BY HENRY ABBOTT
PART 1: Rocket Tiger King
I know you have already watched Tiger King. It’s OK. We all did.
A strange business tension runs through the series: For a just few weeks—when they’re about the size of house cats and like to snuggle—tigers are gold. People sit on the ground in big circles while tiny tigers roam from high-dollar customer to high-dollar customer. Tiger cubs are smuggled into fancy hotels in roller bags to cavort with gamblers. A party bus loaded with exotic cat babies can make a lot of money rolling up and down the Vegas strip.
So, breeding tigers makes solid business sense.
But, tigers live a long time. And they cost many thousands of dollars in food for every one of those years they’re alive. They grow less valuable but not less expensive. The show routinely suggests that some tiger keepers kill or “disappear” mature cats that have outlived their profitability.
It’s grotesque. (“Joe Exotic” is in prison for that and other charges.)
It’s also a portrait of one of my favorite questions: Is this a transaction or a relationship? The coked-up party-bus people who love the tiger when it’s a baby—do they love the tiger? Not enough to take care of it. Not enough to give it a good life. They want to party with it for a little while. That’s a transaction.
Transactions are fine, as far as they go.
But if you’re going to have a halfway decent life, you’ll need some relationships. If you’re lucky, you’ll have one with your employer, whether you’re a tiger, NBA fan, or NBA player.
You want to know that someone has your back, even when times are tough.
Rockets governor Tilman Fertitta has points to make about both savings and relationships. “If you save your money, and don’t do a lot of stupid things with it, then you’ll have the opportunity to do big things,” he says, in a recent interview on David Meltzer’s show The Playbook.
Fertitta has a four-million dollar car behind a velvet rope in front of one of his Houston hotels. It has a sign that says, “Tilman Fertitta’s Bugatti Chiron.” Just in case you were wondering. Moments before the quote above about savings, he discusses his private jet, yacht, and oversized office.
But he knows about thinking long term. In the same interview, Fertitta expresses certain values (“It’s nice to be important, it’s more important to be nice.”). He recognizes the importance of his employees: “I have 60,000 people out there that I sign a paycheck for and I couldn’t have done it without them. I’m only one person. … My gratitude is to all the people that helped me do this.”
He doesn’t sound like the kind of guy who would be forced to lay off 40,000 hotel, restaurant, and casino workers because of the coronavirus.
Alas, that’s exactly what he did, just 13 days after the NBA stopped playing and the U.S. business landscape changed. He says dark things like “we have to survive or there is no company.”
So soon? Pick any financial advice book off the shelf, it’ll tell you to have six months of expenses stashed away for a crisis.
Did this casino-owning Bugatti driver really not plan whatsoever for his payroll needs? Or does he have the money and simply prefer to spend it on other things?
Fertitta talks about successful people who fall apart. He talks about people who gamble a ton of money in his casinos, and then—he notices—have to sell off assets.
Those stories fit a trend, in Fertitta’s view: “People start drinking their own kool-aid, believing their own B.S.”
PART 2: Team Mitch
There’s a bit of a “holy crap” quality to Jane Mayer’s reporting on Senate Majority leader Mitch McConnell. If there was ever a relationship between the U.S. government and its citizens, here is the man who transacted that away. Whatever you think might be America’s most profound problem—a lack of preparedness for the coronavirus, millions without healthcare, a broken social safety net, politics designed to stoke racial tensions, foreign meddling in elections, secret dollars driving the government’s most essential decisions, the ruination of the environment, Fox News, the partisanship that prevents the Senate from honestly considering impeachment or most things—Mayer’s reporting establishes that McConnell is involved in all of it. Deals were cut. McConnell, we hear from several sources and see in several actions, believes that only three things matter in politics: Money, money, and money. It’s a must-read story.
NBA billionaires pop up throughout the story. One of the Celtics investors is a man named Jim Breyer, who is McConnell’s brother-in-law. Breyer and McConnell each married into the Chao family. Mayer writes:
As the Times has documented, McConnell and his in-laws have benefitted from unusual connections in Beijing. One of James Chao’s schoolmates was Jiang Zemin, who later became China’s President. According to the paper, James took a stake in a state-run company closely associated with Jiang. James and his daughter Angela, the chairman and C.E.O. of the family business, have also been on the boards of directors of some of China’s most powerful state-run businesses, including the Bank of China. Moreover, both Angela and her father have been on the board of a holding company that oversees China State Shipbuilding, which builds warships for the Chinese military. Angela Chao told the Times, “I’m an American,” and suggested that nobody would question the business “if I didn’t have a Chinese face.”
