Expert Excerpts

Expert Excerpts

Peter Gray, GLG Council Member and
former trial attorney at the U.S. Department of Justice

This question is excerpted from the article, Will the Government Take Further Action Against Amazon, Apple, Facebook, and Google?


Although the hearing also centered on Apple, Facebook, and Google, most attention was paid to Amazon. What were the key arguments against it during the July 29 hearing?

Amazon was the focus of approximately 10 different sets of questions, more than twice the others. Concerns were basically around a pattern of Amazon taking the information that third-party sellers give them, and then using that information to create knockoffs and start selling them in competition with a third party, underpricing them and driving those third parties out of business. There was some mention of predatory pricing a couple of times, both with regards to Diapers.com and some of the smart home devices like Alexa. Predatory pricing is a tough legal theory to prove in a lawsuit. I’m not sure what kind of legislation would be proffered to try to cover that kind of allegation.

It wasn’t clear how many documentary pieces there were to underlie the allegations made by committee members. There must have been emails, and probably some Amazon documents, but it wasn’t clear how strong the evidence was. There’s a lot of smoke, but it isn’t clear how much fire is there.

 


Elizabeth Bierbower, GLG Council Member and
former Segment President of Employer Group and COO of Specialty Benefits, Humana

This question is excerpted from the article, Telemedicine Dynamics: Payer Perspective.


As we look to the spectrum of health care services from urgent care, ER, primary care to even specialties like dermatology, where do you see the greatest use and growth of telemedicine?

I’ve seen areas where there’s a real access barrier. Practices where there are long wait times: behavioral health, psychiatry, cardiology. In some areas, it is very difficult to get in to see a cardiologist. If you are not seeing that cardiologist within 14 days, you’re likely going to the ER.

Dermatology — another practice that sometimes has long wait times — is also a good example. But think of a telehealth visit for a patient with suspected skin cancer. You could have a consult with the primary physician in the room, something that would pay off if you need to get the person into the right kind of treatment.

 


Dr. Arvind Mayaram, GLG Council Member and
former Finance Secretary of India

This question is excerpted from the article, Building Tomorrow: Long-Term Economic Trends in India.


Impact of COVID-19 in India?

COVID-19 pulled out the rug from an economy that was already stumbling. Private consumption ground to a near halt, curtailing tax revenue and severely constraining government expenditure — something that we now know the economy depends on. Complicating this is the very high fiscal deficit, which limits the government’s option of borrowing more from the market.

It is now increasingly evident that COVID-19 has severely impacted gross domestic product growth and the country is staring at the possibility of a recession and serious contraction. The International Monetary Fund estimates that the contraction may be 4.8%, while other economists predict between 5 and 7%, which is very serious for a country like India. Recently ICRA Limited predicted a whopping 8.5% contraction.

Economies like India are still struggling to control the spread of infection. Large parts of the economy are still under shutdown, and it will take a much longer time for them to emerge from it. We are seeing a loss close to $9 trillion in output over two years in the global economy, which is quite steep. The Indian economy would not be too contrarian to these global trends.

 


Joe Hlavin, GLG Council Member and
Principal at H III Enterprises 

This question is excerpted from the article, Outlook for the Email Security Market.


Let’s begin with your view on security spending, particularly for the email security market. Are you seeing it increase or decrease and do you expect this to stay the same, increase, or get worse?

Email security spending was somewhat halted in late Q1 as work-from-home efforts took priority, but throughout Q2, email security began to move its way back up the priorities list as organizations began to realize that working from home greatly enhances the threat vector, particularly in email. Email continues to be the most popular attack. There was a 30% increase in impersonation fraud in the first 100 days of COVID. These attacks are not solely focused on the corporate network; they now also focus on the home network.

Once an attack is initiated on a home network, bad actors can move parallel across to the corporate endpoint. Once a home PC, modem, router, or access point is compromised, it makes accessing the endpoint on those networks that much easier. Organizations have begun increased spending, beefing up not just expansion of their existing solutions but also security awareness trainings to focus on employee awareness.

With multiple opportunities in multiple markets, expect the market opportunity to continue to grow faster for email security than the overall security market as a whole.

