Goldman considers joining the financial migration to Florida
Goldman Sachs is one of Wall Street’s best-known firms, its identity indelibly tied to New York. Yet it may move at least some parts of a major division to Florida, with costs and the pandemic in mind.
DealBook has confirmed that the bank has explored moving some of its asset management unit, following a Bloomberg report that executives had scouted office locations and spoken with officials in Florida. It’s not clear how much of the business, which generates about $8 billion in annual revenue, might move. The firm has reportedly looked at areas around Miami, but may ultimately choose to move elsewhere (or not at all).
Goldman already bases some operations outside of New York: It has been building up its investor relations team in Dallas, while its Marcus consumer-lending division is in Salt Lake City. A spokesman for the bank told DealBook that it is “executing on the strategy of locating more jobs in high value locations throughout the U.S.,” but it has “no specific plans to announce at this time.”
Saving money is a major factor. In January, Goldman identified its real estate footprint as a target in its $1.3 billion cost-cutting campaign. Since then, remote working during the pandemic has persuaded many companies to shift operations to lower-cost locations. A similar shift is afoot for firms in Silicon Valley, with Hewlett-Packard Enterprise moving to Houston and Palantir to Denver, among others.
Florida is particularly popular for the financial industry. Elliott Management plans to move its headquarters from Midtown Manhattan to West Palm Beach, and Citadel and Blackstone are also expanding in the state. The lifestyle appeals to some financial high-rollers, who can keep East Coast hours while benefiting from warmer weather, palatial homes near the beach and no state income tax.
Goldman’s potential move may become a political talking point, as New York City faces a budget shortfall because of the pandemic. Any potential loss in taxes is sure to play a part in the mayoral race that kicks into high gear next year.
HERE’S WHAT’S HAPPENING
Signs of progress on a stimulus compromise. President Trump and the Senate majority leader, Mitch McConnell, have suggested they will come “on board” with a $908 billion proposal from a bipartisan group of lawmakers, according to one of its authors. A final version of the bill could come this week, but there’s still skepticism.
A pornography giant is under fire after a Times investigation. MindGeek, the parent company of Pornhub, is facing scrutiny after The Times Opinion columnist Nick Kristof wrote that the site distributes videos of child abuse and sexual assault. The column drew outrage, and Mastercard and Visa said they are reviewing their relationships with MindGeek.
Glencore’s longtime C.E.O. will step down. Ivan Glasenberg, who led the mining and trading giant for two decades through an I.P.O., commodity booms and corruption inquiries, said he plans to retire next year. His successor, Gary Nagle, will be charged with making one of the biggest shippers of coal a net-zero emissions company by 2050.
Chick-fil-A sues chicken producers over price-fixing. The fast-food chain accused top suppliers including Tyson and Perdue of coordinating their production to push up prices. The Justice Department has filed criminal charges against industry executives over similar claims in other cases.
Tragic details emerge of Tony Hsieh’s final days. During the pandemic, the Zappos founder had fallen into abusing alcohol and drugs, as well as increasingly erratic behavior, leading to his death from fire-related injuries in Connecticut last month, according to The Wall Street Journal and Forbes.
A first look at Neiman Marcus’s postbankruptcy board
Neiman Marcus, which emerged from bankruptcy in September, will announce today that it is naming Paul Brown as its nonexecutive chair. Mr. Brown, who runs Arby’s parent Inspire Brands, may not be an obvious candidate for the high-end retailer.
It’s all about the shift to e-commerce accelerated by the pandemic. At Inspire, Mr. Brown oversaw the digital transformation of franchised restaurants like Arby’s and Buffalo Wild Wings (and he’ll soon add Dunkin’ Brands to his portfolio). He was previously charged with a similar makeover at the hotel chain Hilton Worldwide, and will bring that experience to bear on Neiman’s attempt to offer more services online. The retailer’s board will also have a majority of women, with members including Kris Miller, eBay’s former strategy chief, and Pauline Brown (no relation to Mr. Brown), LVMH Moët Hennessy’s former North America chair.
“We had a strong belief that when you transform you need to be diverse in your thoughts,” said Geoffroy van Raemdonck, Neiman Marcus’s C.E.O., who told DealBook that the company’s new directors have a variety of skills and backgrounds.
Neiman’s previous board was rebuked by a judge overseeing its bankruptcy for the handling of its online subsidiary. Along with a new slate of directors, turnover in Neiman’s ownership ranks in the Chapter 11 process means that Pimco is now the company’s largest shareholder, joined by Davidson Kempner Capital Management and Sixth Street Partners.
The week ahead
DoorDash and Airbnb plan to make their stock market debuts on Wednesday and Thursday, respectively. Both have raised their valuation targets significantly, part of a frenzy of tech deal making that some say resembles the dot-com mania.
Negotiators from Britain and the E.U. will try to break the deadlock in Brexit talks ahead of a year-end deadline to sign a trade deal. Negative news today about progress led to a plunge in the British pound.