McConnell’s marriage also made him kin to some of the most influential businessmen in America. Angela Chao was married to the investment banker Bruce Wasserstein, who died in 2009, and she’s now married to Jim Breyer, a billionaire venture capitalist with huge financial interests in China. In 2016, Breyer joined the board of directors of Blackstone, giving McConnell a brother-in-law at a company that financially supports his campaigns, and that manages more than half a trillion dollars.
McConnell and his wife, transportation secretary Elaine Chao, have been subjected to this billboard attack over their wealth.
Blackstone isn’t only run by a board featuring one NBA billionaire in Breyer. It’s also the work home of another: 76ers investor David Blitzer. Blitzer’s boss there is Blackstone CEO Stephen Schwarzman, a legend of private equity who, himself, pops up with connections to so very many of the characters around McConnell, Trump, and their various scandals.
At a 2008 event called “New Yorkers for children,” Schwarzman was photographed “deep in conversation” with Jeffrey Epstein’s most essential associate, Ghislaine Maxwell (as pointed out by Matthew Schneier of New York magazine).
When the Kremlin started a fund to inspire overseas confidence in Russia as a place to invest, Schwarzman was one of the bold-faced names involved. (Another: Leon Black, founder of the Apollo Group, who has well-documented ties to Epstein. Two of Black’s Apollo co-founder—Anthony Ressler of the Hawks and Josh Harris of the 76ers, are co-founders in Apollo.)
The Chinese government invested billions in Schwarzman’s firm, which the Financial Times reports has been involved in more than $32 billion in transactions with China. Nonetheless Schwarzman has represented the Trump administration in talks with Beijing, even personally attending Trump’s meetings with China’s leader Xi Jinping.
Senator Susan Collins of Maine was among the Republicans who needed the most convincing to vote with McConnell on key issues from Brett Kavanaugh to impeachment. Public records show Schwarzman recently donated half a million dollars to a PAC that supports Collins’ re-election.
The way money flows in politics is a major focus of Mayer’s article—many with first-hand knowledge of McConnell’s practices, including the man who wrote a warm biography of McConnell, are displeased. Mayer writes McConnell’s own children are working against the effect of money in politics, and are especially focused on Blackstone.
McConnell also appears to have lost the political support of his three daughters. The youngest, Porter, is a progressive activist who is the campaign director for Take On Wall Street, a coalition of labor unions and nonprofit groups which advocates against the “predatory economic power” of “banks and billionaires.” One of its targets has been Stephen Schwarzman, the chairman and C.E.O. of the Blackstone Group, who, according to the Center for Responsive Politics, has, since 2016, donated nearly thirty million dollars to campaigns and super pacs aligned with McConnell. Last year, Take On Wall Street condemned Blackstone’s “detrimental behavior” and argued that the company’s campaign donations “cast a pall on candidates’ ethics.”
There was a time billionaires were constrained in donating so very much to elected officials. McConnell, however, drove the political process that resulted in the U.S. Supreme Court decision in the Citizens United case that changed all that, and unleashed the floodgates of dark money.
Amazingly, the critical supporter of McConnell’s Citizens United effort was the DeVos family that owns the Orlando Magic. Mayer writes:
Dull as campaign financing was, it was vitally important to his peers, and to democracy. Few members wanted to risk appearing corrupt, and so they were grateful to McConnell for fighting one reform after the next—while claiming that it was purely about defending the First Amendment. According to MacGillis, behind closed doors McConnell admitted to his Senate colleagues that undoing the reforms was “in the best interest of Republicans.” Armed with funding from such billionaire conservatives as the DeVos family, McConnell helped take the quest to kill restraints on spending all the way to the Supreme Court. In 2010, his side won: the Citizens United decision opened the way for corporations, big donors, and secretive nonprofits to pour unlimited and often untraceable cash into elections.
It feels like a lot of things are broken at the moment. (Like we are all baby tigers, hoping the owners of a cut-rate zoo will keep taking good care of us.)
Fellow Substacker Judd Legum delves into a fascinating issue. Right now, when America is transfixed by the risk of insufficient healthcare, hospitals are actually being shuttered and healthcare workers laid off, idled, or having their pay cut.
