Monthly Archives: April 2015

Overpaid?

By Lloyd Graff

Jadeveon Clowney, Number 1 Draft Pick in 2014. Tore Meniscus in first game. Had 7 tackles for the season.

With the NFL draft taking place today and the NBA playoffs in full swing, I’d like to broach the topic of whether pro athletes make too much money.

If Jameis Winston, the number 1 overall draft pick, signs with Tampa Bay and the team wins seven games next season with him slinging the ball, how much is he worth to the team? He will likely sign a three or four year guaranteed contract, with a club option for one more year. Tampa Bay will risk the future health of the franchise on a 21-year-old immature athlete. Winston will get financial security in exchange for being locked into a contract for the next four or five years.

The deal that Winston will get is basically prepackaged by the union agreement negotiated between the players and the owners. Young players coming out of college work relatively cheap. The average career for an NFL player is four years. They often get hurt and sometimes sustain life threatening head injuries. Leg injuries, which happen to almost every player to some degree, will lead to hobbling arthritis over time. The players are gladiators who choose this life, but the health costs are substantial.

The NFL wage structure has worked out famously for the owners of the teams. The TV money has escalated rapidly despite terrible publicity about wife and child abusers, concussions that lead to early dementia and even death, and the fact that there are fewer than 10 quarterbacks worth watching.

The NFL cartel has a built-in free pipeline of players coming out of college programs. College is a free minor league system. What a deal. Most players do not have guaranteed contracts. The elite players get some “guaranteed money,” having been vetted for several seasons. The NFL’s TV money keeps going up because live broadcasts of sporting events tend to defy the use of the DVR, making the endless commercials still be deemed worth the money.

If wimpy Roger Goodell, Commissioner of the NFL, can make $44 million in 2013 (we know this because the NFL was a “non-profit” group) should we feel bad if a free safety is working for $500 grand? Is a free safety really supposed to work for FREE?

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The NBA, or the “Association” as the players call it, is a little different than the NFL. We got a glimpse of the value of an NBA franchise when Steve Ballmer, former president of Microsoft, ponied up $2 billion to buy the Los Angeles Clippers in a sale forced by the NBA cartel. Ballmer bought the franchise, beating out Oprah Winfrey’s group, because he’s a pretty smart business guy. Franchise values almost always go up over time. Mark Cuban, who sold his tech startup at the peak of the dot.com bubble, invested $285 million for the Dallas Mavericks in 2000. The team is currently valued at $1.2 billion by Forbes.

The 400 current NBA players average $5 million per year in salary. The average time in the league for a player is four years. LeBron James makes $20,644,400 this season, 7th most in the NBA. He only signed a two year deal, which entitles him to a little less money per year according to current NBA rules. I think LeBron can reasonably argue that he is underpaid compared to what he brings to the Association.

LeBron has agreed to become the lead player for the NBA players union, which is interesting because he is moving toward the latter stages of his remarkable career. The NBA players got rid of Billy Hunter, who led the strike that sacrificed 16 games of the 2011-12 NBA season for a modest gain in a player earnings.

The Union recently hired Michele A. Roberts to lead them. She is an African American woman who grew up in a New York housing project to become a top partner at one of the most prestigious law firms in the country, Skadden, Arps, Slate, Meager & Flom. She fervently believes the players she represents are underpaid. She believes players should think more like a Mayweather than a TV weatherman. She argues that the NBA is nothing without the players and that theoretically the players could start their own league.

This is probably just posturing on her part as she prepares for the next big negotiation with the owners. She wants the players to think like capitalists. In Europe, there is no draft for the soccer leagues. Top players move from country to country for the best deal.

The current NBA union structure aids the marginal players. A good example is Nazr Muhammad, the second backup center for the Chicago Bulls. He barely plays in a game. He makes $1.5 million this season as a practice player. A player like Muhammad needs the union. LeBron does not.

Question: Are professional athletes in the United States overpaid or underpaid?

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Industry Scuttlebutt

By Lloyd Graff

Rex Magagnotti, Lloyd Graff, Noah Graff at Graff-Pinkert PMTS booth

Just got back from the Precision Machining Technology Show (PMTS) in Columbus, Ohio, organized by the Precision Machined Products Association (PMPA). I collected a lot of scuttlebutt and impressions. I’ll share a few that bubble to the top for me.

