UNRESTRAINED GLOBALIZATION WILL DEFEAT THE AMERICAN ATHLETE

By Diane M. Grassi

”I’m surprised at the number of elite athletes from around the world who are in the NBA as of 2006.” National Basketball Association (NBA) Commissioner David Stern made this comment when asked about the future of the NBA. For the 2006-2007 NBA season, approximately 100 of the NBA’s 450 players will be from countries outside of the United States. But David Stern’s surprise is rather disingenuous, as he readily admits the NBA’s commitments to investing in Europe, South America, Africa and China, to name a few, over the past decade.

“The China market is our most important and largest market outside the United States. China is clearly priority No. 1,” Stern said, as he was interviewed from Guangzhou, China in early August 2006, where the U.S. National Basketball Team was playing in exhibition games prior to the World Championships in Japan. He went on to say that the NBA’s business holdings in China are growing by 30% each year.

Stern hopes to double the NBA’s staff from 50 to 100 at its three China offices in time for the Beijing Olympics in 2008. Stern has structured a marketing engine in China, ready to sell more NBA merchandise and apparel, expanding its online presence, offering live streaming of NBA games online and hopes to double its broadcasts of NBA games to 50 in the next few years. Stern has set his sights on the NBA playing regular season games in China as well.

Although NBA.com/China was launched by the NBA in November 2002 and has had limited TV broadcasts since 1991, it currently has programming on 24 television outlets including on national TV station China Central Television, which broadcasts NBA games for free. NBA merchandise is sold in over 20,000 retail outlets throughout China and in 2005-2006 the NBA signed on with five new Chinese marketing partners. Recruitment of new talent cannot be overlooked either, with the NBA’s appetite to diversify its player personnel. But one can only wonder how much benefit NBA players will realize from such investments.

But this is only part of the story, as there are many problems which still remain such as the rampant counterfeiting of NBA merchandise in China, which exists in every sector of marketed goods there, costing U.S. firms billions of dollars in lost revenues each year. In addition, censorship of broadcasts and limited internet access by the Chinese people is controlled by the Communist Chinese Party. China’s persistent human rights and labor abuses are never discussed in a perfect NBA world either and why should they be? After all, the U.S. government pays but lip service to a trade partner and major creditor in China, which the U.S. economy is virtually dependent upon.

Prior to Stern’s recent visit to China, back in the U.S. in June 2006, United States Olympic Committee (USOC) Chairman, Peter Ueberroth, signed a bilateral agreement with the China Olympic Committee. Titled the Memorandum of Intentions for Sport Exchanges Between the Chinese Olympic Committee and the United States Olympic Committee, it is designed to promote friendship and understanding between the two nations. According to Ueberroth, “We clearly need to reach out to every nation, no exception, and envelop friendship through sport,” supposedly to give other countries a different perception of Americans.

But the agreement in friendship goes far beyond a mere symbolic gesture, just two years before the 2008 Beijing Olympics. It will provide the Chinese with the U.S. sharing of its expertise in coaching, its sports facilities, inroads in science and medicine, management and marketing, among other things. It is arguable about how much the U.S will gain from China’s implied reciprocity.

What is clear, is that China looks at sports far differently than the U.S. does. Sports are not just games or a business or sheer entertainment for the Chinese. Elite athletes in China are trained to project national ambition. China’s main intent is not to develop NBA stars but for their athletes to be representative of the nation and that international competition is far more important than lending a few players to the NBA. But yet the Chinese are also smart in business and will suffer allowing a little entertainment for its people, on its own terms of course, while at the same time benefiting from millions of dollars in American business ventures.

And while the Chinese have different cultural objectives than the western world, other countries are about the individual. The NBA, the National Collegiate Athletic Association, (NCAA) in addition to Major League Baseball (MLB) and the National Football League, (NFL) are about packaging those individuals in order to market the whole of their sports. And as all of the aforementioned are businesses, they look at the bottom line, even at the sake of opportunities for American athletes.