What in the name of free markets is going on? Legum’s must-read story discusses that maddening practice called “surprise billing,” where you visit the emergency room for things that you thought were covered by your insurance, but somehow end up with giant bills all the same. Typically an ER staffing service is at the heart of this—or more importantly, the private equity firms that have been purchasing ER staffing services. Legum writes that two staffing companies owned by private equity firms, Envision Healthcare and TeamHealth, have “a 30 percent share of the market for outsourced emergency room doctors.” One of them recently attracted negative media attention, and a familiar name comes up:
Ling Min, an emergency room doctor, was outspoken about the poor safety practice and shortages of protective gear at PeaceHealth St. Joseph Medical Center in Bellingham, Washington. Because of his candor, Min was fired by his employer, which is not the hospital but TeamHealth.
TeamHealth is a subsidiary of the Blackstone Group. The CEO of Blackstone, Stephen Schwarzman, is a fundraiser for Trump and a member of his inner circle. Some speculate that Min’s firing was a warning to other emergency room staff who lack adequate supplies and an effort to protect Trump.
PART 3: Joe Tsai’s generosity
At the time of Daryl Morey’s tweet about Hong Kong, Nets governor Joe Tsai did something that alarmed me: He took a political position that was very difficult to support with evidence, but very much from the playbook of the Chinese Communist Party.
“He really followed the lines of the official Chinese Communist Party position on this subject very closely,” says Steve Tsang, director of the University of London’s SOAS China Institute. Others, including Republican Senator Ben Sasse of Nebraska, in a Washington Post op-ed, have also noted how closely Tsai’s words hewed to Beijing’s.
Sasse’s column spells it out:
The message is inescapably clear: If you’re a U.S. company, the only acceptable position is the Chinese Communist Party’s position:
Let’s be clear: The NBA’s surrender is nothing new. American businesses have been silent for years as C-suite executives chased Chinese markets for higher profits. But, like Sun Tzu’s enemies, we’ve found ourselves encircled, playing by China’s rules and struggling to keep up.
Communists aren’t seizing businesses; they’re co-opting them. Just last week, Apple took HKmap.live off its App Store after Beijing complained that Hong Kong protesters were using it to organize. ESPN not only warned its employees to avoid talking about the Hong Kong protests but also described the pro-democracy protests as “anti-government.” Even worse, the network used a propaganda map of China that includes the South China Sea as Chinese territory, despite the fact that U.S. sailors are patrolling there to prevent that annexation. Clothing manufacturers, hotels and airlines have been forced to adopt the Chinese Communist Party’s official talking points about its supposed ownership of Tibet and Taiwan.
Freedom of speech is tough under autocratic regimes. Tsai’s wealth derives from Alibaba, a giant company that requires Beijing’s ongoing blessing to operate. If he were asked to say or do something on behalf of the Chinese government, it’s hard to imagine how he could refuse. Transactions that big can make relationships with the truth tricky.
Joe Tsai, the billionaire co-founder of Chinese ecommerce giant Alibaba, and his wife Clara Wu Tsai, have donated 2.6 million masks, 170,000 goggles and 2000 ventilators to New York — the US epicenter of the coronavirus pandemic.
The supplies were split into two shipments. The first arrived on Thursday at Newark Liberty International Airport, while the second arrived on Saturday at John F. Kennedy International Airport.
"We kept hearing cries for (personal protective equipment) from our community and wanted to help," Clara Tsai told CNN in an interview. The state will allocate the second shipment but "it's our intention to help the most underserved institutions."
The easiest thing ever to celebrate. Until Vivian Wang of The New York Times reports it comes at a time that Beijing has certain long-game global political goals. She writes:
“A top European diplomat warned that China’s aid to the continent was a mask for its geopolitical ambitions, while a Brazilian official suggested the pandemic was part of China’s plan to ‘dominate the world.’”
“China is trying to rewrite its role, leveraging its increasingly sophisticated global propaganda machine to cast itself as the munificent, responsible leader that triumphed where others have stumbled.”
“‘I think that the Chinese remain very fearful about what will happen when we finally all get on top of this virus, and there is going to be an investigation of how it started,’ said Bonnie Glaser, the director of the China Power Project at the Center for Strategic and International Studies in Washington. ‘They’re just trying to repair the damage that was done very early on to China’s reputation.’”
Tsai’s name is not in the Times story—quite possibly his generous, life-saving donation was about nothing but being big-hearted. But it’s fair to keep an eye on his political actions, and to wonder about his motivations.
People like Joe Tsai, Tilman Fertitta, and Mitch McConnell come pretty close to driving this bus. You hope they’re not going to forget about us tiger cubs when it pulls up to the next casino.
Be among the first to follow us on our brand-new Instagram @true.hoop!