Author Archives: Tom

Conited Airlines, finally?

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Continental and UALThe NY Times is reporting that the on-again, off-again merger negotiations between Houston-based Continental Airlines and Chicago-based United Airlines are coming to a conclusion and that a definitive merger deal is likely to be announced by the end of next week.

Continental, the nation’s fourth-largest carrier based on traffic, has long been the natural merger partner for United, which is the No. 2 airline. If they strike a deal, the merger would produce the world’s largest airline, bigger even than the combined Delta-Northwest and significantly outdistancing American, which is currently No. 1.

Speaking of the Delta-Northwest deal, those partners this week reported an astounding, combined first quarter loss of $10.5 billion, reflecting that the two airlines are now worth far less than when they emerged from bankruptcy a year ago.

Two drunks holding each other up is rarely a good idea. ;^)

Update: The Chron is reporting that Continental’s board has decided to reject any merger proposals "at least for now." The NY Times reports that Continental backed off because of United’s worse-than-expected first quarter losses.

How the mighty have fallen

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deniro_pacino Some folks thought I was too hard (see also here) on the Stros and Craig Biggio for turning the Stros’ 2007 season into a death march to Bidg’s 3,000th hit.

However, my criticism of the Stros and Bidg was child’s play in comparison to this LA Times broadside on fading Hollywood leading men, Robert De Niro and Al Pacino. The following will give you a taste:

Pacino has made a string of bad films lately, including the famously awful "Gigli," "The Recruit" and "Two for the Money," where he hams it up as an unscrupulous football oddsmaker. If anyone has made more movies for the money than Pacino, it would be De Niro, who has largely abandoned serious dramatic work for a spate of forgettable horror and crime thrillers (try sitting through "Hide and Seek" or "Godsend") and lowbrow comedy high jinks like "Meet the Fockers" and "Analyze That."

De Niro’s most recent film, "What Just Happened?," an inside-the-movie-biz comedy, got such an abysmal reception at Sundance that it limped out of the festival without a sale (it’s expected to close the Cannes Film Festival this year). De Niro cut his longtime ties with CAA last week, defecting to Endeavor, inspiring a venomous response purportedly from one CAA agent that was e-mailed all over town. Claiming that De Niro asks for a $1-million production fee on his pictures to help fund his Tribeca empire in New York, it minces few words, saying, "Bobby held us responsible for his own greed, his own avarice and his own megalomania. And it’s just like the studios now ask us: Why should we pay this guy — who doesn’t open a movie — the payoff to his production company, just so he can add his name as a producer?"

Also check out this Variety review and related blog post on Pacino’s latest movie "88 Minutes," which is already being included in some "worst ever" lists.

Tough place, that Hollywood.

UH Law Center Gets It Right

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Ray Nimmer is truly one of Houston’s treasures.

The Leonard Childs Professor of Law at the University of Houston Law Center, Ray is one of the nation’s leading authorities on business and bankruptcy law, computer information licensing, e-commerce, and related intellectual property issues, all of which he has addressed in the 20 or so books and numerous articles that he has written over his superlative 30+ year teaching career.

Even more importantly, Ray is a gifted teacher who has taught a remarkably broad variety of courses at the UH Law Center over the past 30 years, including Contracts, Contract Drafting, Evidence, Bankruptcy, Corporate Reorganization Law, Internet Law, Electronic Commerce, Secured Financing Law, Negotiable Instruments, Copyright Law, Information Law, Sales, and Licensing Law. Somehow, Ray has even found the time to maintain a blog.

For the past couple of years, Ray has been serving as the Interim Dean at the law school, where he has done an excellent job of patching things up after the divisive resignation of the previous dean, Nancy Rapaport. Thus, I was happy to see this UH press release Wednesday confirming Ray’s appointment to that position (Mary Flood’s Chron article on the announcement is here). Ray released the following statement to friends, alumni and students:

As many of you know, in 2006 I agreed to serve as interim dean of the Law Center while a nationwide search for a permanent dean was conducted. That search has now been completed – and today I have accepted the position of Law Center Dean offered to me by Dr. Donald Foss, the provost of the University of Houston, subject to the approval of the UH Board of Regents.In many ways, it remains business as usual at our school. Two years ago, this is what I told my team when I stepped in as interim dean:

Here’s what you can expect from me. I am pragmatic, oriented to understanding and explicating the role of law and lawyers in society, and I am committed to leading a team that will distinguish our Law Center as being among the best in academia and a major factor in the practical practice of law. I believe in action and achievement. I applaud people who target goals—and invest the necessary work to achieve them. And I am determined to give our highly skilled faculty, administrators and students the support they need to maneuver and achieve.

