EP 10 | Social Security, Chicken Sandwiches & $10B Lakers Math - The Octus Download

Episode Transcript
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Jason Sanjana (00:00):
Jason,

(00:05):
welcome back to the octusdownload the podcast where
credit markets meet culture andwhere your retirement, your
lunch and your favoritebasketball team are probably all
more expensive than they shouldbe. I'm Jason Sanjana

Kevin Eckhart (00:18):
and I'm Kevin Eckhart, if your financial
outlook depends on underfundedpensions and overhyped brand
loyalty, you're in good company.And yes, I will be defending my
controversial chicken sandwichthesis later, because someone
has to bring structure to thisasset class. We've

got a packed one today. Social Security may be
running out of cash. We'll checkin on past stories. We'll break
down the $10 billion Lakerssale, and we'll introduce you to
the WNBA, newest Enforcer.

Disclaimer, these are our personal views, not
those of octas, our coworkers orthe legal team making desperate
neck slashing gestures in thebackground. This podcast is for
information and entertainmentonly, and is not investment or
legal advice unless yourstrategy involves throwing down
an edible and praising our newPeople's Commissar. Zohran.

Let's kick things off with three words that make
any American sweat SocialSecurity shortfall. Okay, Kevin,
we're going to talk about theone government program no one
wants to touch until it breaksaccording to this year's report
from his trustees andCommissioner Frank bisagono,
apologies, I don't know how topronounce that. Social Security.

(01:25):
That's her, that's ourretirement fund. Will run out of
funds in 2034 They call this thego broke date, and they give us
a new one every year, and it's ayear earlier now than it was
last year. And there's, there isno plan to fix it at the moment,
and there hasn't been one formany, many years, and this has
been a problem for since we'vebeen adults.

Just to keep things spicy, Congress recently
passed a law that raisedbenefits for some retirees,
which, surprise, surprise,pulled Social Security's
insolvency date forward. Enjoythat new Viking oven. Mom, it's
on me. Oh,

well, so the debate is, do we cut benefits,
raise taxes, or, if you ask X,formerly known as Twitter, turn
Social Security into a sovereignwealth fund and hope the quote,
unquote, startup ecosystemdelivers us salvation, not sure,
Kevin, we're going to be thegroup that runs the Social
Security Trust is a SocialSecurity trustees. They also

(02:22):
cover disability and Medicare,and it is the commissioner,
Commissioner bisgano, who Imentioned. I love this fact.
Apparently he was the CEO of JPMorgan, so he's no no
lightweight. But when he foundout he was nominated for this
job, apparently he had to Googlewhat it is, but he took it
anyway. So it must be prettyinteresting. The issue for any
solution here is that there'strade offs. If you limit

(02:45):
benefits, you're breaking apretty overt promise to people
that have been paying into thesystem for decades. If you raise
taxes that's hugely unpopularand has all sorts of knock on
effects, and taking all themoney, like some people on X
would want to do, and putting itinto all sorts of new
investments is going to oneplace we probably don't want
risk. So Kevin, I don't know. Imean,

well, we either need to do that. We need to
either cut benefits, increaseearnings or revenue going
forward, or mama Eckhart isgoing to have to cancel the
farmer's dog subscription andlearn how to trade crypto from a
we work. Mom, I know you'relistening. I know you're
listening. They don't want tohear about your thyroid. Okay,
just That's my tip. But therewill have to be that you have to

(03:29):
either solve this on the benefitside or on the asset side. It's
the same as the pension crisisfrom the early 1980s which I
just got a amazing refreshercourse on in the yellow case,
where they just, if you're notgoing to trim benefits, you have
to increase revenue, and they'renot going to trim benefits. It's

(03:50):
just simply not tenable for themto try to do that.

I mean, it is. It was a promise people have been
paying. I mean, for our youngerlisteners, the only thing you
might actually know about SocialSecurity is that, depending on
how much you make, there's amagic date somewhere in the
middle of the year where yousort of mysteriously get a
bigger paycheck than you did thepaid cycle before. And that's
because years contribute toyou've contributed the max to

(04:16):
Social Security. It

took me years to realize that that like in August
one year, I'm like, wait asecond, why am I not paying any
social

this is, this is a these are Bucha anecdotes.
Because you do have tocontribute. I can't remember
exactly how much it is,

but if you're like, 85 grand, I think, or
something like that, I mean not

that much. Anyways, if you have a salary
that's, you know, over 125 granda year, at some point during the
year, you'll max out your socialsecurity contributions, and
you'll suddenly receive more.And if you're a 24 year old
working in a law firm who'spretending to know more than
they are, you'll wonder if youshould tell HR they think there
was

an error. Does anyone really even read their
pay stubs anymore

Unknown (04:55):
back? I mean, if you you know when they're paycheck
to paycheck. Kevin, I. Know,it's been a while for you, but
those,

I mean, all you got to do is make sure you got
it. You got it like any goodcorporate citizen, you just have
to make sure you have enoughfree cash flow to service your
burrito debt.

