15th Anniversary of Madden NFL from EA-Sports

As we diligently rub metal on metal, producing the stuff that makes the wheels roll smoothly, the big money in the economy continues to flow to the world of ideas, entertainment and health.

A few thoughts to connect.

Monday Amazon agreed to buy Twitch for $970 million. Google thought they were going to get it but Amazon swooped in at the last minute. Twitch is a site that broadcasts online video game competitions. They aspire to be the ESPN of video gaming. Who knew?

But this is a big business and growing fast. Twitch is in the top 15 most trafficked Websites. It gets 55 million unique viewers a month as a three-year-old company. The number of hours users spend on Twitch is the same spent on MTV and a tad behind CNN. For Amazon it means an advertising vehicle for the company and a big opportunity for growing ad revenue to reach a prime demographic that is hard to reach – young men.

One of the video game competitions Twitch broadcasts is Madden NFL, which came out with its 15^th edition Monday. The 25-year history of this game is fascinating. The game’s creator, Trip Hawkins, was a football player at Harvard. He wanted to combine his love of the game with his passion for computers. As a child he had played the board game Strat-O-Matic and wanted to bring a version of it to the Apple II, the computer gaming platform of the day. While he was not banging helmets on the field for the Crimson, he worked on the code for his video game, which became the genesis of his multi-billion dollar firm, Electronic Arts. Hawkins admired John Madden as a student of football and wanted to get his input and possibly even his name and voice for the game. John Madden was famous for his fear of flying and traveled to every game on a land conveyance. Through a friend of a friend, Hawkins located Madden traveling on an Amtrak train in 1984. He bought a ticket and found the famous coach and commentator in the club car. He introduced himself and told Madden about his project in the hope that Madden would buy into the idea even though he was not computer savvy.

The game’s popularity has grown steadily through the years, with total sales of $4 billion since its inception. They have an estimated 6 million active players today. Madden receives $2 million a year from Electronic Arts, a nice royalty but paltry compared to the $50 million Electronic Arts pays the NFL and NFL Players Union for the exclusive gaming rights. With Twitch under Amazon’s flag I can imagine those numbers rising significantly.

Meanwhile, Kevin Durant, the NBA’s Most Valuable Player last season, weighs shoe offers from Under Armour and Nike. Under Armour has offered him a $265 million 10-year deal to endorse its shoes. Current shoe endorsement Nike probably will not match it. Kevin Plank started Under Armour in his basement and has come a long way toward challenging Nike in athletic apparel. He is hoping that Kevin Durant will be his Michael Jordan, or his Madden.

But the Durants and the Maddens are the tiny exception. Consider the lock the NCAA and its schools have had on their huge cash cows, the college football and basketball players who have always worked for nothing except their scholarships. The NCAA cartel has really taken advantage of its players. The organization rakes in billions of bucks each year and then terrorizes the players if they get a hamburger from an alum.

The era of athletic serfdom is beginning to end now with smart lawyers blitzing the NCAA from all directions. Some players will be getting a little money soon, and considerably more of the pie down the road.

A side note. The Libman family, which owns a 118-year-old cleaning products family business that started with brooms manufactured in downtown Chicago in 1896, recently signed a smart endorsement deal with the Big Ten Conference. Libman is the exclusive floor mop at all 12 of the conference’s schools.

Every time a kid swoops onto the basketball court of an Indiana vs. Ohio State game to mop up sweat, you see the Libman brand. It’s a nice branding device for the company and another piece of money for the colleges. Of course, the players don’t see a penny.

What these disparate dots on the economic map illustrate is that money gravitates to good ideas and where we spend our time and cash. When we go to IMTS in a few days, the emphasis will be on better machines to make things, which is crucial in the machining business. There will be a little booth in the corner where a geeky young woman or man will have a better idea for your business, like Trip Hawkins offered John Madden on the Amtrak train in 1984. Maybe you will feel a twitch when you see it.

Question: Should college athletes be paid?

Philadelphia’s Taney Dragons, Mo’ne second to left

I was going to write about the important stuff — unemployment, Fed policy, Ferguson, and the price of the new Hepatitis C wonder drug. But then the Little League World Series came on TV and I knew what really spoke to me.

I’m one of the millions of men and women hooked by the Little League World Series — broadcast on ESPN, brought to you by Kellogg’s Frosted Flakes. I know it’s all brilliantly packaged by the media flacks, but the authenticity of the 11-13 year-old boys and one amazing girl have lifted the event from obscurity to center stage.

A million years ago I played Little League Baseball. But my team could not have challenged these kids. They are focused and athletic, yet still unpolished enough to relate to.

The big hype for the event is around 5’4” Mo’ne Davis, the female star of the Philadelphia Taney Dragons. She is superbly athletic, plays shortstop, and pitches. She can bring it at 70 miles per hour, which is the equivalent of a 91 mile per hour fastball from a Major League mound. She has control and an effective curveball.

When my daughter Sarah was growing up I taught her to “throw like a guy” with full arm rotation. She was bigger than Davis, but not as coordinated. And girls and their fathers would never have dared to intrude on the male domain of Little League Baseball. A pity, in retrospect.

I love the Mo’ne Davis story. The girl has moxie and a remarkable calmness about her to go with her technically perfect left-handed delivery.

Jackie Robinson West, the Little League team from the south side of Chicago, has excited the Windy City. In a year when both the Cubs and White Sox are pathetic, these kids have achieved front page status. With rampant gang violence and kids their age being slaughtered daily in random shootings, it is fresh air for the city to see a cohesive group of black boys, coached by fathers, compete with the best teams in the country. Baseball has lost favor amongst kids in Chicago. The ball diamonds in my neighborhood are neglected. Girls play softball, but boys hardball has generally been forsaken for basketball, soccer and football. So the Jackie Robinson West boys are a delightful anomaly for a city where baseball seems like more a sport for middle aged (and older) white guys.