 


Jonathon McCutcheon, GLG Council Member and
Founder and CEO of Supply Chain Technologies and former Supply Chain Director at Carvana

This question is excerpted from the article, Besides Vending Machines, What Separates Public Used Vehicle Dealers Carvana and Vroom?


What are your general thoughts on the Vroom IPO?

I thought the timing was a bit risky. I expected the company to wait longer, given COVID and the uncertainty of it, but I know Vroom already had it in motion. The company went in with only a bit of differentiation from Carvana, which is okay given the size of the market. But it took a very conservative stance at the time it chose to IPO. Vroom was looking to avoid the issues that Carvana ran into with liquidity. It took an asset-light approach that translated to outsourcing most of its reconditioning and logistics that are a fair part of the customer service. But in the end, Vroom inspired enough confidence to raise almost $467 million.

 


Craig Johnson, GLG Council Member and
President of Customer Growth Partners

This question is excerpted from the article, U.S. Retail Is Doing Better than Expected Entering the Second Half of 2020.


Why do you think we’re going to see a better back-to-school season given the current environment?

The American consumer is the biggest driver of retail spending no matter what kind of disaster may have occurred. The consumer is resilient and is the same consumer who bounced back from 9/11, the same consumer who bounced back after the Great Recession of 2008-09. The current recession may be shorter than these past recessions, and may even be over by now. Retail spending is triggered, most important, by growth in disposable personal income (DPI), and DPI growth has been very strong this year, entering the year at 3% cost. The fact that we’ve seen record unemployment numbers isn’t translating to slowing spending. Right now, unemployment is largely offset by the more than $2 trillion in government stimulus over the last several months.

We’re also not seeing store closures hurt as much as one would think. We haven’t yet seen many outright full-blown closures, outside of Modell’s and Pier 1. Demand has a way of finding its own level. People have turned to the internet, relying on it significantly at the peak of the COVID closures this past spring. The demand pool that represents disposable income built up over this time is healthy.

 


David Dollar, GLG Council Member and
former U.S. Treasury and World Bank Representative to China

This question is excerpted from the article, U.S. Options Are Limited in the Ongoing Trade War with China.


It seems so far that the U.S. has ratcheted up rhetoric on China, but not on tariffs. Should we be expecting more tariffs to come?

The first couple of rounds were pretty serious. We got to the point where we’re taxing roughly half of our imports from China at 25%. That’s the most overall protections the U.S. has put in place since the 1930s. We rolled back a tiny bit of that as part of the phase one deal. But the main thing the Chinese got out of the phase one deal is no further escalation of U.S. tariffs.

While I can see that the trade deal may fall apart officially, I’m skeptical the administration will ratchet up more tariffs. The president may choose to make a very highly publicized announcement that China’s not meeting its standards and he’s going to punish them and raise tariffs, but most of the time that he’s raised tariffs on China, the U.S. stock market has reacted badly because it’s bad for the U.S. economy. Tariffs are paid by American consumers and firms. They’re not paid by the Chinese. It’s just creating uncertainty in business.

It’s not in the president’s interest to raise tariffs further and risk a bad reaction from investors and the economy. But if President Trump’s poll numbers continue to look bad, he may consider some things that are inherently risky.

 


Casey Carl, GLG Council Member and
Former Chief Strategy and Innovation Officer at Target

This question is excerpted from the article, How Will Big-Box Retailers and Beauty Incumbents Navigate the Shifting Beauty Landscape?


Are any traditional beauty retailers better positioned than others when it comes to competing with these mass-market players?

Sephora and Ulta are best positioned relative to others. Sephora has more challenges now in terms of where the macroeconomy and consumers potentially might go and how much they’re willing to spend. But both brands can present different parts of the experience with services, through a more concierge approach. That is a great way to differentiate themselves from a lot of the mass retailers and certainly from the digital channels. Obviously, in the short term, when we’re trying to mitigate human-to-human interaction, those services don’t carry a lot of weight, but I believe that is a momentary thing.