While the NBA has been successful in creating a myth that European players have better fundamental skills than American players, yet are inferior overall to the American NBA player, it all comes down to economics. Since the U.S. uses the NCAA primarily as its developmental league, and Europeans can sign professional contracts at age 16, the NBA signs European players and waits now until they are 19 years of age and drafts them directly into the NBA. But the NBA does not get the full scope of the player’s skills, as they remain secluded in another country during development. The NBA however takes a gamble and figures that buying out a less than lucrative contract for a potential superstar is a better bet than having patience with an American who may have had a marginal NCAA career and may demand an overpriced contract.

Meanwhile, NCAA Basketball is rabidly recruiting those foreign players who do not sign professional contracts abroad, or those who may have fraudulently made their way into the American collegiate system, which has been fully documented. It includes players from as far away as Australia, as in Andrew Bogut, the first overall NBA draft pick of 2005. Players are also brought in from Argentina, Brazil, Africa, all of Europe, Russia and the West Indies, among others. However, the signing of such foreign students means less opportunity for American students, and some of whom who just wish to finance an education while at the same time doing so by playing basketball.

Yet, the majority of Europeans playing college basketball are not NBA material. And instead of playing in their home countries for a minimal salary they instead get the good fortune of a free college education. According to Andrew Bogut, “Once you’re here, you’re kind of taken care of. A job isn’t necessary if you’re on a full scholarship.” “With a free education, three meals a day and a nice dormitory, rather than complain about college cafeteria food, they think its Morton’s Steakhouse,” says Fran Fraschilla, former St. John’s University and University of New Mexico basketball coach, speaking of the foreign student athletes.

Think its only basketball where Americans are losing ground? Aquatic athletes are coming to U.S. college campuses in droves. Since the modern Olympic Games, the U.S. has dominated in international aquatic competition. Australia has recently closed the gap. And the women’s German swim team no longer dominates as it once did with the use of anabolic steroids, which existed in the pre-testing era when there was an East German team. China’s use of steroids was also deterred upon testing positive in past Olympics with several of its women swimmers.

But now athletes are welcomed with opened arms to experience the best training in the world, only to go home and compete against the U.S. on the world’s stage. Countries such as Germany, Malaysia, Finland, Sweden, Hungary, Italy, Estonia, Trinidad and Tobago, Brazil, Great Britain, Australia, Canada, Hungary, Kazakstan and of course China, among many other countries, send their athletes to enroll in U.S. schools with the best swimming and diving programs. Such schools offer excellent academics as well including the University of California at Los Angeles, (UCLA) the University of California at Berkeley, the University of Southern California, the University of Minnesota, the University of Florida and the University of Arizona.

And we cannot forget about the recent flood of professional tennis players and professional golfers making homes in the U.S. while seeking out U.S. trainers and coaches in order to increase their winning potential on the world circuits. Primarily among them are Russian women tennis players and Korean women golfers.

And while individual professional athletes are received differently than professional teams or college athletes in the U.S., the sports industry including the USOC wishes to change its image from that of competitor to that of being inclusive and politically correct. Should that come at the expense of funding Americans preparing for the Olympics or deprives American students from college educations all in the name of globalism, so be it. Yet, it will eventually defeat the U.S. athlete and impact morale and America’s sense of competition.

And finally, the idea that white American players are not equipped to play in the NBA but white European players are, including those who are not professionals and go through the same NCAA experience, is but a fallacy and has been perpetuated for far too long. The few exceptions to this myth are the newly drafted Adam Morrison and J.J. Reddick, and past players John Stockton, Christian Laettner, and Chris Mullin along with the great Larry Bird. It is simply wrong. Were Europeans the best players, it might be more acceptable.

But the increase of insourcing foreign players in the U.S. will become the new norm and the best athletes now, who are predominantly African Americans, will be sacrificed. As aptly put by Kenny Smith, former NBA world champion and now TNT studio analyst for NBA games, “Something deeper and more complex than “poor fundamentals” is at play here and young NBA players had better check it out.”

The USOC, the NBA, the NCAA, MLB, including the NFL, simply cannot continue to dilute the American pool of athletes while at the same time expect Americans to dominate in their respective sports. Such hypocrisy is no better exhibited than by the NBA and the USOC, fearful that America no longer dominates basketball internationally as it once did, while the NBA in 2006 devotes 25% of its spots to foreign players.

