NY Yankees Pres. Randy Levine: Taking Stock (07/15)

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July 15 (Bloomberg) -- On today's "Taking Stock," Pimm Fox helps you to think like a professional investor and discover the next "big thing." (Source: Bloomberg)

We introduced you to a $21 billion biotechnology company that gets most of its money from just one thing.

And goldmansachs is reporting earnings tomorrow.

We will prepare you for the trading day ahead.

The dow jones industrial average at more than 19 points, continuing its record winning streak.

The s&p on the close, higher by two and the nasdaq was up more than seven.

For a closer look at individual companies making headlines today, let's go to my co-host, carol masser.

There is more drama over del.

T. rowe price said it will not support michael dell's buyout plan.

They say it does not truly reflect the value.

And the deal from at&t to buy leave wireless is seeking wired -- regulatory approval.

And green mountain coffee the the hard seen stocks advanced more than -- more than the lowest in two months.

Thanks, carol masser.

Happening tomorrow night, the new york city baseball all-star game.

The new york yankees will be represented by the close are, mariano rivera.

Joining me now is the president of the new york yankees.

He also serves as senior counsel for strauss, howard, and felt.

Thank you for making it.

I know you made it all away across town in the heat of new york city, 101 degrees.

And i mentioned your also a lawyer by trade.

You worked at the justice department.

How do you end up as the president of the new york yankees?

It is a long story, and a lot more than one hour show.

I've been in baseball for over two decades.

I started out as a lawyer.

I was george steinbrenner's lawyer.

I represented him as the council for the yankees for many years.

And i was hired in 1985 after the labor strike.

I was fortunate to negotiate the agreement that ended the labor strikes.

There have been no labor strikes in baseball for over 20 years.

And in 2000, the boss asked me to become president.

That is the short version.

Did you ever want to play baseball?

I was a basketball player in college.

I could not hit a curveball in baseball.

Crux the the right now, the break is four days rather than the old three days.

What are some of the trend of getting people into the stadium?

Is it still just all about winning?

In new york, the yankees are about tradition, history, and winning.

We are extraordinarily successful and have been in the playoffs 18 of the last 19 years.

We won two world championships and the american league series many times.

It is about winning.

The fans come to the stadium to see a winning team and that is what we tried to do.

And we have very appealing players.

You have how and hank right now.

How do you and brian cashen split the jobs?

What is your role?

We have ownership.

I am the president.

We have our chief operating officer.

The brain cashman is the general manager.

-- brian cashman is the general manager.

The the he comes to you to write the checks?

Toomey, and then eventually the steinbrenner family.

And then we have the entire business died, the television network, the -- the business side, the television network, and the regional networks.

We have partnerships with the dallas cowboys.

We are into selling premium products, food and merchandise.

We are very successful with the price we just got the new observatory.

And many other great venues.

Of course, we just invested along with manchester city in the soccer team.

We have interests in restaurants and it is a big sports entertainment company.

And can you give us an idea of what the process was like to get the financing, the $1.5 billion for the new yankees stadium.

It was hard.

It took about four years of approvals through hearings and it was financed through a very unique tax-exempt financing arrangement with the new york city edc.

Common misperception is that there is public money involved.

There is not.

The yankees were responsible for every dime that went into making that stadium could we just used our tax exempt status, which it left a slightly lower rate.

In today's market, there's not much difference.

It took a long time.

But anyone who has gone up to the stadium can see that it is second to none.

Also, you were deputy mayor to the city of new york in rudy guiliani's administration.

That is right.

What did you learn from that job?

In that job, like in many jobs, you learn to manage people.

How many in the yankee organization do you have to keep tabs on?

400 or 500 who work for the yankees.

And all of our companies in addition to that.

We have thousands of people.

What you learn is whenever you manage or leadership, whether for the city or a sports and entertainment company, it comes down to how to relate to people, how to get everybody to be as good as they can, make them better, and what comes with experience the most important thing, good judgment.

The experience of the gas network, tell us how that came to be and what the future is.

Begats network started about 12 or 13 years ago.

-- the yes network started about 12 or 13 years ago.

George steinbrenner had a vision of creating his own regional sports network.

We just used to sell our rights to various networks.

We thought we could do it as well as anybody and did not need a middleman.

We partnered with goldmansachs, a private equity group.

And we went out and got people who knew how to run a television network and it has been the number one rsn in the united states since its adoption.

-- in section.

We just sold 39% of it to newscorp about six months ago.

