Economics in the News – April 29 – May 5, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o American investors are increasingly buying old, storied English soccer teams, while making the in-game atmosphere more Americanized to the chagrin of their most die-hard fans. Attempts to Americanize the sport include pregame entertainment to the addition of club seats inside stadiums, and other in-stadium amenities that lead to ticket price increases.
Nine clubs playing in England’s top flight – the English Premier League – are owned by Americans. Despite improving the financial components of their clubs, the fans believe that the American owners do not properly understand the culture of the English soccer pyramid and finance the club with large amounts of debt. American owners are drawn to English soccer because of the significant opportunity for economic growth due to rabid fan bases, inexpensive ticket prices and inadequate concession options. [The New York Times]
o Restaurant and arcade chain Dave & Buster’s announced that it would allow customers to bet on arcade games. Customers will be able to digitally place bets at the arcades, where people play games such as Skee-Ball, billiards, and basketball shootouts. Dave & Buster’s is teaming up with technology company Lucra to provide the opportunity to bet on “skill-based games.”
The decision has led to some negative backlash, specifically from anti-gambling groups, who raise concerns about the exposure will have on children, leading to a gambling addiction. Age policies vary at each Dave & Buster’s location, but generally those under the age of 18 can enter with a guardian. It was not clear from the announcement how many of the 164 nationwide locations would allow betting. [The New York Times]
o What is the financial impact of driving your car until the wheels fall off? In March, the average transaction price for a new vehicle was $46,660, compared to $39,950 three years ago, according to Edmunds. In addition, the costs associated with maintenance and repairs have climbed 8.2 percent year-over-year, while insurance costs are 22.2 percent higher.
Because of the rising costs associated with purchasing a new car, Americans are opting to keep their current cars for longer. US vehicles’ average age was 12.5 years old in 2023, rising for the sixth consecutive year, according to S&P Global Mobility. The economics of buying a new car varies depending on the manufacturer. Lexus and Toyota have the strongest reputation for fewest number of problems during the first three years of ownership, while electric vehicles have among the highest rate of problems reported because of their batteries and the more technological features. [The Wall Street Journal]
o Roughly 500 Tesla workers, many within the electric vehicle charging team and public charging, were laid off. The move comes as a blow for the US network to build the country’s fast chargers. Tesla owns and operates nearly two-thirds of the fast charging ports in the United States and deploys more chargers each year than all other providers combined.
The decision by Tesla could undermine President Joe Biden’s pledge to rapidly expand the US fast charging network. While other automakers and companies are investing in US charging, none were doing so with the scale that Tesla had been pursuing. The decision also casts frustration and confusion on deals that Tesla struck with other brands, such as Ford, General Motors, and Volkswagen for their drivers to use Tesla chargers. The lack of public charging infrastructure is one of the contributing factors that people point to against buying an electric vehicle. [The Washington Post]
o The value of the Japanese yen dropped last Monday, where $1 equaled 160 yen. The yen has dramatically weakened over the past few years that it’s back to where it was in 1990. The yen has been under pressure, as the Bank of Japan kept interest rates low to encourage more inflation in its economy.
In addition to benefiting American tourists to Japan, a weak yen can benefit Japan’s exporters because it boosts the value of their sales made in US dollars when translated back to yen. However, a weak yen for Japan could cause Japan to overshoot its inflation targets. In addition, Japan imports nearly all of its energy, which is traded in dollars instead of yen. [Associated Press]