Yeah, that involves seeing what's coming in
your burrito out. Your burritoout has to equal your money in,
all right. Kevin, so wait, doyou want to talk about yellow a
little bit more well, pensionsFund, which might may or may
not, have allegedly killed JFK,

they almost certainly did kill JFK. No. I
mean, what happened with this?And it's a similar situation,
people paying in money overtime, with the promise that
they're going to get some of itback at the end, yeah. And the
problem was you had not onlymafia running these pensions,
but much worse than mafia badmoney managers, and they were

(05:49):
losing money on the investmentsor not make making nearly
enough. And so in the early 80s,they had to basically blow up
the whole system and create astructure that controlled what
they invested in, and made clearthat they could not invest in
any invest anything risky, see.So it was sort of the opposite
as what we're talking about now.They went from a sort of private

(06:12):
invest in whatever the pensionthinks is going to pick up the
most money, even if it's sellingstolen heating oil, and they
went to losing

Havana casinos,

and unfortunately, they did not trim
benefits. And so now, you know,come 2019, 2020, when so many
employers have pulled out ofthese multi employer pension
funds, they have a hugeshortfall in what they owe
people going forward. And then,fortunately for yellow and its
unions, they got a bailout aspart of the COVID bailout

(06:46):
statute, and they receivedsomething like a Central States
alone received something like$40 billion

so yellow is a trucking company and its union
with Central States, which hasbeen around forever, is the
Teamsters, is the Teamsters, andthen they now, what's happened
since the 60s and theirnefarious now there's multi
employer pension fans plans, sothey will go across all these
different employers and sort of

Yeah, the thinking being that it's easier
for a bunch of employers to ponyup more money,

and then, in sort of a too big to fail thing, they
got a bailout, where, becausethey became insolvent, because
so many people in the sameindustry were going belly up,
they were becoming insolvent,and then they got bailed the
multi employer, pension fans gotbailed out. And then the issue
for yellow in the bankruptcymath was, you know, do you count
this bailout money?

And there was another issue. I mean, do you
count the bailout money? Was thefirst issue, and the unions won
on that. The judge said, youdon't count the bailout money.
But more interesting was informulating the amounts of their
claims. They wanted to use riskfree return rates in
discounting, right? Their claimsto present value, right? So they

(07:56):
have a claim for a billiondollars in discounting that,
because it's a billion dollarsover time, they wanted to say,
Oh, well, you know, you discountit at like 2% and the debtors
point out you're not invested inthat. You're invested in actual
securities. There's sometreasuries, some annuities. It's
a low risk, but not zero riskportfolio. So in bankruptcy,

(08:17):
because they got all this moneyto plug the hole, and they don't
need to get as big a returnsgoing forward to make the
promise benefits, plus they arelosing so many members that so
many fewer people are actuallygoing to get the benefits. But
the point is, there is a thirdway of getting out of this
problem. There is loweringbenefits, there is investing the

(08:38):
money more profitably, orthere's just the government
continuing to give them bigpiles of money to cover
shortfall,

but that does mean raising taxes eventually.
Oh, perfect solution.

Unknown (08:48):
You almost got

there. It

made me think about, you know, like, what?
When you're talking aboutinvesting someone's, you know,
pension funds and what they'rerelying on, possibly for
retirement, especially nowadays,when no one has any wealth. I
mean, there's, you know, 60something, like 60% of people
live paycheck to paycheck. It'sgonna be rough. So,

I mean, this is an interesting thing that the
mere debate of whether or notall this money, and there's a
ton of money in the SocialSecurity Trust,

how much? How much is in there? I'm sure,
trillions. Oh, trillion. Okay,yeah, for sure, but we'll get
the exact number in second. Itdoesn't matter if, whatever the
number is, if it's in thetrillions, it's more than any of

us can really so that's so there's this idea
that, Oh gee, if you had takenall that money and invested it
in just the 70s, think of howwe'd have so many more trillions
of dollars. We wouldn't even betalking about this issue. So why
can't Why are we? Why are wetaking this money and investing
it in treasuries? And what thatmisses is that the system wasn't
designed to be people put inmoney and then we grow it. The