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The PMPA is a small but surprisingly useful and effective trade organization. It has active members who share information and help out fellow members with valuable, hard won knowledge. The Columbus show has grown into a nice magnet for folks involved with machining. It is not an extravaganza like IMTS, but for the tens of thousands who attended, filling the 70,000 square feet of the downtown Columbus convention center, it made good economic sense. People were looking for little specks of knowledge to bring back to their factories gleaned from exhibitors, presentations and chance encounters in the aisles and hotel lobbies. If folks were open to the event they come back with those crucial tidbits of knowledge that cannot be found online or in courses, because “inside baseball” stuff in any field is derived from personal interaction. The question you would never think to ask comes up when guards are down at a show like Columbus.

It was remarkable the exhibition came off so well, with the PMPA professional leadership a mess for more than a year. I met Mike Duffin, who retired as the head of the organization after a decade of stewardship. He told me about the short stints of his two successors, the first one brought in from outside the group, the second a long-time employee. Both men had good credentials and legitimate track records. Unfortunately, they flunked out of the top job of the PMPA within months.

The group’s Board of Directors is probably a bit in shock after two bad picks in a row following long runs of previous heads. Miles Free and Monte Guitar, two long-time employees of the organization, have held things together, but they have to be getting a little worn out from the turmoil.

Mike Duffin appears happily retired and seems to have no desire to return. It seems like the PMPA is sorely in need of an outside search firm to vet a few legit candidates. An organization can run well only so long without an active, respected leader.

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Just before the show started, a big piece of news came out about the Pfiffner Group in Switzerland, which manufactures Hydromat rotary transfer machines. The company was sold to FFE Group of Taiwan, which owns Leadwell Machine Tools, Feeler, and several other Asian and European builders.

The scuttlebutt was that the banks, who had lent Pfiffner a lot of money through the years, were pressuring the company’s owner Karl Pfiffner to pay it back or sell the company. Karl Pfiffner may not have wanted to sell the firm that he had built, but the FFE deal was one he could not easily refuse.

The Taiwanese firm owns Witzig & Frank, which also makes big transfer machines, so it was familiar with the market. The relationship between Pfiffner and Hydromat has had its ups and downs through the years.

Bruno Schmitter, CEO and President of Hydromat Inc. in St. Louis, relies on Pfiffner to build a good portion of Hydromat components, but Hydromat in St.Louis has established its own engineering and rebuilding capability. The two companies need each other, as Hydromat is Pfiffner’s biggest customer, but their interests do not always converge. Pricing in Swiss Francs can be problematic with that currency so strong. The possibility of some of the manufacturing being done in Taiwan or elsewhere was being discussed by Hydromat users at PMTS, but nobody knows how FFE will run Pfiffner. It does appear likely that significant changes will be coming.

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There were a lot of metal companies at PMTS. There is definitely turmoil in the metals market, though the bar producers put on a good front that they are not discounting heavily. One thing is certain, the scrap market for steel and to a lesser degree, aluminum, has plummeted. The strong dollar, weakness in China’s manufacturing, the oil sell off, and reduction in drilling has really whacked the market. Warehouses are loaded with material, so they are not buying much. Scrap prices for heavy melting steel and cast iron are off 40% from a year ago. The value added producers of extrusions and tubular goods are trying to hold prices, but it seems to be a tough battle for them.

But they are not the only ones who are discounting. Most machine tool builders of lathes and mills are cutting prices to make a deal because they have slack built into their margins with the soft yen and euro. Haas has allegedly cut prices to compete. Business is generally good for machine tool buyers and sellers, but everybody is under pricing pressure in the cut throat world market.

Question: Do you belong to a trade organization? Why?

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Rememberance

By Lloyd Graff

Majdanek concentration camp is within the city of Lublin, Poland.

Yesterday, April 16, was the day Jews call Yom Ha’Shoah, the day to remember the Holocaust.

The Holocaust has shaped my life, which may sound odd for an American born in Chicago who never lived through the horror. My parents did not experience it either, and we never talked about it at home.

But I became emotionally involved with the horrific killing of Jews and Gypsies and homosexuals and political complainers by the Nazis in high school, from movies, books and television. I internalized the images of bodies piled up like cordwood and emaciated living corpses in striped uniforms walking around bedazed. When I could bare it I imagined myself walking into the gas chambers of Auschwitz.

I had thought of going on a concentration camp tour, yet I could never find the stomach to do it, but in 1999 my wife Risa and a friend had the opportunity to go to Poland with a sophisticated guide. I engineered a business trip to Europe and caught up with them the day before they were going to Lublin, the site of the Majdanek camp.

We rode the chartered bus through the snowy countryside. We arrived at Majdanek around 6pm. It was empty. We were the only ones there other than the caretaker.

All the folks on the bus walked into the “welcoming” room, but I lingered outside. I took off my winter coat, sweater and shirt because I wanted to feel the icy cold chill in my bones. Then I put my garments back on and joined the others.