It remains unfair and unrealistic for those Americans who aspire in the future to become college, Olympic or professional athletes and eventual champions. For without America’s resources and its full support they will simply lose.

Copyright ©2006 Diane M. Grassi
Contact: dgrassi@cox.net

U.S. Power Grid Unreliability Enabled By Legislation

By Diane M. Grassi


For the past 70 years, federal laws have played a vital and necessary role in the operation, production, distribution and protection of the electrical power grid throughout the United States. Federal laws in concert with state regulations have ensured that the power grid not be subject to criminal behavior and market manipulation, for most of that time. However, over the past several years, the fragility of the power grid’s infrastructure combined with mandated deregulation of the utilities industry has seen less necessary routine maintenance, upgrades in technology as well as necessary investment in research and development.

While it seems that most everyone believes that the power grid woes culminated with the rolling blackouts of 2000-2001 in California, the initial concerns with major outages go back to November 1965 when power went out from New York City, New York state, all of New England and parts of Pennsylvania. That outage however was not caused by insufficient capacity, but a surplus of capacity which the New York grid was unable to accept from the interconnected New England grid.

The excess supply during the ‘65 blackout was too much of a surge for most of the utilities whose power went out for over 30 million people. It was not a supply problem but insufficient line capacity. In 2003, 50 million customers were without power for almost the entire Northeast. Again, it was not lack of supply but a downed power generator near Cleveland, Ohio combined with a downed line from lack of tree trimming which failed to provide full capacity for the areas’ needs; a domino effect of failures, human error and lack of compatibility of computer programs. In addition, some competing generating companies did not share data and there was a failure by the Ohio utility to be able to interpret computer data they did receive outside of its local geographic region.

In 1968, the North American Electric Reliability Council (NERC) was formed by the federal government in response to the 1965 blackout to serve as a watchdog group for monitoring operational compliance of the national electric grid. In 1972, the Electric Reliability Institute (EPRI) was formed to help in delivering high-value technological inroads through research and development. Yet, it has been recently and incorrectly reported that the NERC was just recently formed to comply with the 2005 Energy Policy Act.

The “energy crisis” in California has now been well-documented that there was not a shortage of power but a manipulation of the electricity market which was to blame. However, the federal government must bear some of that blame due to the exemption of federal statutes which holding companies such as Enron were able to overcome in its blind greed.

Once again, the heat wave of the summer of 2006 has resurrected the age-old question of power production in the U.S. But equally as revealing is the non-disclosure of the basis for the primary problems with the grid’s operational capacity. While transmission lines were added since 1965 and nuclear reactors proliferated in the U.S. primarily in the 1970’s as national growth ensued, little has been done to ensure the reliability of the local infrastructure of the power grid. Its accountability has been based upon a good faith measure. And most consumers have no idea that the divestiture of their utility companies nationwide contributed to their now captivity by several holding companies in many cases owning their once reliable power provider.

While the 2005 Energy Policy Act, has been rolled out as a cure-all to ensure compliance with reliability standards and a preventative to market manipulation, it is far from what it has been touted to be, with some of its provisions given a grace period of 18 months since its passage August 8, 2005. Yet, it is necessary to grasp a basic understanding of how the system provides power to your home in order appreciate the grid’s remaining unaddressed flaws.

The basic structure consists of a control center which monitors the utility’s generating plants, transmission and subtransmission systems, distribution systems and customer loads. With 140 control centers and 3,000 utilities combined over essentially two power grids one east and one west as Texas has its own it is an overwhelming task. The interconnectivity and delivery of power in many cases is incompatible with widely varying levels of equipment, data systems and personnel training.

It is the secondary system which supplies the distribution of electricity to consumers where most of the failures take place and require time to repair. The network of substations feeding electricity to neighborhoods via feeders which flow to transformers is often where supposed problems arise during local outages. And then there is the inadequacy of often aged equipment, such as in New York City, which has cables, feeders and circuit breakers anywhere from 30 -70 years old.

