Weekly Reads - February 27, 2023
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Declining interest in live sports by Gen Z presents a long-term problem to the value of sports media rights which continue to be purchased at record prices by the largest tech/media companies.
Sport media rights are expected to eclipse $60 billion by 2024 with the largest tech/media companies in the world clamoring for broadcasting exclusivity. We have seen many landmark deals last year with Amazon and Google paying billions for NFL broadcasting rights and Apple beginning a 10-year livestream partnership with the MLS. While the momentum in sports media remains strong, many executives in the industry are worried about the lack of popularity of sports in the Gen Z demographic. A recent survey of 1,000 Gen Zers found that 33% of them do not watch live sporting events compared with 24% of U.S. adults. Not all sports are the same to Gen Zers with the NFL remaining the most popular sport with 53% of respondents indicating they were fans of the NFL followed by the NBA (47%), College Football (41%), MLB(35%), College Basketball (34%), NHL (25%), and MLS (16%). There is a growing worry that the NFL could attract the majority of viewership with sports like the MLS and MLB floundering reducing the value of media rights in these less popular sport leagues. This issue is forcing sports leagues, teams, and broadcasters to revamp how they market to Gen Zers and creating tailored experiences that attract new demographics to live events. With the growing popularity of alternative media (social media, video games, livestreaming, etc.) sports are facing a difficult fight in getting Gen Z viewers to become avid fans.
After two years of disappointing crop yields in California, in 2023 the region could see a meaningful uptick in crop yield potentially acting as a headwind to food inflation.
California is the largest agriculture state in the U.S. accounting for 13%-14% of total U.S agriculture production (in dollars) from 2015-2020. In 2021-2022, California saw significant declines in agriculture production due to droughts. This year farmers should see stronger yields with the state allocating the highest levels of water to agriculture since 2019. This should help agriculture production rebound to 2019-2020 levels which could help reduce food prices across the U.S. California is the sole U.S. producer of almonds, artichokes, peaches, plums, figs, olives, raisins, persimmons, pomegranates, and clover. These are products you can find in any grocery store across the U.S. and are very sensitive to regional weather trends. With the crop yield in California likely to return back to normal we could see food inflation slow down which should be a massive boon for the end consumer.
With U.S birth rates continuing to fall below replacement levels the country could be heading toward a labor/population crisis as older generations age out of the workforce.
After years of declining birth rates in the U.S. there has been an uptick over the last few years but it’s unlikely to be sustainable going forward. Since birth rates were so low in 2020 due to COVID, the growth in births we have seen over the last few years are likely the result of parents delaying having children and the return of foreign-born mothers into the country (removal of U.S. travel restrictions) which accounted for 23% of all U.S. births prior to COVID. Since the great recession the average number of births per woman in the U.S. has declined to 1.6 births per woman, far below the replacement level of 2. This data point is frightening as U.S. couples are not having enough children to replace them once they exit the workforce. This means the U.S. needs to rely on immigration to fill in the labor/population gaps or the country will be facing a looming labor crisis. This trend is likely to get worse with more women and men delaying having children till later in life and rising housing/healthcare costs preventing couples from having large families. As couples delay having kids till they are older, the harder it is to get pregnant(fertility decreases) which likely limits the total number of children they can have. If these trends continue to worsen, it’s likely we see government intervention to prevent the U.S. from reaching negative population growth.