Why the idea to get into soccer?

What is the basis?

We think it is a good investment.

Manchester city is a terrific organization.

They are committed to winning.

They're one of the premier soccer teams in the world and they play in the premier league in england.

They came here and wanted a local partner.

This is our market.

Hank steinbrenner is a joint soccer fan.

He knows all about it.

This is our backyard.

And it has been a combination of them, knowing how to run a world-class soccer team.

I was on tv in great britain and they made a bet with me how many times -- i was not allowed to use the word soccer.

In about four minutes, i blew it.

But it is a combination of a great futbol team and as the -- us knowing sports.

Coming up, we have more which randy levine, the president of the new york named yankee spirit also coming of how microsoft tablet is struggling with consumers.

We will tell you what is next for the microsoft tablet.

? microsoft is cutting the price of its surface artie tablet by as much as 30%. why?

The company is struggling at the tries to get customers away from apple and google devices.

Let's go to emily chang for more.

While it's been awhile, microsoft is finally admitting that it has not met expectations.

Partners are saying they're not too happy with the performance by there.

We do know that according to ibc, microsoft sold 900,000 or so tablets in the first quarter of this year, compared to 90 million ipads.

-- 19 million ipads.

Microsoft not only has to build plugs, but also a following.

That will be difficult.

These price cuts might not even make a difference.

We do know that steve ballmer is pushing into hardware to bolster sales for global demand for software.

And its windows flagship software is slowing down in sales as well.

That is in part behind bars efforts to streamline the organization and split up into four different parts instead of multiple different parts.

Julie larsen-green has been put in charge of hardware the the.

-- of hardware.

She has a tough job ahead.

It has been plunging in the market, and that means it isn't that much more important for microsoft to have a tablet that is relevant.

What do you have coming from the up for us on "bloomberg west"? a great show, as always.

H-p has added three new board members today, bringing the board to 12 from nine.

A lot of people have been asking the question of why not someone younger and known for being more innovative?

We'll be taking a look at innovation at nickelodeon and animation technology.

You don't want to miss this one.

Thanks the the very much.

We look forward to during those stories as well as other top technology news.

"bloomberg west" at 6:00 p.m. and 3:00 p.m. as well as 8:00 p.m. and 11:00 p.m. the total value of the new york yankees, about $3.20 billion.

With me now is the president, randy levine.

$1.5 billion for the new stadium.

You got the new stadium.

I don't think they have been in a worse position since 1995. there is an all-star break needing to happen for the yankees, too.

Let's start off with derek g. year.

One of the greatest players ever.

Unfortunately, he broke his foot last year.

He rehabed , came back and played the game, the game we won.

He tweaked a quad muscle.

We played it safe and hopefully he will be back after the all- star break.

Alex rodriguez.

He is in rehab assignment.

I think he is in writing, pennsylvania tonight.

If all goes well, he will be with the team on july 22nd in texas.

Injuries, if you had to write down what 2013 was in the world of the yankees, would injuries top the list?

I think this is unprecedented, the amount of injuries we have had this year.

Basically, six of our top eight players starting lineup have been hurt for a long time frame.

Great players.

And i give the players who stepped in a lot of credit.

At the all-star break with this amount of sears the great players not playing at all, we are seven games up.

Hopefully, we will get some players back and get the cash to make some trades and then we can be strong to finish the run.

Make some trades, where would you like to go?

We are always trying to get better.

Any place that we can get better if we can come about as we try to do.

The trading deadline is at the end of this month.

We are out there trying to see what is available.

And to see what can make us better.

And in trying to make this yankees better, a lot of people look at the average age of the lineup.

How do you respond?

I think that great players are great players.

We also have a lot of good young players.

If you look at some of the players today who have recently come up, rob beacan naoto or greg gardner, some of our pitchers, robinson, the no vote.

We have a lot of good players.

We have great players who are still playing great.

They are getting a little older, but they're still playing great.

We have more with the yankees president on the business of baseball.

? this is "taking stock" on bloomberg.

With meat is randy levine, president of the new york yankees.

He advises on all sponsorship and stadium advertising.

I mean, the business of the yankees.

Also with me is joel stern, managing partner of stern, stuart, and creativeor the economic value performance measure.

You are an economist, but i've never seen you so animated when you're talking about the economy.

You come on with randy levine, and you can remember when you went to your first yankees game.

When was this?

