In The Headlines

ESPN Bets that Drone Race is Next Big Thing in Sports

Is drone racing the next NASCAR? ESPN announced a deal this week that will bring competitive drone racing to the network starting in August in hopes of tapping into the sport’s small but growing following. Drones, which began as a niche market, have grown in popularity with consumers and sports enthusiasts. The Federal Aviation Administration (FAA) forecasts that hobbyist and commercial drone purchase will rise from 2.5 million in 2016 to 7 million in 2020.

“Drone racing is currently seeing an unprecedented rise in popularity and is poised to become the next behemoth racing sport alongside NASCAR and Formula 1,” the company said in a statement. The first televised event, the 2016 National Drone Racing Championships, will take place on Governors Island in New York City, from August 5-7.
For the uninitiated, drone racing is exactly what it sounds like. As in automotive racing, teams construct their own vehicles within a certain set of specifications–in this case multi-propeller unmanned aerial vehicles–and then pilot them around a course. Sci-fi goggles project live video from the drone directly to drone pilots, giving them a “drone’s eye view” while racing.

ESPN sees potential in this kind of immersive sports medium. Viewers, the network says, will be able to follow the action on traditional screens, but will also be able to tap into that first-person “drone’s eye view,” which they can transmit to their screens or even to their own goggles, giving them the sensation of flying along with the aircraft.

As an organized sport, drone racing is indeed taking off. A number of leagues have sprouted around the globe over the past few years, each vying to become the world’s premier drone racing organization. Last month, the World Drone Prix—organized by the World Organization of Racing Drones and Sheikh Hamdan, crown prince of Dubai—handed out roughly $1 million in prizes, including a $250,000 grand prize to a 15-year-old British pilot who bested 100 other competitors at a two-day event in Dubai.

That is not exactly NASCAR money or Formula 1 prestige, but for ESPN the deal offers an opportunity to get in on the ground floor of a growing new competitive sport, as well as to influence which emerging drone racing league becomes the sport’s pre-eminent global organization. It is also an opportunity to engage new viewers–something ESPN needs. The company has lost millions of subscribers over the past couple of years, creating headaches for parent company Disney.

For its televised events, ESPN has teamed with the International Drone Racing Association, marking the first time such an organization has struck a multi-year television distribution deal with a major sports broadcaster. ESPN will stream the 2016 National Drone Racing Championships and the 2016 World Racing Championships—slated for October in Hawaii—live on ESPN 3, then package each competition into a one-hour television special that will air following each event.

Citations

1. http://for.tn/22ACJlJ – Fortune
2. http://cnb.cx/23uGzCF – CNBC

TAL Education Makes the Grade with Online Tutoring

Parents start them young at Chinese billionaire Zhang Bangxin’s schools. Toddlers, some no older than 2, squirm their way through 90- to 120-minute classes that costs their parents about $20 an hour (the average Chinese manufacturing worker, by comparison, earns around $2 an hour). Some of these students will stick with Zhang’s tutors through high school, boning up on history, math, Chinese, English, and more.

China’s parents have a reputation for striving to give their children any advantage in the intensely competitive scramble for entry into top schools and universities. Pressure on children to succeed has transformed education into a big business, with listed education providers proving fairly immune to China’s slowing growth and volatile markets, as parental anxiety about their children’s career prospects ensures a steady flow of students into the classroom.

Zhang’s TAL Education Group is one of the biggest players in Chinese private education. Revenues from his 301 schools in mainland China have climbed nearly 300% in four years to $434 million. The company’s New York-listed stock is up 200% since its October 2010 IPO, lifting the press-shy Zhang, TAL’s 36-year-old chief executive, into the billionaire ranks with a $1.5 billion fortune.

Zhang’s path to this 10-figure net worth had an inauspicious beginning. After graduating from Sichuan University in 2001, Zhang worked seven part-time jobs—including tutoring—to keep afloat as a cash-strapped life sciences PhD student at Peking University. The tutoring was so successful that Zhang decided to start a full-time business in 2003. Four years later, he dropped out of his PhD program to focus on his new company, TAL Education Group.

Now, less than 10 years later, Zhang’s company has become one of the top five tutoring firms in China’s fragmented $100 billion private education market, reaching 1.5 million Chinese students in 24 Chinese cities. While the company is still focused on physical expansion (it is looking to enter at least two new cities each year), its commitment to online education has allowed it to maintain its position in the Chinese market and grow, according to a Deloitte report.

TAL first began offering online courses in January 2010, and launched live online courses in 2012. The company launched a new “flipped classroom” experience in March 2015, allowing students to interact with their classes instead of just watching a recording. TAL also recently launched a mobile app that enables students to communicate with tutors at any time of day. “We are constantly working to expand our online offerings,” Zhang wrote in a recent company filing. TAL claims that its online offerings account for nearly one-third of China’s online tutoring. While online courses only made up 3.6% of TAL’s total net revenue in 2015, online revenue has increased more than 1,000% since 2011.

In addition to improving its own technology, TAL has focused on acquisitions and strategic investments to expand its digital footprint. In September, TAL acquired Firstleap Education, a Chinese company that provides online and offline tutoring for children between the ages of two and 15. A month later, TAL invested $30 million in Phoenix E-Learning, which operates China’s largest online education platform. And in January, TAL announced a strategic investment in education firm Knewton, with plans to integrate the adaptive learning leader’s technology into TAL’s own online education platform. “We want to be right at the cusp of where education meets technology,” Zhang told investors in July.

