New York State of Mind
On Tuesday evening, Major League Baseball staged its annual All-Star Game at Yankee Stadium in the Bronx. Once again the American League All-Stars beat their National League counterparts, winning 4-3 in 15 innings and securing home field for the American League’s representative in the Fall Classic. The pre-game show with All Stars from the past brought back many memories. It does seem strange that The House That Ruth Built will be replaced by a new Yankee Stadium right next to it for the start of next season, but the All-Star Game was a fitting curtain call for the ghosts of past seasons. Yankee Stadium has been the Yankees’ home for all of their 39 American League Pennants and 26 World Series Championships.
On Friday evening, Mary Claire and I joined our good friends Trish and Frank Cavuoto at Billy Joel’s farewell concert to Shea Stadium. The Mets will also have a new home next season, and while they have not been around New York as long as the Yankees, they have their loyal fans, many of whom were former Dodger and Giants fans prior to those teams deserting New York for California in the ’50s. Billy Joel at 59 struggled earlier in the set with the heat and humidity, which were stifling, and made it a classic New York City July evening. Some wet towels and a number of guest appearances helped him through. Tony Bennett joined him early and they did a wonderful duet of “New York State of Mind.” Roger Daltrey, of The Who, joined later with “My Generation” and finally Paul McCartney, just off a plane from London, joined Billy Joel on stage to close out the evening with “I Saw Her Standing There and Let It Be.”
Turning to the deal market, there has been one that I have followed with great interest but not commented on previously — the takeover battle between Electronic Arts (ERTS) and Take-Two Interactive Software, Inc. (TTWO). Several years ago during the options scandals, Strauss Zelnick and the Zelnick Media team very skillfully won control of Take-Two Interactive through a proxy fight. They proceeded to calm investors and refused to rush Grand Theft Auto IV to market, in spite of criticism at the time. As the release date of April 30th approached, Electronic Arts decided that they needed the Grand Theft Auto franchise to reinvigorate their growth. They made an initial offer of $26 per share, which was rebuffed, and then they slightly lowered it to $25.74. The Zelnick team, this time with shareholder support, resisted the offer, prior to the release of Grand Theft Auto IV, and clearly stated that they believed the offer undervalued the company, but that they would consider an increased offer after the release. During this time, both sides held to their positions. In its debut week, Grand Theft Auto IV did over $500M in sales! This one release has clearly helped the more sophisticated technology platforms from Microsoft (MSFT) and Sony (SNE) gain market share at Nintendo’s (NDTOY) expense.
While this battle appears to be winding its way through the courts as anti-trust issues are examined and dates for the offer to expire have been extended several times, it will be interesting to see if EA is willing to finally raise its offer to secure its target, in light of the fact that a competing offer has not materialized. I believe that EA’s bid will not carry the day without a higher offer for a company and franchise that have been very well managed for shareholders by the Zelnick team. During this same time, France’s Vivendi (VIV) acquired Activision and merged their operations into Activision-Blizzard (ATVID) to became the world’s largest videogame publisher. This was a position long held by EA, which brings some additional perspective to the value of Take-Two.
Are there some lessons in this long-running takeover battle for Steve Ballmer and his new partner, Carl Icahn, as they approach the August 1st Yahoo (YHOO) shareholder meeting and the vote to oust Yahoo’s current board? On Friday, Bill Miller, chairman of Legg Mason Capital Management, the large mutual fund operation which holds a 4.4% stake in Yahoo, announced his support for the current board. As I write this, it was just announced that Yahoo and Icahn have reached an agreement to expand the board and to allocate 3 seats to the Icahn team.
Another legend from the past, Greg Norman, aka The Shark, held our attention this weekend at the British Open being played at Royal Birkdale Golf Club. Norman led at the end of three rounds played under classic Links conditions, lots of wind and rain, with a +2. Could he hold on to become at 53 the oldest person to win a major? Norman had won the British Open previously in 1986 and 1993, and had recently married tennis legend Chris Evert. In the final round on Sunday he opened with 3 bogeys and found himself struggling for most of the day. Padraig Harrington, who won the Claret Jug in 2007, secured this year’s championship with an extraordinary eagle on the par 5, 17th hole.
The conditions, particularly the high winds, brought back fond memories of our trip to Bandon Dunes in early May. Many of you know that while I enjoy golf and play with great enthusiasm, the results are not often reflected in my handicap. Over time I have learned to be patient, if not more consistent. On Friday July 11th I was invited by Fred Goldberg, a longtime friend, to join him for a round of golf at The Franklin Hills Country Club in Franklin, Michigan. On the 14th hole, a 200 yard par 3, using a TaylorMade demo driver, I finally had my first hole-in-one. I trust that this alone will bring me back for many more rounds.