I was about 13. i came down from frisco, n.y. and we sat in the bleachers for 25¢. and by the way, we were so far away that when the ball meets the that, you don't hear it right away.

And now you told me you are in section 114. it is right behind the yankee dugout.

And it is great to be there for batting practice.

And if you walk right down to the field, there cheater -- derrick jeter will sign your baseball for you.

Gretzky got the investments in soccer, the investment in -- you've got the investment in soccer, the investment in new stadium.

How you value something like this franchise?

I've got a real problem.

That is, i'm concerned about how the yankees right long-term contracts.

My area of economics with my specialty is the economics of incentive contracts.

And years ago, dave winfield signed his first 10-year contract.

At the end of five years, he could reopen it and have further negotiation.

You will not believe what he did that year.

He was off the charts.

He was always 30, 35 home runs, batting over 300. that was his normal year.

But we did not find out how good he really could be until the year he could open the contract.

And that year, it was like an mvp season.

As soon as he opened a contract and signed a new deal, and my son said to me, now we have the real dave winfield plane.

And i said, oh, no, he will revert back to playing the way he was before.

And when he did, george steinbrenner was so upset he traded him away.

The real question is, why you do it?

You want people to play the best they can every single year, not just in the year their contract is renewed.

But take a look at this year.

Canote is having a dave winfield year.

And it is because he has to renew.

Would you do about the long- term contracts?

There are part of the game.

The way baseball works, the first three years your under the control of the team as long as you are paid the minimum salary.

The next three years, then you worry too -- a free agent.

And that is kind of unfair because derekjeter had a 10-year contract and i think people would say he lived up to every dollar of it.

And if you look at surabhi kennelly, he's had a lot of good years.

-- robby canoli he has had of good -- a lot of good years.

We are going to have more with randy levine later on in the program.

Now for a seventh inning stretch from our conversation.

It's 26 past the hour.

Time for bloomberg to take you on the market.

All three major benchmark index is adding -- getting higher.

Let's just say that.

The s&p 500 finishing the day with a record close.

The u.s. bond market, the long bond at 3.59%. the 10-year at two 0.54%. -- 2.54 %. still ahead, a biotech company will give you details.

It ? for a look at today's market moving headlines, let's go to mark crumpton.

The acquittal of george zimmerman in the murder trial of 19 trayvon martin has sparked a new call for a federal civil- rights prosecutions.

President obama has said a jury has spoken.

The governor of florida tells bloomberg the justice system is doing its job.

We have a lot of checks and balances.

The federal government gets to make a decision whether they want to pursue something.

They will make that on their own.

But we have a system in our country and it works.

The mayor of london says he will submit plans to deal with the heathrow because it is too noisy baker build homes for as many as 200,000 people, hoping to ease a national housing shortage.

And new rallies in egypt.

Authorities are cracking down on the supporters of mohamed morsi and other islamists.

Tonight on "bottom line" i will be joined by tara moller of the new america foundation.

We will be speaking about edward snowden.

Hope to see you then.

Speaking of edward snowden, russian president vladimir putin has said he has welcomed a message from the president of the united states.

What is going on with edward snowden?

Greg he seems to be changing its tone a little bit by talking about such a gift.

He seems to be blaming the united states for bringing snowden to russia.

A track -- a slight change in rhetoric from mr.

Putin.

He came out against the u.s. saying they have pressured and spooked former countries -- other countries from accepting him.

You overlay that the with what he said the last time.

He said it snowed and want to stay in russia, he asked to stop harming u.s. interests.

Today, mr.

Putin talk a little bit about it.

And he said it seems that snowden has had a change of heart himself.

And overlaying all of this, we do have some fresh insights, some comments from some note in -- from snowden.

He spoke to greenwald just hours before this.

He said that snowden has the blueprints, the nsa document, a howl of how they actually do this.

And what greenwald said is that you essentially have this as a security policy, an insurance policy by snowden, that he can prove his case on what he needs asylum.

The crux in looking -- in looking at the conversation from vladimir putin, what is he trying to accomplish?

Just to embarrass the united states?

My read was not that.

My read was that putin had this problem that is not of his own making and that he wants to resolve it.

And that's now been just landed there and now he has this big headache and a could imperil relations with the u.s. president obama mentioned at the olympic games they will be having in sochi.

They are clearly hintz, pressure points on russia.

Can't he just sent him to venezuela, to one of those countries that wants to take him?

It you can find him a passport.

He does not have traveled documentation.