In South Williamsport, Pennsylvania, the annual Little League World Series has struck a national nerve. The television ratings of Wednesday evening’s Jackie Robinson West vs. Philadelphia’s Taney Dragons were seven times that of the ESPN broadcast of the first place Los Angeles Angels vs. the Boston Red Sox the same night. People wanted to see Mo’ne pitch. She had just been put on the cover of Sports Illustrated — generally a bad omen. She lost that night, but struck out six batters in less than three innings against a powerful Las Vegas team that had a burly blond kid 6 feet tall who threw even harder than her.

The baseball in the Little League games is not as artistic as in the Big Leagues, but the energy and passion makes up for it. The kids really care. They cry after losses. Chubby kids with glasses hit home runs. Shrimpy kids make terrific plays in the outfield. Coaches really coach and comfort devastated young boys who have just lost the biggest game of their lives.

I’m a sucker for a good story. I even loved the Tim Tebow saga. I understand that a Mo’ne Davis autographed baseball is going for $500 on eBay. And the beauty is that she couldn’t care less.

Question: Should girls play Little League Baseball?

Question 2: Will a woman ever play in the Major Leagues?

Robin Williams in “Good Morning Vietnam”

August is a strange month for me. It is the month of my mom’s birth and death, August 11, 1993. It is a celebration of surviving my heart attack, a near death experience in 2008. It is the time my daughter Sarah and son-in-law Scott come to Chicago for a week with my three spectacular granddaughters.

The baseball season is in its dog days, and my Cubs are in last, as usual. But oh those fabulous prospects – the best in the game they say – will turn it around next year. Well, maybe in 2016. With my August pre-occupation with life and death, I always wonder if I will be lucky enough to cheer the next Ernie Banks.

In business we feel the excitement of IMTS growing toward Labor Day. I can already feel me knees rebelling against the endless aisles of McCormick Place.

School is starting this week in my neighborhood, and the kids are oiling up their iPads and computers. My wife Risa is gearing up her educational therapy practice. She is in the “make school easier” business, and beginning in August, needy parents and struggling kids find their way to her office in our house.

In August, Rabbis like my daughter have started planning their Jewish High Holidays (Rosh Hashanah and Yom Kippur) sermons. The High Holidays are somber days of contemplation, fasting and relief. I’m particularly aware of the clergy prep. While writing this blog I sat next to two local rabbis who were planning their Temple services at the local Starbucks.

August also brings the Fantasy Football draft and NFL football pre-season, the former being the more important of the two. I find it fascinating that today the statistics of the game have become more important than who wins or loses for many people. The game really is a lot more fun seen TV than paying $100 to attend a game, fight the traffic, and sit in the sleet. Games may as well be played in big TV studios. Fans in the stands, who needs it? Just give me the stats in real time.

For the French, Italians and Spaniards, August is the traditional vacation month. Five weeks of saying goodbye to work. To me it is a quaint custom for the monied elites. I’d go nuts if I didn’t work for over a month. Oh, maybe I could survive it with constant doses of televised baseball, football and audio books, but it would be tough.

I am soaking up August, that difficult transitional month between summer and fall, baseball and football, and who shall live and who shall die.

Question: What was your favorite Robin Williams film?

Congressman Francis Underwood from the show, “House of Cards”

Man plans. God laughs.

A client of ours just had a huge fire that wiped out much of his capacity. He is scrambling to pull things together overnight to service his customer base. The insurance adjusters dither while he awaits the settlement.

Another client jumped into the machinery market because he landed a big new account that wants parts in September. He’s buying a $100,000 machine and new secondary equipment. It had not been in the budget finalized in April, but a million dollar job was not going to be missed for want of a machine to run it properly.

In Washington, the bonus depreciation law is up for debate again, behind and in front of closed doors. Code name – Section 179. The trade associations I belong to, the Precision Machined Products Association (PMPA) and the Machinery Dealers National Association (MDNA), have their law firms and lobbyists out buying drinks and advocating hard for the resuscitation of the expired law. It’s why we hire lobbyists and pay them $500 per hour to schmooze staffers and channel money to campaigns. But I have to wonder, in the end, how much do the incentives really change behavior?

In our machinery business we expected a rush of business before Section 179 expired last year. But I can attribute to it only one sale, a ridiculously cheap 1-1/4″ RB-8 National Acme, that a client (who happened to have an accounting background) rushed through because of the tax incentive.

I know this dissing of the catechism of tax benefits for business is Obamaesque blasphemy, but I really think it is true. People buy capital equipment generally only when they have a pressing need for it. Without a pressing need, they may buy a smaller item like a hardness tester, or a cleaning tank. At Graff-Pinkert we rushed to buy a Graymills cleaning machine last year and a backup generator the year before to get the convenient write-offs. They were purchases we could have lived without, but the ability to write them off against income did play a role in our timing and was an impetus to pull the trigger. If you multiplied our cleaning tank and generator buys through the whole economy it would be significant.

Section 179 is not part of the backbone of capital spending in the United States. It will not have a pivotal effect on our machine tool business. For big companies it will barely ripple the water. On the margins, the last-second buys of a clutch, a repair part, a set of bearings, or a generator, magnified by thousands of little buyers, is significant. It’s worth fighting for in Washington, but if we don’t get it, there’s still next year for another schmooze at it.

Question: Do feel like your congressman cares about you?

Lloyd Graff is Owner of both Today’s Machining World and Graff-Pinkert & Co.