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"We could have indicted, convicted, and destroyed Merrill, and that would have been insane." -- Eliot Spitzer, New York State Attorney General, explaining his office's $100 million settlement with Merrill Lynch Cooperstown-on-the-Hudson? By late 2004, if all goes well, sports buffs will no longer have to trek to upstate New York; Canton, Ohio; or Springfield, Mass., to visit the three big sports halls of fame (baseball, football, and basketball). They can just visit New York City.
No, the sports shrines aren't moving to the Big Apple. After last year's terrorist attacks, entrepreneur Philip Schwalb's Meaningful Entertainment Group began planning the American Sports Experience, a 40,000-square-foot, $51 million adjunct to the three halls, likely to be in lower Manhattan or Harlem. Says Schwalb, who was once affiliated with museum design firm Edwin Schlossberg Inc.: "We've spoken to all the leagues and all the halls, and generally, we've had a favorable reaction."
Foreign-born pros such as basketball's Yao Ming or baseball's Ichiro Suzuki are boosting global interest in U.S. sports. That should help draw the overseas tourists who come to New York but are unlikely to travel any farther. Think auditors are cracking down since the accounting scandals at Enron, WorldCom, and other corporate giants? Think again. A recent survey of 170 chief financial officers by CFO Magazine found that 38% said auditors questioned their results in the past year.
Of those challenged, most refused to back down: 25% persuaded the auditor to agree to the practice in question, and 32% convinced the auditor that the results were immaterial. Only 43% made changes to win the auditor's approval.
That's alarming to Lynn Turner, former chief accountant at the Securities & Exchange Commission and a professor at Colorado State University. "There is still gaming of the numbers going on that is not being ferreted out by the auditors," he says. He points to an earlier CFO Magazine survey that had 17% of respondents admitting that CEOs pressured them to misrepresent results. CFO Editor Julia Homer is more sanguine. She believes that many audit challenges are minor and that more companies are changing poor practices.
Maybe, but it's hard to give CFOs the benefit of the doubt when they're resisting even the most modest reforms. The magazine found that about half the CFOs in the survey published in September did not believe audit firms should be banned from providing consulting services to clients and 52% opposed rotating auditors on a regular basis. New regulations bar auditors from providing some consulting services and mandate that the person leading the audit be rotated every five years. A massive influx of foreign sex workers--and the health and crime risks that come with it--are forcing European governments to reconsider old attitudes toward prostitution. Germany and the Netherlands have recently passed laws that regulate the sex trade. Now Italy and Scotland are considering similar measures. "It offers a more pragmatic solution by considering prostitution as a kind of labor," says Marieke van Doorninck, a consultant at the Institute for Prostitution Issues in Amsterdam.
Soliciting sex has long been illegal in Europe, but authorities mostly looked the other way so long as prostitutes stayed in red-light districts. Now, with hookers invading once-quiet neighborhoods, politicians are being forced to address the issue.
Europe's capitals are also discovering what the underworld has long known: Sex is a good source of revenue. The Netherlands now collects sales and income taxes from licensed brothels. In return, sex workers get health care, unemployment insurance, and pensions. (Their clients pay 30% more than on the street.) Germany expects to start taxing the trade this year. There's pressure for similar action in Italy. Despite Vatican opposition, Prime Minister Silvio Berlusconi is considering sanctioning brothels. And the Scottish Parliament will look at a bill to create "prostitution tolerance zones."
Some, such as France, still want to end the sex trade. But experience has convinced other governments that it's better to tax sin than to ban it. The sidewalks of Chicago and Los Angeles will soon boast the hottest French import since perfume and champagne: sleek new bus shelters by out-door advertising giant JCDecaux. The Paris-based company recently signed with Chicago and L.A. to install thousands of shelters, advertising kiosks, and other sidewalk amenities in exchange for the right to sell ad space on them.
Decaux pioneered so-called "street-furniture" advertising in France in the 1960s and has spread the concept to major cities across Europe. "It's a model we can export anywhere," says co-Chief Executive Jean-Franois Decaux. Now the company is taking aim at North America, where it's gearing up to bid for an even bigger deal in New York next year. In a recent contract with Vancouver, as well as the one in L.A., Decaux bid jointly with the outdoor advertising unit of Viacom.
It's classy stuff: Decaux uses famous designers such as Philippe Starck. In Europe, Decaux bus shelters are so well maintained that upscale brands such as Christian Dior and Chanel happily advertise on them. One thing they can count on is that no matter how bad the economy gets, there will always be pedestrians. The weak economy has forced a sharp pullback in advertising. But one advertiser who still appears to be going strong is William Sani, owner of privately held Hong Kong Grand Custom Clothes.
Sani, who has sold men's suits for decades from traveling showrooms set up in hotels around the country, spends millions advertising them in eight-page pull-outs in The Wall Street Journal, Barron's, and The New York Times. In his somewhat campy ads, Sani poses with his wife, kids, and family dog, and he spices the copy with such phrases as Om Sai Ram ("Hail Lord Rama" in Hindi). Notoriously secretive, Sani does not speak to the press--and declined comment for this story. But through interviews with his ad agency and others, BusinessWeek has learned this about the India native: He lives in California, has his headquarters in Las Vegas, and operates production facilities from Hong Kong. He built up a reputation by word of mouth, and a following of loyal, well-heeled clients.
Sani is a welcome sight for sore publications: The Journal ads, for example, cost $2.9 million. Marvels Stephen Howe, who until mid-September was vice-president for advertising at the Journal: "Isn't it arresting?" To his two daughters, R&B legend James Brown is the godfather of bad faith, not soul. Deanna Brown Thomas and Yamma Brown Lumar are suing their 74-year-old father in a federal court in Atlanta for $1 million.
They allege he owes them no less than $200,000 in royalties for at least 23 songs they helped him write, including the 1976 hit Get Up Offa That Thing, plus an additional $800,000 in damages for breach of contract. Even though they were just young children at the time, Brown lists them as co-writers on his albums and sheet music. The daughters declined to discuss the suit, but their attorney, Gregory Reed, says, "This is painful for the daughters, to say the least." Neither Brown nor his attorney would comment.
The eldest daughter, 33-year-old Thomas, had her father committed to a psychiatric hospital for painkiller addiction in 1998. When Brown emerged a year later, he vowed publicly that his daughters "would never get a dime from him," the suit says. Later, Brown tried to settle, offering the $200,000 in royalties--but only if the daughters surrendered all copyrights to songs on which they're credited. They refused. So much for family harmony.