I don't know if you can offer someone trouble documentation before you can offer them asylum, or whether or not that is a false construct that they are putting out there.

The official line from russia is that he cannot travel until he has documents.

Thank you.

On two drug maker roche, seeking billions of dollars for the potential takeover of the often orphan drug maker, alexia and pharmaceuticals.

It may be less than ideal.

For more on what alexia does and where the industry is headed, let's bring in shannon pettypiece.

Also, meighen terrell, covering biotech and pharmaceuticals.

Good to have you both with us.

What is this idea of an orphan drug act is one drug of -- that makes a lot of money.

They have one product the the that treats the extremely rare diseases, but that one drug sells for $400,000 a year.

$400,000 a year is a lot.

Soliris is the name of the drug.

What is it designed to do?

Gregg's the the -- it is for two very rare diseases.

They actually call them all drug-rare diseases.

Fewer than 20,000 patients in the entire world have these diseases.

One is pnh.

And the second indication is ahus.

That was approved in 2011. the idea with this drug is that it not just treat those two diseases, but it is being tested for five additional indications also very rare.

These are conditions with very poor quality of life, so they can demand these high prices because if patients don't survive, they have organ damage.

It is for a very small, niche population.

Everybody in pharmaceuticals suddenly gone into making these drugs for rare populations because they realize they could charge a ton of money.

In this case, four hundred thousand dollars.

May be only have 1000 people in the u.s. to have it.

In the past, big pharmaceuticals scoffed at that.

Then they got a lot of pricing pressure on things like cholesterol and blood pressure drugs.

These orphan drugs are rare and there is only one treatment and it is a small population, so they can charge whatever they want.

That is the incentive for the drug makers to develop these.

They're going after the cholesterol and other big indications.

These incentives are things like increased regulatory or lager pat lives on these drugs.

That is something big pharmaceuticals want.

You do not have to prove that you are superior to five other cholesterol drugs out there.

I think pnh was tested in something like 17 patients in order to prove that it could really work.

Is this a big area for the pharmaceuticals?

It is one that a lot of companies identified as one that they want to get into.

Two years ago there was a $20 billion deal, the second-biggest on the books, gaining two rare disease drugs.

And then you have the geely ad in deal and the bristol- myers deal.

Gilead playpaid $11 billion for a drug.

It is almost the flip side, but equally valuable.

What happens to alexia?

We should make clear that what we reported on friday, that roche is seeking a deal and it may not happen.

Right now, no offer has necessarily been made.

Just that roche is seeking financing to potentially make an offer.

Who else would want this?

There could be a lot of potential pharmaceutical bidders.

But if you're a $20 billion company with one product the that is worth $1 billion, the that is a big valuation.

Analysts are connolly rolling their eyes -- kind of rolling their idol but that roche would be interested.

But they can charge what they want and that is the lower.

This company has tripled in the last three years.

Wall street has been watching.

It and you are going to continue to watch this, too.

Thank you very much, shannon pettypiece, as well as made terrell.

Coming up next, some final thoughts from the yankees' president, randy levine.

He is talking about big money.

What are the contracts holding for the future?

? more on the new york yankees and the economics of one of the world's most valuable sports franchises, $2.3 billion.

Randy levine, president of the new york minkes -- yankees.

You've always got to be aware of not always good things.

Performance enhancing drugs, that is in the headlines.

How do you as the head of an organization, how do you deal with that potential?

It is like any business.

There are always things you never see coming.

When it comes to performance enhancing drugs, baseball has taken the lead.

We have the toughest drug program in the world.

The commissioner has got a program where if you break the drug agreement, they will find out about it and you will be disciplined.

And the club's support it 100%. but it is like any other business.

You try and anticipate and have reserves and resources to compensate.

If you lose a great player, hopefully there is one in the minor leagues that can step in.

Like with all of the injuries this year.

If you have a player it go down, hopefully can get someone to step up and step in.

The same thing in business.

If you lose an opportunity, hopefully there is one right behind it that you can close and compensate for not getting the first opportunity.

But as a lawyer and someone with a legal background, are there certain rules and regulations?

Like, you cannot even have a conversation with alex rodriguez about the ongoing issue?

How is it as a person who is part of the organization?

But i can have a conversation on anything i the one two.

I choose not to have that conversation with him or anyone else presently being looked at by the commissioner's office because i want the investigation to be pure.

The player, or his counsel, should have those direct talks.

All the clubs have voted for that and designated the commissioner and his people to pursue that.

We stand by that.