 


Steven Buckley, GLG Council Member and
Principal and Senior Advisor, Profit Objective LLC, and former COO at BurgerFi International

This question is excerpted from the article, Ghost Kitchens Are Likely Not the Savior of the Pandemic-Pummeled Restaurant Industry.


Can you walk us through a sample P&L for a ghost kitchen? Could you identify the areas that can improve or the areas that you think will change the most moving forward?

On the side of the operator, the P&L for the brand is simple. You’re taking a limited restaurant operation and placing it into a ghost kitchen environment, which is a 250- to 350-square-foot kitchen facility with varied support services and an infrastructure that creates order and efficiency through delivery. You then run your restaurant kitchen and have variable costs and fixed costs. Variable costs, like any restaurant operation, are food, paper, direct labor, and delivery fees. There are fixed expenses of management labor and rent, which can go as high as $100,000-plus for a unit adjacent to a prime business district. Additional administrative expenses are also fixed. Those costs, labor, rent, and administrative expenses total about $300,000. The break-even point approaches $750,000 in revenue to cover fixed expenses. Operating a ghost kitchen successfully is not as easy as it sounds.

 


Michael Farzan, PhD, GLG Council Member and
Co-Chair of the Department of Immunology and Microbiology at Scripps Research

This question is excerpted from the article, COVID-19 Vaccines: Moderna, Pfizer/BioNTech, AstraZeneca/Oxford.


Can you share your thoughts on the impact of convalescent plasma comparator groups of the trials having mostly mild disease, and whether that impacts the hurdle for antibody response?

The main problem with convalescent plasma is the wide range of potencies. People who do not get that sick tend to be the donors, and they also do not tend to have very good neutralizing responses. We ourselves have been looking at that, at different convalescent sera, and it’s really surprising the number of people who have tested PCR positive for the virus and who actually have good anti-nuclear capsid antibodies but do not make good S-protein antibodies — the S-protein being the only real target for neutralization on the virus.

I know OneBlood is doing a better job now of screening through the sera to make sure that they’re using the more potent sera, but that was a problem with the early use of convalescent sera. I should also say that I suspect it’s going to be supplanted pretty quickly by a cocktail of two neutralizing antibodies that we know are very good and are well controlled and scalable, and you don’t have to draw from one person to give to another person, etc. Hopefully we’ll be fading out with convalescent sera and replacing them with some of the neutralizing antibody cocktails that should be out soon.

 


David Plouffe, Campaign Manager for Barack Obama

This question is excerpted from the article, GLG Signature Series: David Plouffe, Campaign Manager for Barack Obama.


Most polls show Biden to be the clear favorite over Trump, but November is still a long way off. What are the most important things the Biden team can do to maintain and/or increase their lead going into November?

Biden is about at his ceiling with swing voters. They need to focus on maintaining as much of the current support he has built up, especially with seniors. Filling in the blanks for voters about what he will do concretely as president and how he will more effectively manage the COVID-19 crisis is key. Strong debate performances where he can show he is up to the job will also be essential. Enthusiasm for Biden among younger voters is strengthening but still below where you’d feel comfortable. The Biden campaign needs to make continual progress on that measure.

 


Don Kilburn, GLG Council Member
and Chief Executive Officer of UMass Online

This question is excerpted from the article, The Pandemic Has Accelerated Downward Trends in Higher Education.


The sudden abandonment of campuses was one of the most pronounced developments in the wake of COVID-19. How have institutions managed the transition to online?

It took everybody by surprise. In general, institutions mobilized the best they could to continue teaching online, and if you watched closely, they didn’t talk about it as online education, but as remote learning. The difference being that they basically had taken the on-campus experience and stuck it on Zoom, for better or worse. That experience was largely uneven — not particularly good at schools with little experience using remote modalities but better at schools where many faculty had been delivering online or remote content for two decades. A lot of schools thought that they could do online education, but when forced to go fully online, they found many of their programs were lacking. They also had a hard time justifying keeping money for room and board and other services. Some schools decided to do rebates, and that put pressure on the financials of these institutions.

 


 

William McRaven, Admiral, U.S. Navy (Ret.)

