Greensill is paying its suppliers. Hearst essentially has a lot more debt, but it’s not on its balance sheet. It’s debt. It’s on its balance sheet. There’s old fashioned receivables and payables. And so when the credit rating agencies or the investors or whoever it is or the other banks look at her, they say, well, they’ve got this much debt and they don’t count that as debt. And so it’s a way of borrowing money that is not disclosed as borrowing.

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S4: And that’s where the daddy comes in.

S1: So this is a big business and lots of banks do it and lots of companies do it in. The disclosure is very limited in some companies. In the footnotes of their accounts, you’ll find they say, well, we use supply chain financing and we had outstanding balances of X, but it’s it doesn’t appear in the debt line on their balance sheet. And the people I spoke to about this say if you ever got to a point where the rating agencies and the accountants and the regulators all got together and said, we’re just going to call this debt and it’s going to pay on your balance sheet, is debt, then I think this whole business goes away because at that point it doesn’t make sense for us to do this anymore. It’s just goes to its banks and says, can you lend us a bit more money?

S4: And now do we talk about David Cameron? Because somehow he’s like in the middle of all this. And it is so I mean,

S3: like the worst politician in the history of Britain who was single handedly responsible for destroying an entire country, somehow managed to get himself in the middle of this. And he was like texting the chancellor, saying, can you please

S4: help me

S3: help your mate, Dave?

S1: It goes back a bit further, actually, because the thing about Lex Greensill is when he used to work for a couple of banks, Morgan Stanley and Citigroup, and then when he set up by himself, one of the first things he did kind of amazingly, was he was also given this sort of quasi official role within the government to help them with their supply chain finance.

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S3: He had a number 10 go after UK email

S1: address and a business card. And we’re going around telling these civil servants, well, I can arrange for nurses to get paid faster and the civil servants will basically said this doesn’t make any sense if we want to pay the nurses. We’re the government, we can just pay them faster. But he still he has some powerful backers and obviously came into contact with Cameron. And then so then when Cameron left office and obviously with his reputation somewhat damaged, we’re looking for something to do. Seems like like Lex. So go and said, we’ll make you an adviser and I’ll give you a little share options. The number exactly is in dispute, but it does seem like David Cameron, instead of March and April last year when, you know, the financial world was melting down and the country was in crisis and all these officials at the Treasury and the Bank of England were desperate, trying to save the economy. We’re now learning that a lot of them spent quite a lot of time dealing with calls and emails from David Cameron, basically pleading the case for them to provide some loans to this company that he was advising

S4: covid relief loans. Right.

S1: It was a special financing from the bank. I mean, they were trying all kinds of stuff. What was

S4: that like? That’s what I couldn’t understand. Just reading about this the past couple of days. Was he doing something illegal or is it just a bad look for him? Yet another bad look for David Cameron?

S1: I think it’s not illegal so that ironically, David Cameron actually changed the rules on lobbying when he was in government in an attempt to clean up the government. But the way those rules were designed was sort of on the assumption that only lobbyists do lobbying. And so you had to be if you’re registered as a lobbyist, then you have to disclose who you’re lobbying for and departments have to disclose the meetings they have with you and stuff. But if you’re just an ex prime minister who happens to be on the payroll of this company and instead of texting his old friends in government, it’s not illegal. And as long as the the ministers who he’s getting in contact with disclose these contacts to their civil servants, then again, they don’t break any rules. And I think the other thing, as far as we know so far, and it’s like every day there’s a new data dump. So who knows what we’re going to find out over the weekend. But as far as we know so far, it seems that the heroes of this are the officials at the Treasury and the Bank of England who basically listened politely to David Cameron and Lex Greensill and then told them to go away. So at least that bit worked.

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S3: I can tell you from every single remotely intelligent English person I’ve ever talked to would have at least that reaction to David Cameron, if not worse. The idea that like David Cameron, by dint of being David Cameron would somehow be persuasive and people go, oh, you’re David Cameron. I’m going to listen to you. Wait, what? Don’t you remember what this guy just let’s have a numbers round. I think it’s time for some numbers. Emily, what number did you bring this week?

S4: I brought the following number five two, three one.

S3: Is that your PIN code for your firm?

S4: Yes, it’s my debit card. ETM No, I no, this is the secret code, formerly secret code used to hack the ice cream machine at McDonald’s, which is owned by a company called Taylor and is at the centre of a very sweet, if I may say, that controversy that I read about in Wired magazine. I see what you did there. Thank you. And basically McDonald’s ice cream machines and they also make shakes are terrible. The technology hasn’t been updated for decades and decades. This wonderful couple figured out a way to make them better and created this little device that could be used to sort of like hack in and figure out if a machine is broken or not troubleshoot da da da da da. And people liked it. But then McDonald’s, big ice cream, big burger. They’re now fighting with this couple over the machine and over this innovation. And the whole story is there. I’ll put a link in the show notes, as they say, and everyone could read it. The story is called They Hack McDonald’s Ice Cream Machines and start a Cold War. Get it?