We are going to the all-star break.

Are you going?

I'm not going.

I have some business meetings.

I have been too many all-star games.

Of course, it was many stadiums ago.

The last year of the old stadium.

The the -- people come here and i was walking around the city today.

There was traffic and that is why in moist.

You see people here from all over the world at the all-star game and baseball has done a great job promoting it.

Correct what is the chance we will see more of late -- what is the chance that we will see more major-league baseball games played outside the u.s.? i think there is a good chance.

Dara been games played in japan, exhibition games played in your pocket -- in china.

And baseball will be played in australia this year.

If we're looking for opportunities to grow this outside north america.

The i want to thank you for the your time.

Come up and with us at the stadium.

The the appreciate it.

Now for a look on what wall street has on the agenda for tomorrow, let's go to carol masser.

Tomorrow in the united states, the federal reserve will report its production data, which may have reason for the month of june.

We will also give you a production process -- consumer prices for june as well.

Earnings include members from goldmansachs, the coca-cola co., johnson and johnson, and yahoo!. thank you.

Coming up next commodity s&p 500 will close at a record.

The question then is, will they continue to rise?

? the s&p 500 closed at another record high today.

Citigroup earnings drive stocks higher.

Morning earnings are to be released, of course.

I'm joined by the the principle of stone temple -- stone capital partners.

He is the president and chief investment officer of ncis futures and management and my co-host, carol how masser.

Where is all the money going to come from to make stocks go higher?

From the fred -- the fed, actually.

Where does from here, i don't see going much higher.

Some of us are getting a bit nervous with how high it has gone.

John, are you getting nervous?

We are.

We feel the stock market has been in a 13-year secular sideways movement and we do not think it is over.

It is more likely the 1966-'82 time frame when you had a long bear market and rallies.

Does not mean you are just turning to cash?

No, we are heavily invested in things like commodities.

We feel that sense -- since the last decade, we're in a bull market in commodities as a result of tremendous growth in the developing world.

We're very commodity sieve -- manti intensive with a growing middle class.

-- commodity intensive with a growing middle class.

What are you going to do with your money?

I'm nervous about the market, but general performance.

Financials was a big issue today.

It where you go from two dollars trillion?

It is hard to move up from the same pace you get when you were out half a trillion.

There is growth, there is consolidation.

And where you are in the market makes a lot of difference.

But a lot of folks are saying if the fed is continuing with the easy money policy, why should you fight the fed?

It is not a question of fighting the fed, but figuring out where the most undervalued areas are and where we will have tailwind.

Many feel the developing world is the engine of growth for the glowing -- the global economy.

We want to be able to take advantage of that.

The developed world is very in debt and is an aging population and is very slow growth.

We want to be taking advantage of the growth in the developing world.

Yak, but we played great baseball -- yes, but we play great baseball.

[laughter] everybody wants a refrigerator and a washer, but if you invest in emerging markets at the beginning of the year, you are in the spin cycle right now.

We think oil is just trying to break out and -- oil in the u.s. or overseas?

But globally.

-- globally.

It is very much a global market.

Even with what is going on with the the globe, that measure play?

In the midwest, texas, is driving a lot of local economists -- economies.

Many people are paying off their loans.

It makes it difficult for banks to deploy money if they are paying money in and getting it back to them.

That housing play a role?

Yes, said the because you have a stagnant building for a long time.

Although you have large rental properties.

Compared to the european markets, more people rent than they do own . and mixtec is for naught -- for a while.

How are you on housing?

Not so much on housing.

It is an old play in your view?

Yes.

You regret that, though, that you did not play housing.

Correct to a certain extent, but there are plenty of other opportunities out there.

Oil is a big commodity.

Most of the major fields have been found globally.

You have aging fields that are losing over 4% of their annual production.

The oil that has been found is not -- it is very high cost.

You lose production very quickly.

The title will formations, they lose in the first year about 69% of their initial production.

We've got to leave it there.

I want to thank you very much.

And thanks also, carol masser.

It is 56 past the hour.

It is time for our news segment called on the markets.

The s&p 500 hit a record close today, 1680 two.

The index climbing eight consecutive trading days, the longest stretch since late january.

Copper fell today after china's economic reported growth slowed for the ninth time out of 10 quarters.

The biggest consumer of the metal.

The the -- and my guest tomorrow, we will talk to the vice chair of the san francisco federal reserve.

?

This text has been automatically generated. It may not be 100% accurate.

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