Citations

1. http://onforb.es/1MyxS2D – Forbes
2. http://bit.ly/1WweSUD – Barron’s

The Good News Is . . .

• U.S. consumer prices increased less than expected in March and underlying inflation slowed, suggesting the Federal Reserve will remain cautious about raising interest rates this year. The Labor Department said its Consumer Price Index (CPI) gained 0.1% last month as a rebound in gasoline prices was partly offset by a drop in the cost of food. There were also slowdowns in medical care and housing costs.

• Delta Airlines, Inc., reported earnings of $1.32 per share, an increase of 193.3% over year-earlier earnings of $0.45 per share. The firm’s earnings topped the consensus estimate of analysts by $0.02. The company reported revenues of $9.3 billion. Management attributed the company’s results to improved operating margins led by lower fuel prices.

• Mitel Networks of Canada said that it had agreed to buy Polycom, a telecommunications and video conferencing equipment provider, for $1.8 billion in cash and stock. Under the terms of the deal, Polycom investors would receive $3.12 in cash and 1.31 Mitel shares for each share of Polycom they own. The deal would value Polycom at $13.44 a share. The merger is part of an ongoing consolidation push in the telecommunications equipment industry. The combined company will have the talent and technology needed to deliver integrated solutions to businesses and service providers across enterprise, mobile, and cloud environments.

Citations

1. http://1.usa.gov/1jOrHr7 – Bureau of Labor Statistics
2. http://cnb.cx/1gct3xa – CNBC
3. http://bit.ly/1Sc7cSb – Delta Airlines, Inc.
4. http://nyti.ms/1T9SFca – NY Times Dealbook

Planning Tips

Guide to Social Security Dependent Benefits

Most people think of Social Security in terms of a retirement benefit. However, Social Security offers other benefits including benefits for dependents that can be critical for some individuals. Below are some guidelines for benefits offered to surviving spouses and dependents. You should consult with your financial advisor to better understand how these benefits might apply in your situation.

Benefits for children – Children can qualify for a benefit as the survivor of a deceased worker or as the dependent of a parent who is living and receiving Social Security retirement or disability benefits. Benefits paid for a child will not decrease a living parent’s retirement benefit. The value of the benefits the child receives, added to the parent’s benefits, may help your client decide if taking their benefits sooner may be more advantageous. If the parent is deceased, dependent children can receive up to 75% of the worker’s benefit, calculated as a percentage of the benefit that the worker would have received had he or she continued working until retirement. Children need to be:

•    Unmarried
  • Under the age of 18, or
  • Under the age of 18 if they are a full-time student in no higher than the 12th grade. If they are 19 and still in school, benefits will continue until the earlier of the date of graduation or two months after their 19th birthday.
  • Be 18 or older and suffer from a disability with an onset that occurred no later than age 22.

Benefits for surviving spouses – To receive benefits as a surviving spouse, you must have reached your full retirement age (FRA), which is 66 for those born earlier than 1960, for a full benefit or age 60 for a reduced benefit. The survivor’s benefit for those who have reached their FRA is 100% of their deceased spouse’s benefit; they can opt to receive their own benefit at any point, if that is more advantageous. For those who are at least age 60, the benefit ranges from 71.5% to 99% of their deceased spouse’s benefit. The surviving spouse is also eligible for a survivor’s benefit if they are at least age 50 and disabled, as long as the disability started before the worker’s death or within seven years of their death. A disabled widow or widower aged 50-59 would receive a benefit of 71.5% of their late spouse’s benefit. A younger widow or widower can collect a benefit if they are caring for a minor child of a deceased worker. The surviving spouses cannot remarry and must not qualify for retirement benefits based on their own earnings record or be collecting survivor benefits based on their deceased spouses’ contributions. The surviving spouse can qualify for up to 75% of their late spouse’s benefit if they are caring for a child under the age of 16 or disabled and that child is receiving dependent benefits based upon their late parent’s earnings record. If the surviving spouse remarries their benefit as the caregiver of the deceased spouse’s child stops.

Benefits for grandchildren – If grandchildren become dependents of their grandparents due to the death of their own parents or other reasons, they can be eligible to receive benefits based upon their grandparent’s earnings record. Great grandchildren do not qualify for dependent benefits, however.

Benefits for disabled children – Disabled children are covered under Social Security, but the application process to obtain these benefits can be arduous. Social Security says that the child must have a physical or mental condition that severely limits their activity and is expected to last more than one year and/or result in the child’s death. The child must meet Social Security’s definition of disability and their family must have little or no income or resources. Social Security considers the family’s household income, their other resources and other factors in making their determination.

Family benefit maximums – There is a limit to the amount that Social Security will pay to a single family. This total depends on the worker’s benefit amount and the number of family members who also qualify on their record. It varies, but generally the total amount a worker and their family can receive is about 150-180% of the worker’s full retirement benefit.

Citations

1. http://1.usa.gov/1MyDObP – Social Security Administration
2. http://bit.ly/1VqQ8gV – Nolo.com
3. http://bit.ly/1W56laF – Investopedia
4. http://bit.ly/1G6kazn – AARP
5. http://bit.ly/1VvNK9k – DisabilitySecrets.com