This question is excerpted from the article, GLG Signature Series: William McRaven, Admiral, U.S. Navy (Ret.).


Throughout your career, you’ve stressed the importance of education. How do you weigh academic education vs. experiential education?

You need both education and experience. Education provides the intellectual framework for thinking about complex problems. Experience fills in the framework and provides you a clear picture of the problem. When I was preparing for the bin Laden raid, I referred to the work I did at the Naval Post Graduate School to build the base plan, and then I used the experience of several officers and senior officials enlisted to flesh out the plan to ensure it would work. You always need both.

 


Frank Napolitano, GLG Council Member
and former President at 24 Hour Fitness

This question is excerpted from the article, Working Out the New Normal for the Gym Industry?


What are some of the biggest investment themes coming up in fitness, and how have they shifted as a result of COVID-19?

I think the smart money says that COVID-19 didn’t really cause anything new to happen. Rather, it accelerated things that were already happening. Before the pandemic, investment themes in the fitness industry surrounded how to merge the brick-and-mortar experience with the digital experience so you can surround a customer with your brand 24/7. So, when COVID-19 really shut down the brick-and-mortar element, anyone who was already working on those programs launched them – sometimes before they were ready. These technology-based products allow their members to exercise even if they aren’t in the gym. That investment theme will continue. You’ll see further integration of the digital and physical experience that was already very much in evidence before COVID-19.

 


Stephanie Lind, GLG Council Member and
former Senior Vice President, Global Sales at Impossible Foods Inc.

This question is excerpted from the article, What’s Next for the Alternative Meat Industry?


Food service demand was decimated with the lockdown orders around the world. Are there any differences within the supply chain as it relates to food service vs. food retail?

Supply chain for retail is much more simplistic. Essentially, 10 retailers do 80% of the volume. Many have their own supply chain. If they don’t, they’re using one of a handful of distributors. From this perspective, it’s a pretty easy supply chain.

The food services supply chain is complicated. You might have 4,000 distributors. Many restaurants get three, four, or five different distributors in their back doors. It’s much more difficult in food service to know what and where the inventory is. In retail, you get scanned data. You know what’s going out the front door. You don’t get that data in food service.

While the food service supply chain is more complicated, I don’t think that has any bearing on what’s happening in food service today. There are reports that about 25% of restaurants will not survive the shutdowns. It’s hard enough for restaurants to make money in normal times. COVID-19 is forcing weak and over-leveraged restaurant concepts out of business, or at least to rethink where they fit.

 


Stan Friedlander, GLG Council Member
and
former Chief Director of Clothing, Jewelry, Watches, and Customer Experience at Amazon

This question is excerpted from the article, The Effects of COVID-19 Will Likely Further Cement Amazon’s Dominance in Retail.


What are the dynamics of the apparel industry as it stands today?

There’s been a huge shift over the past 10 to 12 years in how much business has been done online. Obviously, Amazon is a key component of that, and COVID-19 has essentially brought what would have happened over the next 3 to 10 years in 3 to 6 months. About 25% of the U.S. market segment in apparel was done online, and now, arguably another 10 percentage points could be added to that because of COVID-19.

The big shifts come from shopping trips where people would have to drive 20 minutes each way, and the experience is more of an errand. People will ask themselves, “Can I do this online for the same price, same selection, in less time?” Assuming they’re not getting engagement and enjoyment out of a store environment, then it’s going to shift to online, and COVID-19 just accelerated that. People who’ve now tried Amazon or others will unlikely go back to brick-and-mortar, according to our research.

 


Brijesh Kapil, GLG Council Member and

former Director of Marketing and Sales – Consumer Health, Procter & Gamble

This question is excerpted from the article, COVID-19 May Mean Opportunity for the Indian Consumer Health Industry.


What impact is COVID-19 having on the consumer health industry in India?

COVID-19 doesn’t show any signs of plateauing, currently. Pharma has shown no signs of slowing in India either. In the three years before the first quarter, the NIFTY index has grown from 6,000 to 9,500 points. For most top companies, stock prices are running close to their 52-week highs. Looking at the fast-moving consumer goods industry, the growth was close to 9% and has petered out in Q1 to about 6%. IQVIA is projecting the whole pharma industry to be straddling somewhere close to 1% to 5% growth, with the best case around 6%.