The Food and Drug Administration holds a hearing on the Covid-19 vaccine developed by Pfizer and BioNTech on Thursday, which could lead to the country’s first emergency authorization of a vaccine candidate.
In a light week for earnings, Adobe and Campbell Soup report on Wednesday, while Costco, Lululemon and Oracle release their financials on Thursday.
Upping the ante in gambling M.&A.
Last week’s $4.2 billion deal by the Irish bookmaker Flutter to buy near-total control of the New York-based fantasy sports site FanDuel made waves in the gambling industry. There’s reason to think it won’t be the last big money move.
Industry executives expect more deals and partnerships. “I think you’ll continue to see media companies, in particular, try to figure out how to build a closer relationship with sports betting companies,” Matt King, FanDuel’s C.E.O., told DealBook.
Flutter itself is a product of M.&A. activity, having sold a small stake to the casino operator Boyd Interactive Gaming and bought PokerStars’s parent company last year for $6 billion. Fox Sports, which formed a relationship with Flutter through the PokerStars deal, has the option to buy an 18.5 percent stake in FanDuel next summer.
FanDuel’s chief rival, DraftKings, went public this year by merging with a SPAC backed by the Hollywood executives Harry Sloan and Jeff Sagansky. Disney, which owns ESPN, is one of the biggest shareholders in DraftKings.
Penn National Gaming announced earlier this year that it will buy a minority stake in Barstool Sports.
FanDuel says its deal is a bet on the U.S. Mr. King called it “a recognition that the U.S. is on track to be the largest regulated gaming market in the world.” The betting industry has received a boost from the pandemic, as cash-poor states and sports leagues search for new revenue sources. Nineteen states and Washington, D.C., now allow some form of sports betting, with more expected to follow. (The dynamics are similar to the marijuana business: see below.)
Marijuana gets MORE legit
The House of Representatives on Friday passed the first cannabis liberalization bill to ever make it to the floor of Congress — the Marijuana Opportunity, Reinvestment, and Expungement Act, or MORE. It decriminalizes and reschedules cannabis, allowing for more expansive scientific research and business investment. It would not, however, make marijuana legal at the federal level, and must pass the Senate to become law.
There’s been a lot of action in marijuana lately. The House vote came days after the United Nations Commission on Narcotic Drugs reclassified cannabis, removing it from the most dangerous drug category. It also followed the passage of marijuana ballot initiatives in several states last month, bringing the total number to legalize medical use to 36, with 15 states now allowing recreational use.
“In 2021, we predict the cannabis industry will ride on smooth tailwinds,” said Matt Hawkins, the founder of the cannabis private equity firm Entourage Effect Capital. He believes that the MORE Act reflects “a positive political climate,” but is circumspect about the bill’s next challenge. He does not expect the Senate to pass or even vote on it any time soon.
The House vote is a “largely symbolic” victory that reflects changing public sentiment, said Joe Crouthers, the C.E.O. of Ceres Group Holdings, which manages a cannabis SPAC. As millions more Americans gain access to cannabis products, he believes that “massive shifts in consumer and capital markets” will put pressure on lawmakers. But continued uncertainty on federal legalization means it “won’t be smooth sailing” for investors in the meantime.
THE SPEED READ
A government-imposed deadline for TikTok to finalize its sale to Oracle and Walmart lapsed on Friday, but the Trump administration will let the negotiations continue. (NYT)
Paysafe, an online payments company backed by Blackstone and CVC Capital, is reportedly in talks to go public by merging with a SPAC run by Bill Foley. (Bloomberg)
The pet supplies retailer Petco filed to go public on the Nasdaq — ticker symbol “WOOF” — as it benefited from a pandemic-driven surge in spending on furry companions. (CNBC)
Politics and policy
A government watchdog found no evidence of wrongdoing in the Trump administration’s now-halted $765 million loan to Kodak to help the company pivot to pharmaceutical ingredients. (WSJ)
President-elect Joe Biden picked Xavier Becerra, California’s attorney general, as his nominee for secretary of health and human services. (NYT)
Britain’s Parliament released a report chiding the Bank of England for failing to keep tabs on $67 billion in cash that vanished from the country’s money supply. (NYT)
Google is reportedly weighing whether to penalize Barry Diller’s IAC over alleged deceptive marketing practices. (WSJ)
The gaming company Activision Blizzard sued Netflix, accusing the streaming giant of poaching its then-C.F.O. in violation of his employment contract. (The Hollywood Reporter)
“The pandemic was great for Zoom. What happens when there’s a vaccine?” (Recode)
Best of the rest
The Cheesecake Factory settled charges by the S.E.C. that it misled public investors about its financial health during the pandemic. (NYT)
An in-depth chronicle of how the C.E.O. of the industrial giant Emerson Electric grappled with the pandemic. (WSJ)
Why OnlyFans, the subscriptions site, might be worth a billion dollars. (Bloomberg)
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