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Forbes Daily: Corporate ‘House Of Cards’

Good morning,

We have our winners. The Philadelphia Eagles and Kansas City Chiefs prevailed on Sunday and will now duke it out in Arizona at Super Bowl LVII on February 12. As a Philadelphian, I am shamelessly inserting an Eagles plug here in hopes of a Super Bowl win that will electrify the city à la 2018.

As yesterday’s games may go to show, the only thing better than an elite quarterback? An inexpensive elite quarterback. Three of the four teams in Sunday’s conference championship games benefit from the relatively low salaries of their signal callers, with only one of the starting quarterbacks, Patrick Mahomes, making above the $12.8 million league median for that position.

At heart of the trend is that quarterbacks who show promise early remain undervalued, allowing their teams to invest money into other positions. But if you caught even one of the plays on the field yesterday, you know that doesn’t mean quarterbacks aren’t worth the mega-million fortunes they can eventually earn.

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BREAKING NEWS

The Memphis Police Department disbanded its specialized Scorpion unit on Saturday, after five officers from the group were charged with murder for beating Tyre Nichols during a traffic stop. Shocking body camera video and surveillance footage of the encounter were released Friday night, sparking protests across the country. (Photo: AFP via Getty Images).

With the Philadelphia Eagles and Kansas City Chiefs set to face off at the Super Bowl in a couple weeks, sportsbooks are projecting a closely matched contest between the two teams. Here are the betting odds.

BUSINESS + FINANCE

American Express CEO Stephen Squeri said the U.S.’ second-largest credit card company isn’t “seeing recessionary signals,” highlighting its wealthier consumer base’s resilience even as the broader U.S. economy teeters on recession. American Express stock rose as much as 12% Friday after posting strong quarterly earnings that still largely slipped below analyst expectations.

Twitter owner Elon Musk says he met with top House leaders on both sides of the aisle to talk about ensuring the social media platform is “fair to both parties” after Musk took on hot water for endorsing Republicans during the 2022 midterm elections.

WEALTH + ENTREPRENEURSHIP

Global investment banks have cashed in on the Adani Group’s voracious appetite for debt. Now their client is accused of pulling off “the largest con in corporate history.” Here’s a look inside the conglomerate’s “house of cards” built by Gautam Adani, who, until these allegations of fraud and stock market manipulation surfaced, clocked in as the world’s third-richest man.

On Forbes' Africa's Billionaires 2023 list, the continent’s 19 billionaires are worth an estimated $81.5 billion—down from the $84.9 billion a year ago, despite having added one more billionaire to the ranks. More: An Enron-like accounting scandal at South Africa-based furniture group Steinhoff International wiped out billions of retail tycoon Christo Wiese’s fortune. After a four-year battle, he’s back as one of Africa’s richest, and at peace with the world.

TECH + INNOVATION

Forbes found that Alphabet laid off more than 12,000 employees, giving Google workers a base of 16 weeks of severance. Workers in its other units, like its health sciences arm Verily and the driverless car company Waymo, got less.

RAYGUN, the private Midwestern novelty company that plasters memes on T-shirts, mugs, posters and more, is looking to further build on its record $7.6 million sales in 2022 by partnering with satirical media company The Onion. Forbes looks at how the collaboration brings “one of the best writers’ rooms around” to RAYGUN’s products, while the retailer provides The Onion with instant marketing.

SPORTS + ENTERTAINMENT

Jim Dolan, owner of the Knicks, the Rangers and Madison Square Garden, is threatening to turn off the tap on alcohol at his indoor Manhattan arena as he goes head-to-head with the New York State Liquor Authority. The state agency is reportedly investigating him for allegedly using facial recognition technology to ban lawyers who are suing him from entering the venue. But doing so would likely only hurt his own holdings—potentially to the tune of more than $6 million annually.

Daily Cover Story

Looking For A Tax Break? Buy Your Alma Mater Its Next Football Star

TOPLINE In the chaotic world of college sports’ Name, Image and Likeness, some booster groups that pay student-athletes to attend their favorite schools have claimed to be charitable organizations.

It’s a far cry from the under-the-radar recruitment deals that amounted to an underground market for raw athletic talent, which fizzled out after the 2021 Supreme Court ruling against the NCAA’s prohibition against athletes profiting from their NIL. Still, in college sports, the process for how money flows to those most responsible for making it remains anything but straightforward. Cue these IRS-approved, tax-exempt booster groups, where donors can make “charitable” gifts that, after a bit of transmogrification, are every bit as tax deductible as a check sent to St. Jude.

Some of these collectives are loosely affiliated with institutions like Notre Dame, Clemson, the University of Iowa, the University of Texas, and we’re not talking chump change. Deals with young athletes are worth millions of dollars, in some cases hitting eight-figure territory. The catch is contributions can’t go directly to players, so a loophole has emerged where donations to a nonprofit collective are said to be a gift to a charitable organization, while the money is earmarked for pay players to serve as fundraisers—at least on paper, that is.

The question of legitimacy for nonprofit collectives has so far been unanswered, too. While the IRS has issued boilerplate approvals, it will be years until any of the booster groups are required to open their books for the final exam.

WHY IT MATTERS The multi-billion dollar college athletics industry is at a turning point, Forbes reporter Brandon Kochkodin says. Throughout the sector’s history, those who actually have done the work have seen little in the way of a reward. That changed with the decision in the NCAA v. Alston case, though rules for how players can be paid remain murky, making NIL “the Wild West.”

“The rules are being made up on the fly and boundaries are being pushed so far that even Senators are paying attention,” Kochkodin says. “Perhaps the most pressing question is why, what is essentially pay for athletes, should be counted as a tax exempt donation.”

MORE College Sports’ ‘King Of NIL’ Is Racking Up Endorsement Deals At A Small HBCU

FACTS AND COMMENTS

$604,800: Four bidders at Sotheby’s drove up the price of a purple velvet gown that belonged to Princess Diana, making it the most valuable of the late royal’s gowns ever sold at auction.

$550 million: The outstanding loans Bed Bath & Beyond had in November with JPMorgan Chase, which just informed the struggling retailer that it defaulted on its credit line.

“Chaos and catastrophe”: President Joe Biden took aim at GOP fiscal policies in his first economic speech of 2023.

STRATEGY AND SUCCESS

As we hear more about incidents of elected officials inappropriately handling classified government documents, corporate leaders who similarly have access to highly confidential and proprietary company information should pay close attention to avoid legal issues for their firms—or themselves. Here’s why organizational leaders need not only to be careful with the handling of confidential data they regularly work with, like strategic plans and customer lists, but also with the disposition of that data when they leave their position.

Video

Exclusive: Inside Sam Bankman-Fried's Hellish Week In A Caribbean Prison

QUIZ

Where in Asia is U.S. gaming giant Las Vegas Sands investing $6.8 billion to capitalize on a gaming boom across the region?

A. Macau and Singapore

B. Japan and the Philippines

C. South Korea and China

D. Malaysia

Check if you got it right here.

ACROSS THE NEWSROOM

  • Don’t miss the Forbes Careers email newsletter, authored by senior editor Jena McGregor, for the news that will help you work smarter and get ahead.

BEYOND THE NEWSROOM

  • Coming up: The 2023 Forbes 30/50 Summit taking place in Abu Dhabi, United Arab Emirates on March 7-10. Register here.
  • Forbes’ fifth annual AI 50 list is seeking nominations from now through February 10, 2023.
  • The Midas List, Forbes’ data-driven ranking of the top 100 private tech investors in the world, is back for a 22nd year. Submissions are open through February 14.

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