There’s a huge opportunity within the consumer health industry for three strong reasons. First is that, right now, there’s no cure for COVID-19. Vaccines are in development, but the typical time the pharma industry takes to develop a vaccine is around 15 years. It’s a four-month-old virus, and I don’t think we’ll get a vaccine soon. There are no direct cures coming up, so although there are antiretrovirals like lopinavir, ritonavir, and remdesivir, nothing is for sure a therapy. Also, anywhere from 60% to 80% of COVID-19 symptoms are not exhibited. That is a huge challenge; people could be spreading the virus without knowing it.

For consumers, these factors raise health and hygiene concerns. That brings opportunities for the consumer health industry.

 


Robby Mook, GLG Council Member and

former Presidential Campaign Manager for Hillary Clinton

This question is excerpted from the article, Slouching Toward November: Presidential Election Forecast.


Given the ongoing pandemic in the U.S., how can we ensure getting to the polls, and why hasn’t the Democratic National Convention or other organizations tried to figure out a digital voting system?

The problem – or perhaps the strength, depending on your perspective – of the American election system is that voting is controlled by the 50 states. Many states delegate that power down to localities, which translates to more than 8,000 individual jurisdictions that have sovereign control of their elections. The federal government is not permitted to step in and demand uniform standards. Many people don’t understand that.

Regarding digital voting, there’s a lot of cross-pressure ideologically on this issue. The GOP tends to resist any change to voting whatsoever. Many Democrats concerned about election integrity consider a physical paper ballot the most secure voting method and don’t like digital voting either. So, it’s not likely you’ll see very much innovation in this space. People might be more open to it in the future, but considering that the attacks in 2016 came in the digital domain, you’ll likely see continuing trepidation to experiment with voting online.

 


Brian Meert, GLG Council Member and
CEO of AdvertiseMint and author of The Complete Guide to Facebook Advertising

This question is excerpted from the article, Facebook and Instagram Advertising: A Look at the Current Market.


What have the past few months looked like for social media advertising?

The year started out strong – then COVID-19 hit. Some companies paused everything outright. Others were unsure, but in general, there was about a 35% to 40% reduction in ad spending within the first week or two of when the pandemic hit. About 30% of our clients paused their ads totally. These were local attractions, restaurants, live events, and other things that were 100% canceled. About 70% of our clients lowered their ad spending across the board. After that, with fewer advertisers and lower CPMs, many e-commerce clients began to see above-average results. And when stimulus checks started to arrive, their sales exploded. More recently, as businesses have started to reopen, e-commerce has cooled a bit from that peak, although it’s still strong. The protests also had something to do with that. Barring a second wave, many of our clients have adapted to this new world.

 


Bill Dudley, Former President of the Federal Reserve Bank of New York

This question is excerpted from GLG’s Signature Series Spotlight. 


In the 2008 crisis, we saw great cooperation between the Fed, Treasury, Congress, and the executive branch. How do you feel those entities are performing today? Are they communicating effectively? What would be an optimal scenario?

I think the Fed and U.S. Treasury are working very well together. The biggest challenge is that monetary policy may not be sufficient by itself to generate a strong, sustainable recovery. The fact is that the pandemic has and may continue to cause damage to income flows and balance sheets. The Fed’s ability to deal with that is very limited. The biggest issue is whether sufficient fiscal stimulus will be forthcoming to help fill the hole in household, business, and state and local government income. If fiscal policy gets locked on hold because of political polarization in Congress, then we could find ourselves in an even more difficult situation.

 


Hunt Lambert, GLG Council Member and
former Dean, Continuing Education and Extension School at Harvard University

This question is excerpted from the article, Higher Education in a Post-Pandemic World.


How do for-profit universities fit in a world where everyone has an online offering?

The private for-profit schools invented this market and the technology, and taught faculty how to teach in the online mode. So when our team created an all-online public university, Colorado State University Global Campus, we didn’t need to invent much. We just had to do it as a public entity at higher quality and lower cost. I always remember to thank the for-profit universities for building what was needed for us to make it a public good.