I read the signatures on the roster. The Nazis kept proper records. There were bunk beds of sorts for the inmates. Men and women were separated in each building. The building was clean, but I tried to imagine what it must have been like filled with people waiting to be killed.

Then I walked alone into the shower room where the gas had once wafted in to quietly exterminate the captives 70 years ago. I looked up at the showerheads. I tried to imagine what it was like, but how do you imitate terror? You feel it or you don’t. It was one-dimensional, derivative horror for me, nothing like the real thing.

I paused for a couple minutes to absorb my feelings, and then I walked out. My 45 minutes of Majdanek were over. I left the building, walked to the bus and saw that the camp was right in the midst of the city of Lublin. I had thought the concentration camps were in the country, hidden away, but Majdanek was right in the city neighborhood. And they say nobody knew what was happening.

We left Majdanek and headed for a hotel and dinner an hour away. We ate little and slept little under the covers.

Today, I remember my concentration camp experience. I mentally return to it on days of remembrance like Yom Ha’Shoah, but I don’t dwell on it. I never lived it. I can only occasionally grasp at a distant synthetic horror.

Most of the survivors are dead now. Europe’s Jews are going through another siege of anti-Semitism, fueled by Muslim hatred and indifference by the general population. The cover story in this month’s Atlantic magazine is a brilliant and terrifying piece entitled “Is it Time for the Jews to Leave Europe?” by Jeffery Goldberg.

I read the article and I couldn’t sleep all night. Seventy years after Auschwitz, and Jews are still being killed in schools and supermarkets.

Why do they stay? Have they forgotten?

I cannot.

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Election Hope

By Lloyd Graff

I have been reading so much lately about income inequality in the United States, how poor young people of color are doomed to unemployment or french frying at best, and if kids don’t hear 30 million words by the time they are three their opportunity to thrive is all but dead.

The do-gooders want to remedy matters with tuition waivers and government assistance and a variety of other schemes.

I’ll admit it, the game is rigged for so many people in our country.

And then there is Marco Rubio running for President, and he might just win.

His future didn’t look so hot when he was born. Mom was a hotel maid, Dad was a bartender. They were immigrants from Cuba living in Miami. They came to America with nothing, worked hard and still didn’t exactly accumulate wealth. Marco Rubio, however, bought into the American Dream. Ambition, drive, chutzpah, the “I’m getting somewhere in my life” passion, set him apart.

He was a good enough athlete to get a football scholarship to an unknown Christian college, Tarkio, in Tarkio, Missouri, which went out of business soon after he arrived. He bounced back to a junior college in Florida, graduated from the University of Florida, and then picked up a law degree from the University of Miami. He accumulated $100,000 in student loan debt in the process.

He talked his way into internships with prominent Miami area politicians and started to learn the game. He ran for city commissioner in West Miami and began to catch on to the nuts and bolts of running local government and getting elected.

He honed his speaking talent and got to know the important players in Miami and the state of Florida. Jeb Bush became his mentor and helped grease the way for the ardent Marco to become known as a comer in politics. If you are a politician it never hurts to have a beautiful wife. Super Marco married a Miami Dolphins cheerleader and they have four children today.

Marco’s ascent to prominence is not unlike Barack Obama’s in Illinois. A shrewd assessment of the opportunities, taking advantage of weak opponents, the ability to attract influential friends and donors, and develop the persona of a leader are attributes of both men.

I have heard Rubio speak and have been impressed by his ability and appearance of conviction and sincerity.

I love his personal story. His conservative politics are interesting though he has vacillated on immigration reform.

His feelings about restructuring college debt reflect his own difficulty dealing with debt overhang.

I don’t know if Marco Rubio will be a legit Presidential candidate, but I like his bio and many of his policies. He speaks perfect Spanish too, which can’t hurt.

America somehow keeps coming up with intriguing self made people who defy the negativity of their background and society’s downcast view.

It’s enough to give me hope in this election.

Question: Does a candidate’s biography influence your vote?

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Going Like 88

By Lloyd Graff

Vin Scully, play-by-play announcer for the Los Angeles Dodgers.

Baseball is more than just a game for me. It is woven into the fabric of my life. When I was about to be wheeled into heart surgery 6.5 years ago my entire immediate family regaled me with “Take Me Out to the Ball Game” for encouragement before being pushed into the operating room.

When Harry Caray, the great Cubs announcer, died, Noah and I journeyed to Wrigley Field to place baseball memorabilia at his makeshift memorial.

As Garrett Morris used to say on Saturday Night Live, “Baseball’s been berra berra good to me.”

