"We are being very aggressive with New York right now." -- Chris Concannon, executive vice-president at NASDAQ, on enticing NYSE-listed companies to switch exchanges When state lawmakers craft tax breaks for companies that create jobs, they don't foresee outcomes like this. On Oct. 27, R.J. Reynolds Tobacco announced a $6.3 billion merger with Louisville's Brown & Williamson Tobacco. Based in Winston-Salem, N.C., RJR said it would move as many as 1,000 B&W workers to the state -- but only if it got tax credits worth up to $12 million a year. It also wanted tax breaks of up to $25 million to demolish an old power plant.
Oddly, RJR's demands come just about six weeks after it said it would lay off 40% of its workforce -- 1,700 people around Winston-Salem. The layoffs and merger would leave the state with a net loss of 700 jobs, at best. And some of those pink-slipped RJR workers may be drawing on the state's unemployment fund. "I'm offended by the arrogance of this," says state representative Paul Luebke.
RJR denies that it was artful in the timing of its news or that this is some sort of payback for the state's part in a $200 billion tobacco settlement. "There's no conspiracy here," says a spokeswoman. Nope, just a lot of tax breaks. The Jets are flying back to New York. After playing in New Jersey for 19 years, the team is expected to announce within the next two months that it will build a $1 billion retractable-dome stadium on Manhattan's West Side, BusinessWeek has learned. The sports complex, which would include a convention center, would be a big boost to New York's bid to host the 2012 Olympics. The Jets' first season in Manhattan would be in 2009, say sources close to the NFL.
Most of the funding for the project would come from the Jets, with taxpayers footing the bill for a still undetermined amount. The NFL would provide some financing through a special loan program for new stadium construction. Spokespersons for the Jets, Mayor Michael Bloomberg, and Governor George Pataki declined to comment.
A proposal for a West Side stadium was first trumpeted by former Mayor Rudolph Giuliani. Mayor Bloomberg was initially less enthusiastic, but along with state officials he has since embraced the idea. City officials have estimated that such a sports complex could eventually generate $2 billion a year in new tax revenues. Now that's something to cheer about. One thing Arnold Schwarzenegger seems to share with his soon-to-be predecessor, Gray Davis, is a penchant for debt. The governor-elect, to be sworn in on Nov. 17, is considering a $20 billion bond issue to close California's budget gap. Davis also called for borrowing, prompting lawsuits alleging such a move requires voters' O.K. Schwarzenegger would put a bond proposal up for referendum in the March primary and include a cap on state spending.
Ratings agencies are wary. "We'd like to see some sort of plan to close the budget gap instead of borrowing," says David Hitchcock of Standard & Poor's. Now, that would be a change. Watch out, mutual-fund managers. Although it's still too early to tell where the billions withdrawn from scandal-plagued Strong, Putnam, and Janus are going, more public money managers suggest index funds. Unlike others, index funds are not actively run by highly paid managers.
Oregon Treasurer Randall Edwards may be a bellwether in the potential exodus. This month, he will ask his board to fire Strong as manager of the state's college-savings plan funds. He's also considering recommending a switch of the plan's $134 million into index funds. "I think people would be just as happy," he says.
The Pennsylvania Public School Employees' Retirement System isn't waiting. It's moving $1 billion away from Putnam and to an index fund it manages. Colorado Public Employees Retirement Assn. is eyeing adding another index fund as a 401(k) option, after dropping the Janus Fund on Nov. 4. And the Texas comptroller's office is investing more of its $2.5 billion in trust funds in index funds. Says Deputy Comptroller Billy Hamilton: "It's a matter of whether you'll pay more to get a lesser performance or just track the market." Ouch. What holiday? The Friday after Thanksgiving has traditionally been spent with in-laws and leftovers. Now, more Americans are spending it with the boss. Only two-thirds of the 258 companies surveyed by the Bureau of National Affairs say they grant two days off for Turkey Day. That's down from 70% in 2000 -- the third straight year of declines. It's also the lowest level since 1995. Workers in retail and finance are least likely to get the extra-long weekend. Employees can take some comfort in another trend, though: Some 16% of companies plan to give Thanksgiving presents in 2003, up from just 8% in 1992. The most popular gift? A turkey, of course. IBM (IBM) is about to shake up the supercomputer field. On Nov. 14, it will unveil a prototype of a machine that's about the size of a dishwasher yet ranks among the most powerful.
IBM's prototype is only a fraction of the size of the machine it plans to deliver to Lawrence Livermore National Laboratory by early 2005, however. It claims Blue Gene/L will be six times faster than the top machine and consume only about 7% of the power and space. This could be a milestone for a new generation of powerful computers that conserve energy and space. Ah, the irony. Back when Priceline.com grew like crazy, lost money by the bushel, investors loved it. Now, the discount travel service is profitable, not growing much, and investors hate it. The shares fell 26%, to $21.66, after a Nov. 4 third-quarter report showed a $10 million profit on nearly flat sales of $243 million.
For CEO Jeffery Boyd, much of the trouble lies in cheap air fares. As airlines compete with low-cost carriers and try to replace business travelers with vacationers, prices have plunged. "Sometimes, the discounts we offer don't justify the trade-off of letting us pick your flight," concedes Boyd. His response: Now, Priceline customers, in addition to naming their own price, can also choose from a list of flights and prices.
Priceline had "a really nice bump" from a site redesign, and Boyd may add $3 million to the ad budget. The true test: Will 2004 travelers pick Priceline as a smart way to go? It's a battle over cyberbooze. In one corner are assorted states'-rights conservatives, beer and wine wholesalers, and a 15-year-old buying tequila online. In the opposing corner stand free-trade conservatives, small wineries, and Free the Grapes!, a group of fans of rare wines.
The issue: Should wineries and distillers be able to use the Web to sell to out-of-state customers? The question has reached federal courts in eight states. Michigan, which had its ban struck down in August, is expected to take the issue to the Supreme Court by yearend.
Those favoring a ban on the sales say they aid underage drinking and bypass state regulations and taxes. Plus, distributors say they could lose $1 billion annually. Their opponents say wineries should be able to sell to customers directly, no matter where they live.
The theatrics have already begun. The tequila-buying teen made his purchase at the behest of his dad, who works for a wholesalers' trade group. And the issue has split conservatives. An Oct. 22 Federalist Society debate in Washington, D.C., featured onetime Supreme Court nominee Robert Bork arguing for the bans. Former Independent Counsel Kenneth Starr spoke in favor of direct sales. No word on what beverages were served -- or how they were procured. Those who miss the glamour of the Concorde will be able to buy a bit of it on Nov. 15, when Air France and auction house Christie's International present a Souvenirs of the Concorde auction in Paris.
We're not talking headphones and pillows. Two Concorde engines that are expected to fetch more than $70,000 each will be for sale, as will the plane's distinctive needle nose, likely to bring at least $12,000.
Collectors on a budget can bid on a pilot's seat ($1,000), the Concorde's maintenance manual ($500), or sections of pipe ($75 and up). The items come from five Concordes Air France donated to museums. Proceeds will benefit programs for needy children.
One caveat: The pieces are being sold "as collectible objects," and using them as airplane parts is illegal. So much for building your own Concorde.