That said, they got greedy and collapsed not just from public competition but from regulatory changes they themselves lobbied for. These regulations allowed them to become the best entities in the world at converting Title IV funds into investor profits. In the end, they lost to well-branded local public universities offering online programs at a higher quality and lower cost.

Going forward, institutions like the University of Phoenix will rise again. It’s been hugely revalued and privatized, and is still full of very smart people at a time of rising demand. It doesn’t have to answer to analysts now, allowing it to pivot much more quickly than a public company. For-profits will probably succeed long term by serving the professional education market around micro-credentials that can but often won’t stack to degrees.

 


Tom Wheeler, GLG Council Member and
former Chairman of the Federal Communications Commission
and former Chairman of the Cellular Telecommunications and Internet Association

This question is excerpted from the article, Understanding the Executive Order on Online Censorship. 


What do you think the proper course of action should be for Facebook and Twitter?

 Zuckerberg’s argument that Facebook is a technology, not media, is just irresponsible. Its selling of algorithmic editorial decisions is an activity of a media company. I have been very disappointed in Mark’s reaction; let’s call it for what it is – appeasement. The correct policy would be to apply some of the company’s engineering brain power to build editorial parameters for its AI algorithms. That applies to the YouTube part of Google too, which also needs to step up its responsibilities. By definition, of course, new editorial parameters would reduce revenue. But let’s remember that traditional broadcasters never carried commercials for liquor, condoms or cigarettes, not because of a law, but because the National Association of Broadcasters stuck to a code of behavior. Today, just as in the past, there are bigger things than dollars at stake.

 


Robin Robinson, PhD, GLG Council Member
and former Director of the Biomedical Advanced Research and Development Authority (BARDA) at the U.S. Department of Health and Human Services (HHS)

This excerpt is drawn from the article A Look at Moderna’s SARS-CoV-2 Vaccine.


Vaccine Durability

An important question is whether the durability of the Moderna vaccine varies with age, dose, or other factors; the interim results announced do not address this question. If the immune titers begin to drop, you can record how much of a drop you observe at each interval. Durability limited to three months is problematic, but it’s unlikely that the neutralizing antibody titers will simply return to zero. On the other hand, the titers could plateau and last for at least a year, producing the desired outcome.

 


Dr. Ning Zhu, GLG Council Member and
Chair Professor and Director of Center for Global Acquisition and Restructuring at PBC School of Finance at Tsinghua University

This excerpt is drawn from the article Post-COVID-19: China May Face an L-Shaped Economic Recovery.


The Resumption of Work

China went into the coronavirus situation about one and a half months earlier than the rest of the world, so it’s coming out of the coronavirus situation one to two months earlier than most other major economies.

China also implemented a strict lockdown policy for the Wuhan province and some other affected cities. That means the rest of China is affected less by the coronavirus situation. As a result, the country is resuming migrant work more quickly than other countries are. Shanghai seems up to 80%-90% back to normal in terms of production and people’s day-to-day life. Beijing appears to have perhaps a 70% resumption of work.

 


Robert Wright, GLG Council Member and
former Executive Vice President and Chief Operating Officer for Wendy’s Co.

This question is excerpted from the article, A Shake-Up Is Coming for Quick-Service Restaurants after COVID-19.


How might the competitive landscape among QSRs look after the COVID-19 dust settles?

There will be a shake-up. The financial pressures alone through this crisis will probably cause several restaurant concepts to lose locations. Large chains will lose restaurants because those marginally performing locations will close. Franchisees and franchisors are going to take advantage of this and close those.

We’ve already seen some bankruptcies announced in the private equity world because they’ve had these highly leveraged buyouts. Likewise, many franchise organizations have had franchisees investing a tremendous amount of capital, much of which has been leveraged over the last five years. The second half of this growth economy was poured back into this business. If they’re struggling to just find four-wall economic profitability and cash flow, it is certain that general and administrative expenses are not being taken care of. This is what will crush them. There’s going to be a shake-up – no doubt about it.