A couple days ago I had the privilege to hear Vin Scully do the Los Angeles Dodgers versus San Diego Padres game. Scully has been broadcasting for 66 years. At the age of 88 he sounds great and his knowledge and recall seemed right on. I was thrilled to hear him, but I couldn’t just listen to the play-by-play. I wanted to vet him, to see if he was all there, if he had lost something.

I do this with older people. I don’t want them slipping and holding on with their fingernails to former glory. I did it with Ronald Reagan when I had a sense he was losing it in his second term, but I didn’t want to believe it. I did it with my own father as I saw him fade physically. Thankfully he kept his mental faculties until he died, but I was always searching for signals of diminishment.

One of the hurtful things about aging for me is not just the sagging skin and aching joints, but the fear of not being on my game, mentally.

I feel solid in every way except one – name recall. I know it has slipped a tad in recent years. More than I want to admit, a person’s name will elude me for a few seconds as I urgently search my mental desktop for a clue to retrieve the name I seek.

So when Vin Scully flawlessly went through the lineups it was reassuring. Scully goes back to Jackie Robinson, Roy Campenella, Duke Snider and Gil Hodges. He was mentored by Red Barber who did radio in the 1930s.

Scully grew up in the Bronx, solidly Irish and Roman Catholic. His father sold silk in the garment district, which seems beautifully appropriate with his silky dulcet tones. He graduated  from Fordham in 1949 where he played center field on the baseball team and did football play-by-play on the school radio station. He sent out 150 letters looking for a radio job after college and found one live job in Washington DC. His big break came after doing an NFL game when the press box was filled. He broadcasted the game from the stadium rooftop in freezing weather without a hat and coat. He never indicated that he was cold in the broadcast. Red Barber was particularly impressed with his performance and the fact that he never injected his personal feeling into the play-by-play. It launched his career.

The beauty of Vin Scully is that he found his perfect career and then spent his life perfecting his work.

I don’t root for the Dodgers, but I love the wonderful delivery of Scully, the consummate pro who just keeps on going and going and gives me hope for my future.

Question: Would you like to work until you’re 88?

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More than an Oil Change

By Lloyd Graff

A dirty car air filter

I recently took my car for an oil change at the local Jiffy Lube, whose many slogans include “More than an oil change,” “Only what you need, guaranteed,” and “We don’t want to change the world, we just want to change your oil.” I had vowed to myself never to patronize the chain because every time I’ve gone there the service was slow and they tried to up-sell me products I didn’t want.

But it had been a year since my last oil change. I saw a sign at the car wash I was visiting, also for the first time in a year, for a $25 oil change at the Jiffy Lube next door, so I decided to kill two birds with one stone on a chilly March Sunday morning.

I drove into the Jiffy Lube, where I happily saw I was the only customer. I maneuvered my 12-year-old Toyota Avalon into position, got out of the car and proclaimed that I “just want an oil change, nothing else.”

The young fellow, who was the only other person present, agreed and showed me to the waiting room. Soon after, he motioned me to come out into the shop area where he showed me the car’s air filter, which looked rather grey and dirty. He asked me if I wanted it changed.

“How much?” I asked.

“$14.95,” he said.

My moment of decision.

“Ok, replace it. But don’t try to sell me anything else,” I said with resignation.

He replaced the oil and then came into the office to ring me up. The bill was too high. I told him the reason I came to the store was because I saw the big sign for the promotion in the carwash lobby next door.

“Oh, that promotion is over,” he said.

“No way I’m paying the higher fee. This is why I don’t go to your stores,” I said.

“I’ll take care of it. I’ve got a coupon I’ll give you to take the price down,” the young attendant said.

I paid the lesser amount and left as usual with disgust.

I thought to myself, this is a terrible business model. Falsely advertise the price for your primary product, the oil change, try to sneak the higher price by the customer but provide a “coupon” if he squawks. Then display the dirty filter to attempt to fatten the bill on the visit.

I usually patronize the Pennzoil shop a few miles away, but they have moved or gone out of business. They never used such tactics, but I usually bought wiper blades from them, which they had on display but never pushed on me.

I believe the Jiffy Lube store’s tactics were unscrupulous and counterproductive. I will never go to one of their outlets again. No wonder their store was empty while the car wash next door was thriving.

But maybe I’m naive.

The reputable Pennzoil guys are gone, and the Jiffy Lube is still standing. Is playing the customer for a sucker the only way to make an oil change business survive? Was I a fool to replace a dirty air filter that could have been vacuumed?

I know it’s hard to be in a commodity service business, but does it have to be run like this?

Question: Do you feel like a sucker when you get an oil change?