But the source of bottlenecks stem from a provider inflicted problem relative to the 1992 Energy Policy Act which changed the way in which electricity was sold to local consumers for the first time. Utility companies were allowed to install their own plants and sought customers anywhere in the country and not necessarily in the same geographic region that historically provided the grid with its reliability.

Energy brokers entered the picture and utilized the open market to buy and sell power. And thus the market’s restructuring had a direct correlation between the industry buying electricity from plants hundreds of miles away putting unprecedented burdens upon the transmission system and raising the likelihood of blackouts. The grid, as it was established, was never designed to absorb the transmission of high voltage across the country without the comparable and upgraded systems in place.

Although Enron has become the poster child for manipulating the power market, the industry and the federal government must be held responsible for even further erosion of federal regulations and of the industry as now provided by the 2005 Energy Policy Act. It provides for Federal Energy Regulatory Commission (FERC) to appoint the NERC to now be certified as a regulatory agency as opposed to its former role as voluntary watchdog. However, the Security Exchange Commission (SEC) which always was responsible for signing-off on mergers and takeovers in the utility industry will now relegate its role to the FERC. So instead of more oversight, there in fact will be less for mergers of holding company acquisitions within the electricity delivery system.

The other landmark change in the 2005 Energy Policy Act is the abolition of the Public Utility Holding Company Act (PUHCA) of 1935. Specifically, it repeals restrictions on ownership of electric and gas utilities. Not only will the SEC no longer have a role in the power industry, but repeal of PUHCA will no longer limit the variety of businesses that may be owned by holding companies purchasing utilities. Formerly, holdings of a company were required to be specific to the operation of a utility. And further, requiring that a holding company’s utility operations be primarily located in a single or contiguous state has also been repealed. Additionally, any foreign country or foreign government is open to buy U.S. utilities and no longer subject to SEC OR FERC review.

The reason for the restriction of PUHCA for a company to limit its holdings was paramount in ensuring the integrity of the power grid for the public good. The idea was preventative in disallowing a company owner from taking profits from the power company to be used for maintenance, staff, or upgrades and then invest them in another far more risky business, with less of a rate of return. The customers lose and there is no guarantee of service.

What has already become evident in the past several months since the 2005 Energy Policy Act was revised is the direct foreign investment of utilities. Many have been former bankrupt utilities such as Montana Power which Northwestern Power Co. now owns, providing service to Montana, Nebraska and South Dakota. It accepted a $2.2. billion bid in August 2006 by Australia’s Babcock & Brown Infrastructure after rejecting several domestic public power companies’ offers.

Similarly, Macquerie Infrastructure & Diversified Utility & Energy Trust of Australia plan to purchase Duquesne Light Holdings based in Pittsburgh, PA for $2.36 billion. National Grid, a London-based holding company received approval in July 2006 to purchase KeySpan Energy. This is National Grid’s fifth U.S utility purchase. KeySpan provides service to New York state customers outside of New York City. National Grid will provide $7.3 billion for its purchase of KeySpan. It previously was approved to purchase four other utilities in the upstate NY area and Massachusetts. All buyouts supposedly will be reviewed by the Committee For Foreign Investments in the U.S. (CFIUS) and must be reviewed by state Public Service Commissions.

In light of the changes in the law, the volatility of the transmission lines and local upkeep of the local power infrastructures compounded by the distancing of consumer disclosure both figuratively and literally, will put more pressure upon the state Public Service Commissions to seek a larger and more vigilant role in pursuing utility accountability. While on paper it may appear that the NERC will have the ability to penalize companies who do not comply with standards, it will be overwhelmed given its history of voluntary oversight. And many in the industry believe that the FERC will be forced to cherry pick and manage oversight of fewer mergers and acquisitions than were done in the past.

And while consumers should always make an effort to conserve energy, the systemic problems of this aging electrical grid are far more about balance sheets and politics than about adjusting the thermostat. Get out the candles and make a wish.

Copyright ©2006 Diane M. Grassi
Contact: dgrassi@cox.net