 


Alex Cohen, GLG Council Member
and owner of Future Workspace Development

This question is excerpted from the article, How Has COVID-19 Impacted Commercial Real Estate?


Do you expect companies that want to maintain most employees in offices to increase the total office space to allow more space per employee?

I’m not sure they’ll need more space. A small, boutique firm will likely reconfigure and probably have enough space to satisfy social distancing protocols. They’ll add partitions and spread out their workstations and use less communal space. Larger firms will likely rethink how existing space is allocated.

For example, instead of having a large trading floor, they’ll likely have a limited trading area with additional partitions and spacing. I expect they’ll encourage a proportion of workers to continue to trade or work from home, but in-office, they’ll have specially design collaboration centers, conference rooms, and meeting rooms that meet social distancing standards but also allow face-to-face interaction. They’ll probably encourage people to come in and only use those facilities on an as-needed basis and thus maintain less density daily throughout the office.

 


Troy Ewanchyna, GLG Council Member
and former VP and General Manager at NBCSports.com

This question is excerpted from the article, Sports Television after COVID-19.


As far as a time line for resuming live sports, what do you see?

From a network perspective, the best case economically would be a limited return of the NBA, the NHL, and MLB this season. If that happened, the networks probably wouldn’t have to pay rebates to distributors, they might get some fee relief from the leagues, and they could salvage their advertiser relationships. For the final piece of the Big Four sports, there’s the hope that the NFL returns, maybe even without fans in the stands, because that could drive up ratings even more.

 


Betsey Stevenson, GLG Council Member
and former Chief Economist, U.S. Department of Labor

This question is excerpted from the article, U.S. Employment Outlook: The Impact of COVID-19.


What are your best- and worst-case scenarios for where the unemployment rate might go?

 Right now, the question isn’t so much what the unemployment rate might be in the short term because there will be many temporary layoffs from which people will expect to be recalled. This will certainly help us understand estimates for GDP for Q2, but the real issue is how many jobs are being permanently destroyed.

There are four reasons it’s so hard to guess what’s going to happen in employment now. First is the demand loss due to shelter-in-place, which is soon ending or going to end in many areas. Second is demand loss due to fear. This may worsen because many people in surveys say they’re fearful that states are reopening too soon or that proper safety precautions are not being taken in their area. They’ll be afraid to venture out even once the stay-at-home policies end. Third, there’s demand loss due to loss of income, something that’s likely to persist for quite some time. Fourth, we see some supply chain problems. If you put all those things together, unemployment becomes self-perpetuating. We create more demand loss due to loss of income. We create more job destruction, and the two are permanent.

Thinking about employment rates in 2021 is in some ways more important but harder to forecast than trying to think about the number we’ll see in April. The Congressional Budget Office is currently forecasting 9.5% unemployment at the end of 2021, but in the short term, it depends on whether you look at the top-line BLS unemployment rates or at the decline in employment reported. I think we’ll see between 15% and 25% in April, depending on how many of those things you take into account. If you take them all, we can easily see the broadest measure of unemployment growing up toward 25%.

 


Tim Merrill, GLG Council Member and
former Senior Vice President of Casino Operations at Sands China, Las Vegas Sands

This question is excerpted from the article, The Gaming Industry in the Wake of COVID-19.


What will be the biggest challenges for casinos when they reopen?

First, it’s paying the bills that have been deferred, especially food. If you have an outstanding bill with your food supplier, you’re going to have to pay that before you get another food shipment.

Second is labor. Casinos probably won’t bring back everyone immediately, because the business volume just won’t be there to support it. It’ll be challenging to get the right level of staffing in place yet not blow out your cost structure while trying to scrape together a bit of additional cashflow during the ramp-up period.

The third is customers. Small retail customers, who’ll have to pay their own bills first, will probably lag a month or two behind the bigger players, who likely will return but at a lower frequency until their own small businesses bounce back.

Finally, there’s the regulatory challenges. Because of the layoffs, several processes aren’t being completed right now, from licensing to tax payments, and even if they are, states are operating at a minimum staffing level, so the work isn’t getting processed. When this is over, the industry will need to ensure it’s operating in compliance with regulations.