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Preparing for Doomsday

By Noah Graff

Neil Strauss in CEP uniform, March 18, 2009 (L.A. Weekly)

I recently finished reading Neil Strauss’s Emergency: This Book Will Save Your Life, the story of the author’s quest to prepare for the day when the “$#*! hits the fan” in the United States. You know, the day when our government can’t protect us, our infrastructure crumbles due to an attack or natural disaster, or we have to fight our own despotic regime.

Personally, I don’t spend a lot of time and energy worrying about what I’m going to do in the case of an apocalyptic event in the United States. I believe there is a real possibility that a huge catastrophe could strike, but I have remained focused on my selfish pursuits of prosperity, love and fun, rather than on stocking water and non-perishables in my basement. I also rationalize that there is an exponentially greater chance of dying from threats such as disease or a car accident than a terrorist attack or natural disaster. It is sometimes an impulse to label the folks who vigilantly stockpile food, water, gold and guns as paranoid and unsophisticated. But as Strauss says in the book, “We make fun of those who we’re most afraid of becoming.”

Prior to writing Emergency, Strauss was a best selling author and music columnist for The New York Times and several other publications. Several years ago, I read Strauss’s entertaining and enlightening best seller, The Game, which told the story of his quest to become a master at picking up women — a goal he accomplished. That quest was obviously a different challenge than learning to survive in the wilderness in the event of the apocalypse, but Strauss claims that the stories of both The Game and Emergency were not planned to be books, they were simply his own personal pursuits that later lent themselves to becoming fascinating memoirs.

I think what gave the book extra power for me is that Strauss and I come from somewhat similar backgrounds. He grew up in Chicago, is Jewish, socially liberal, and had parents who never owned guns, never went camping and called the handyman for work around the house.

After September 11, 2001, and the debacle following Hurricane Katrina in 2005, it dawned on Strauss, as it did for many Americans, that we are vulnerable. As the first decade of the twenty-first century continued, his distrust of the government headed by George W. Bush brought about an obsession to acquire a second passport to a country he could run to if the United States was no longer safe. After extensive and frustrating research, he found only one country he viewed as satisfactory that had a relatively easy path to citizenship. Almost every country Strauss researched required a person to be a resident for several years, often five years. The Federation of Saint Kitts and Nevis, a country comprised of two small Caribbean islands, grants citizenship in less than a year to a person who invests $350,000 in a piece of real estate in the country (at least this was the policy back in 2007 or 2008 when Strauss applied for citizenship). So he took out a loan to purchase an apartment on Saint Kitts (it was easy to get a loan with no money down at that time) and began the process to acquire citizenship there.

Then he realized that he still needed to prepare to first survive a catastrophe so he could actually make it out of the United States in the event of one. So he learned to ride a motorcycle to bypass the traffic that could ensue during a catastrophic event. He took an elite course in firearms, training with soldiers destined for Iraq and Afghanistan. He attended the world renown Tom Brown Jr’s Tracking School. Strauss had grown up hating camping, having only done it a few times at summer camp. He chronicled the hell he experienced during his first few days of tracker school, recounting a cold rainy night during which he slept in a soggy thin sleeping bag, peeing on himself, all the while in constant fear of deer ticks. But he eventually made it through the hell and toughened up. The book also describes Strauss receiving knife training from an instructor named Mad Dog, who made him kill and skin a goat. Strauss also took an urban escape course and taught himself to cook food using a fire pit he built in his backyard.

But after all those practical survival courses, Strauss still worried he wouldn’t be prepared to deal with the stress that would accompany Doomsday, so he became a certified EMT, hoping that the ambulance experience would ready him for high pressure situations. But he still didn’t feel prepared, so he became a search-and-rescue volunteer, joining CEMP, the California Emergency Mobile Patrol. He noted that this was an ironic decision, as it meant he was going to work for the government he distrusted.

In the end, after his experiences working in an ambulance and then with CEMP, Strauss finally came to the realization that he cared more about helping his fellow American citizens than perfecting his own escape plan. The cool part of the book is how Strauss explores his evolving mindset. He changed from a naive and carefree city slicker into a paranoid self-proclaimed “runner.” Then he finally became a self-reliant man, more interested in staying in his home country to help others than just protect his own skin. He eventually did receive his Saint Kitts citizenship, which he appreciated, but he no longer viewed his duel citizenship as salvation.

After reading Emergency, I better understand the mindset of so called “survivalists.” I’m more aware of possible catastrophes that we Americans need to be prepared for. And, if a liberal, intellectual city boy can become proficient with guns and knives and wilderness survival, perhaps I can and should become more prepared myself.

Question: Are you currently prepared for when the $#*! hits the fan?

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