That’s been my approach over the past two years as we energized the Law Center and continued the “pursuit of excellence” in everything we do. Our momentum is reflected in our 15-point improvement in national rankings, two “Top 10” specialty programs, and record-high LSAT scores for our newest class.I took the job of interim dean for a simple reason: because I believed the Law Center was on the cusp of great achievement, and I wanted to help my school reach that goal. Today, I am accepting the position of permanent dean for the same reason, and I am 100% committed to pushing us higher into the top echelon of Tier 1 law schools.It is an honor following the seven men and women who previously served as permanent dean and contributed to the greatness of our school. With help from the entire Law Center community, there is no limit to what we can accomplish.

Congratulations to Ray for the much-deserved appointment and to the UH administration for making the right decision.

Getting to 120/80

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hypertension Jane Brody, the NY Times’ excellent reporter on health and fitness issues, provides this good overview of the current treatment options for high blood pressure, including this summary of the current drugs that are most commonly prescribed. My late father was one of the pioneers in the development of the first drugs and treatment protocols for hypertension.

As this earlier post noted, if FDR’s physicians had known in 1945 what doctors know today about the damaging effects of high blood pressure, those physicians would not have recommended that the seriously ailing FDR be allowed to go toe-to-toe with an avaricious Stalin at Yalta. Even a relatively short delay in the insight gained from scientific research can have a major impact on the course of mankind.

Mayor White’s management

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mayorwhite 042208 Help me out here. I’m really trying to understand the basis of the perception among a large number of Houstonians that Mayor Bill White is an effective manager.

For example, this earlier post summarized Mayor White’s dubious decision-making in regard to having the city buy expensive and not particularly well-located downtown land for the new Houston Dynamo soccer stadium. Not only did the city already own nearby property that is a better location for the stadium, Mayor White pushed through the land acquisition despite not having a binding commitment from the soccer club owners on the amount of their contribution to the cost of the stadium’s construction.

Given the foregoing, who except Mayor White was surprised last week when Major League Soccer (which is really just a minor soccer league) sent a letter to the Dynamo owners that was (again, surprise!) passed along to Mayor White that threatens to relocate the Dynamo if a satisfactory stadium deal isn’t reached? For good measure, MLS and Dynamo officials informed the city that the estimated price of the stadium has increased from $90 million to $105 million and that some MLS cities have contributed as much as 90% of the cost of similar stadiums.

So, what was Mayor White’s reaction? Tell these minor leaguers to take a hike to Corpus Christi or Beaumont? Apologize to the citizens for having the city lay out $15-20 million for property that it doesn’t need? Promise that he won’t get taken to the cleaners again in negotiations with minor league sports club owners? No, Mayor White did his best tough guy imitation:

"I’ve gotten a little bit of a reputation, probably deserved, that I don’t respond well to threats," he said. "I smiled."

If Mayor White is smiling, then imagine what the MLS and Dynamo officials are doing after the way in which those minor leaguers have had their way with Mayor Bill in these negotiations?

The only good news about all this is that the $50-75 million that the city will probably end up dropping over this soccer stadium boondoggle represents only about a couple of months of losses of this much larger boondoggle, which — you guessed it — Mayor White strongly supports. And those aren’t the only questionable management decisions that the Mayor has made during his tenure (for example, see here, here, here and here).

How much longer can Houston afford Bill White?

Remember Refco?

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refco 042108 Amidst the current turmoil in the financial markets, the recent conviction on criminal fraud charges of a former Refco Inc executive barely registered on the radar screen. The details from the meltdowns from years past are just old news now.

However, the criminal conviction and plea deals arising from the Refco affair still leave a troubling question unanswered — why did Refco’s owners take it public in the first place?

The latest big oil discovery

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brazil_map As oil futures hit $115 per barrel late this past week, The Economist ran this article on the questions surrounding the recent announcement regarding the discovery of Brazil’s Carioca-Sugar Loaf Field, which could be one of the largest oil discoveries in history. Given the time, expense and risk involved in extracting the oil, the announcement of the discovery didn’t affect oil markets much, but The Economist article nevertheless concludes as follows:

The discoveries do suggest that the gloomiest pundits are wrong to predict that the world will soon run out of oil. It is not that there are still lots of huge oil fields out there: the number of mammoth discoveries is declining, Tupi (and perhaps Carioca-Sugar Loaf and Jupiter) notwithstanding. But the new finds do illustrate how the technology with which oil firms hunt for, extract and process fossil fuels is constantly improving. Petrobras’s recent success is only possible thanks to recent advancements in seismic surveys, drilling, and offshore platforms. Other technological developments are allowing a greater proportion of the oil found around the world to be recovered and are even expanding the definition of oil, as firms conjure liquid fuel from the solid tar-sands of Canada, for example, or from coal and natural gas.