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S3: Cold War. But if I had that code, could I just go into a McDonald’s ice cream machine and get myself free ice cream? That’s what I want you to say.

S4: I don’t think so, because first, I think they must have changed it because the story’s out and now everyone knows the code. So it’s a moot code. But apparently, like the McDonald’s, ice cream machines are always broken. And if you search on Twitter for, like McDonald’s ice cream machine broken, that you get like all these people complaining about it. Some guy tracks it on a map. I was Googling earlier, like it’s called mic broken. And you can see on a map like which franchises have working machines versus not. So there you go.

S3: All right, Peter, what’s your number?

S1: So my number is minus forty five, which is the price in pounds per megawatt hour of UK electricity. Last Easter Monday was a sunny day. Wow. Unusually sunny day in the UK and it was also quite windy. So we were producing unusually a lot of wind power and a lot of solar power. And so supply exceeded demand and the producers of the electricity were literally paying to offload the surplus.

S3: That’s a big number. It’s not just a little bit negative, it’s highly negative.

S1: Yeah, I mean, it wasn’t like that for the whole day, but I mean, but they were points there was a point during the day where the price was minus forty five pounds.

S3: So this is why you need more electric cars in England. Right. So you can take advantage of negative things and use that to power up your car.

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S1: If we all had batteries and we could take that the extra capacity from the grid and store it, there’s actually this is from a Breakingviews piece by my colleague Ed Cropley, because it’s also one of the reasons that people say actually what you need to do is create more hydrogen power because you can use the electricity when at moments like this to essentially create hydrogen, which you can then turn back into electricity when you need it.

S3: Hydrogen is a battery, basically.

S1: Essentially, yeah. Yeah. I mean, there’s all kinds of theories. Interesting. The other thing about this is that it’s apparently in 2018 in the U.K., this negative electric price where the spot price went negative 18 times last year. It happens three hundred and sixty two times. So, you know, we just we’re getting a lot more renewable electricity. And there are points of the day where we don’t know what to do with it. Wow.

S3: Happy birthday.

S4: Yeah, I want to make a joke about, like, Wind and David Cameron and like, wind. That’s good. And when that’s just bad.

S3: But I didn’t have hot air. Yeah, yeah. My number is ninety nine dollars and 99 cents, which is let’s just say it’s a preview of the Slate plus segment this week. This is the amount of money the New Yorkers are paying and literally are paying. And this thing is selling out to visit an exhibit in New York. Normal tickets are forty dollars, but if you pay a hundred dollars on your Amex card, then you get like a wider range of times. You can turn up and you get to jump the queue to get in. And this amazing exhibit is this immersive experience your art exhibit by the hottest, trendiest artist of the moment. And in fact, part of the reason why we invited Peter Larson on state money this week is because he is Duchesne. This artist happens to be Dutch and because Peter is the only person who can pronounce it. Who am I talking about?

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S1: I want you to hear you say it first, Felix.

S3: So I’m English. So this is the thing. I have this theory that, like the Americans get it completely wrong. The Americans call it Van Gogh, the English kind of like get halfway there and they say Van Gogh. And then the Dutch do a kind of just they just kind of experience life and. Oh, well, something like that.

S1: That’s pretty good, actually. Yeah.

S4: Well, you know,

S1: you don’t have to actually clear your throat, but I mean, sort of.

S3: So we’re going to talk about the whole phone call call. OK, we’re going to talk about Vincent in Sleepless. But other than that, thanks for listening to this week’s show. I hope you learned something about football or Greensville or something. We are always here on sleep money at sleep dotcom. Many thanks to Justman Molly for producing and hosting me this week at Seaplane Armada in sunny Brooklyn. And we will be with you next week on Sleep Money. OK, so, Peter, can you explain for the slate plus folks here, why is Vono so trendy? There are five different immersive exhibitions going on where people, like, walk around blown up. Reproductions of his paintings, listening to classical music and sometimes smelling Dutch aromas, I am not making this up. And the ticket prices range from like twenty five dollars to one hundred dollars and they are selling out all over the place even as the Metropolitan Museum is free. And you can just walk in there and see dozens of paintings, the actual real things, and have lots of space and no one is queuing up to get into them. What is going on? Does this make any sense to you?