As noted recently here, the recent increases in oil prices are making alternative energy sources economically viable. Thus, take note of what former ExxonMobil CEO Lee Raymond noted years ago in response to a question on oil prices:

Interviewer: "Some people think prices will keep going up?"

Raymond: "Maybe. I’ll bet they’ll be lower at some point."

Valuing the Stros

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Drayton McLane 041907 The Stros are not worth squat on the playing field this season, but the club continues to be among the dozen most valuable franchises in Major League Baseball.

Forbes’ annual valuation of MLB franchises is out and the Stros come in at a respectable 12th among the 30 MLB franchises, down one slot from last year. Forbes thinks that the Stros ($463 million valuation) are doing about as well financially as they can do in this market. A list of the values and operating income for all 30 franchises is here.

Interestingly, although the Yankees have by far the most valuable franchise in MLB, they were dead last among the 30 MLB franchises in operating income at a negative $47 million. The World Champion Boston Red Sox were 29th in operating income at a negative $19 million, although the club’s valuation of $816 million is behind only the Yankees ($1.306 billion) and the Mets ($824 million).

This post from last fall noted Forbes‘ most recent valuation of the National League Football franchise, which continue to be much more valuable than the MLB franchises. The least valuable of the 32 NFL franchises (the Vikings at $782 million) would be the fourth most valuable MLB club.

Providing good doughnuts in health care

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doughnut A frequent topic on this blog over the years has been the increasingly dysfunctional nature of the third-party payor health care finance system in the United States. This post from last year examined how my primary care physician changed his medical practice to a concierge model because of the financial risks involved in continuing to rely primarily on health insurance for his revenue stream, and this subsequent post touched on the developing crisis that is occurring in the financing of primary care practices around the country.

Albert Fuchs, a Beverly Hills internist, understands the problem quite well and has a straightforward solution: primary care physicians should require payments from their patients and not third party insurers:

For more than a year, I haven’t received a single dollar from any insurance company. I work for my patients. A few hundred doctors across the country are working the same way, some in blue-collar towns. Routine care should be affordable to the middle class, and as more doctors and more patients form relationships that exclude insurance companies, prices will drop. Insurance doesn’t make routine care affordable; it makes it more expensive by adding a middleman. I know that some patients can afford nothing, so two afternoons a month I volunteer at a clinic that cares for indigent patients, which I could not have done with the huge patient volume I was seeing a few years ago.

When doctors break free from the shackles of insurance companies, they can practice medicine the way they always hoped they could. And they can get back to the customer service model in which the paramount incentive is providing the best care. Only then can doctors reclaim the simple dignity of any businessman: These are my doughnuts; only I and my customers can determine their worth. (At the end of each week, I will donate some to the needy, but I will not let a third party set the price.)

Read the entire op-ed. Medical insurance should be true insurance from a catastrophic ailment or injury, not financial insulation from the routine costs of health care. Jonathan Kellerman, a clinical professor of pediatrics and psychology at USC’s Keck School of Medicine, advances the same idea in this recent W$J op-ed:

Physicians and other providers need to liberate themselves from the Faustian bargain they’ve cut with the Mephistophelian suits who now run their professional lives. Because many doctors are loath to talk about money, they allowed themselves to perpetuate the fantasy that "insurance is paying." It isn’t. There is no free lunch and no free physical exam.

If substantial numbers of health-care providers shook off the insurance monkey on their back, en masse, and the supply of providers was substantially increased by opening more medical schools, the result would be a more honest, cost-effective system benefiting everyone. Except the insurance companies.

What is Tiger thinking and has The Masters become a bore?

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Tiger Woods So, Tiger Woods is being forced to take a month off from the PGA Tour as he rehabs from knee surgery. I know that Woods’ workout routine is considered cutting edge, particularly for a professional golfer, but what on earth is he running seven miles per workout with a bad knee? Don’t his trainers know that long-distance running is not a particularly healthy form of exercise?

Long-distance running is a fine form of recreation for folks who enjoy it. But as a method of exercise, I am hard-pressed to think of one that is more physically damaging. Woods would be smart to re-think his workout to delete long-distance running and concentrate on short sprints for the aerobic part of his workout.

The knee operation will prevent Woods from defending his title at the Wachovia Championship in two weeks or competing in The Players Championship at TPC Sawgrass a week after that.

By the way, Geoff Shackelford (see this Daniel Wexler post, too) is leading a discussion over at his blog on whether the design changes at Augusta National — which have clearly prompted players to play more defensively and less aggressively during the Masters Tournament — have undermined the excitement of the tournament for spectators. Geoff passes along the following interesting stat from Brett Avery’s Golf World stat package:

master's cool stat