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S1: Well, I haven’t been to one of these things, so I don’t know. But I can see the appeal. It’s, you know, especially some of his latest stuff. And I don’t know whether it was the absinthe or the madness or whatever that was. You know, there’s a certain sort of psychedelic aspect to his paintings. And I imagine if you blow them up into a sort of the size of a room and walk through them, it would be quite a sort of mind bending experience then.

S4: Sorry, Vincent has he has mass appeal in a way that very few artists do. I would say, like regular people know him. He’s got that good story about the ear. It’s just it makes sense to me that he is the one breaking out with a virtual ish immersive art experience, doesn’t it?

S3: I have this theory that this is the way that people who grew up on screens and I think we’re all maybe a little bit too old for this, but like it people who are much younger than us. If you really grew up surrounded by screens and where everything was intimidated by a screen, then at some point the screen stops being the intermediary, representing reality and starts being the reality. And if the screen becomes bigger and high def enough, it actually becomes more real than some painting on the wall. Yeah, that you can’t really experience something unless it’s on the screen. And I have to say, I was in Amsterdam a couple of years ago and I actually went to the Vanderhoff Museum. And the first I know 50 percent of that is walking through screens and projections and stuff. Now, partly that’s because they don’t actually have the world’s greatest collection. That’s probably at the Musee d’Orsay. But it’s also just because that is clearly what the customers want.

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S1: Well, and I think also I mean, this is sort of a natural extension here. So, I mean, these these kind of immersive experiences have been around for a while. I went to an amazing one in Tokyo, I think it was called Team Lab, where you walk into one room and your ankle deep in water and they’re sort of like virtual fish swimming through the water. And then you go into something and it’s all mirrors and it’s all very it’s all very kind of immersive and Instagram able and kind of amazing. And so it seems logical to me that people would take known artists and networks and sort of adapt them for that kind of thing. And as Emily said, he’s he’s got mass appeal. And you only have to stand outside the Varjak Museum in Amsterdam when terrorism is happening normally to just see what the appeal is. I mean, there is a massive queue outside that that museum every day of the week, starting first thing in the morning. And people come from all over.

S4: And it’s kind of it’s heartening. Felix, you sent around the piece from Axios that kind of laid out all the different there. I can’t see all the different immersive experiences. And it’s heartening to think about like everything’s starting to open back up. And like here is like a new thing that people are going to attend in person. It just seemed kind of exciting to me, even though at the same thing over and over. And yes, it is a dead artist and not a live artist. And I guess that’s not.

S3: But I think also we have to mention that the key thing here is that he’s not only dead, but he’s been dead for more than 70 years. So no one owns the

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S4: camera, which is great. There should be more things without copyright or IP protection.

S3: So we have to start doing the math basically, like putting our diary, like, when’s it going to be 70 years after Picasso died. And that’s when all of the immersive Picasso shows are going to start popping up.

S4: Yeah, that’s a

S1: really good point. And obviously, the commercialization of, of course, has been going on a long time. And I think last time I was at the museum in Amsterdam, I think they were selling, but they put irises and sunflowers on absolutely everything you could imagine, including I remember one particularly striking thing, which was like a dog coat with a sort of motif. So I think the commercialism, the commercialization ship sailed a long time ago.

S3: It’s certainly true. And if you go to the Museum of Modern Art here in New York, they really only have one. But it’s a very famous one. It’s the starry night. Maybe they have to, but the starry night is on absolutely everything. You go to the museum store and it’s impossible to miss that. You know, that’s there. That’s probably a bigger money spinner for them than like the mussel, which is, you know, objectively a much more important painting.

S4: Yeah. And I think you’re really right. I think kids today, they don’t want to just see, like, flat paintings on walls. They want to, you know, they want to be wow.

S3: They want to see flat paintings on screens or like and they want to sell room with some flowers. Yeah. Yeah. Well, through your own. The field of sunflowers.

S4: Yeah, exactly, I don’t see I don’t see anything wrong these

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S3: days

S1: as long as they all learn how to pronounce his name properly. I’m happy.

S3: Literally, no one will ever pronounce it. I want to end this sleepless segment with you, explaining to me what is the Dutch attitude towards global pronunciations of the name? Do they hate it when everyone would, like, mangle it so badly?

S1: Oh, I think, you know, it’s a small enough country and the language is obscure enough. The people, they realize that people aren’t going to get it right. I don’t think they expect anybody to get it right.

S3: It’s not like a microaggression.

S1: No, no. I think it’s I think it’s more sort of there’s a certain amount of sort of quiet pride in being a person who knows how to pronounce it properly, even if all these other foreigners don’t.

S4: I don’t think I can do it, Bankoff.

S1: I don’t know

S3: how

S1: they come to have some effect right in.