(09:52):
system's designed as a pay asyou go. It's a pay as you go
system the workers now pay forthe retirees now. And the
problem. Only problem with thatis demographics, and that's the
big problem. That is a bigproblem. And also the when the
economy is doing great, moremoney goes in. So this number,
the go broke date, has been asearly as 2026 at some point, and

(10:15):
I think probably during

the I feel like I hear about this. I feel like
once every 10 years, someonerealizes the national debt is
huge, and Med and SocialSecurity is

broke, and it almost always has some other
political agenda behind it.Well,

yeah, of course. I mean, but I mean turning to
like, what the solution is interms of investing the money?
What do you think we should do?Kevin? I mean, I think you've
got, well, I think I don't thinkyou should invest it in the
markets, because I'm sort ofwith you that I don't think
Roosevelt, when he set up socialsecurity in the 1930s was really
thinking, okay, the amount ofthe money that it was a defined

(10:51):
benefit, defined contributionpension plan, right, right? It
was a modeled on Europeansystems, where it was just
assumed that, yeah, people putmoney into it, that if there was
a shortfall, the government wasjust going to cover that. Yeah,
it was not supposed to be likean IRA. It was supposed to be a
government promise that nobodyshould be homeless and hungry

(11:14):
when they're 70 years old. The

problem is, it's not a government it's not a
government promise backed bylike the full faith and credit
the United States, it's agovernment promise that will
require Congress to give thesystem more money at some point
pretty soon, and that it's

pretty good thing it's not reliant on the full
faith and credit of the UnitedStates, because that ain't worth
very much, right? Well, theUnited States would have a
harder time getting a car loanthan I would.

So this idea on, on Twitter, on x, of creating a
sovereign wealth fund is is, tome, like the worst sort of tech
pollyannish nonsense. Becauseone, the mere act of taking all
that money out of us, treasurieswill absolutely destroy our
economy, because it's allinvested in treasuries now. And
if, the if, the if the baselinebuyer of last resort, of

(12:01):
treasuries left, and then we'reeven more at risk. And then
every bad Treasury auction is adisaster for the stock market.
That you just put all the moneyin second, taking all of that,
and I don't even know how youcould put it in, it's beyond
impractical to dump even afraction of that into the
market.

There are companies well, that have
difficulty managing investing10s of value. Apple has nothing
to do with it, of course, AppleI used to work. I did a lot of
work for Philip Morris back inthe day, and I

Unknown (12:33):
represented as most anarcho socialists

do, as one does, Hey, I am a tobacco socialist,
not an anarcho socialist. Andthe reason is, as a bankruptcy
lawyer, they would invest cashin absolutely ridiculous
schemes. I mean, they would buythe equity interests in aircraft
financing, what you call theowner participant. Oh, yeah. I

(12:56):
mean, they were putting downthey were providing an equity
contribution towards a downpayment on a depreciating asset.
And I asked him, I said, Why areyou investing in this? They're
like, first, it's a tax break,but it wasn't that compelling.
But second of all, they justdidn't have anything else to put
their money in. And you thinkyou're gonna, like, take a
trillion dollars, you're gonnagive it to Chamath, and he's

(13:18):
gonna like, I mean, it's a

startups and stuff he wants to I mean, you
know, look, because I mean,

when you're talking about trillions of
dollars, you're not talkingabout money. It's

to Kevin, it's 2.7 trillion. I looked it up,
there's $2.7 trillion in thetrust now. And the argument is
that if they had invested in the70s in something that was
blended with security, with theequities, it would be much, much
higher. Now we'll

get to this when we talk about the Lakers, yeah,
but, but people are always doingcrap like that. And we,

you had, we had mentioned the retirement age and
demographics and how that kindof is the real leading.

Everyone but the Mormons has stopped reproducing.
Yeah, everyone

but the Mormons has stopped reproducing. And
Elon. And Elon, you know,reproduction rates are down in
most of the OECD countries. Andthen, really interestingly, when
the system was created in 1935the average life expectancy for
a man was 60 years, and for awoman, it was 64 years. And that
was, you know, if you thinkabout when you can reasonably be

(14:20):
of working age. It kind of a payas you go. System makes a lot
more sense. If your end of lifeis shorter, shorter. Yeah. Now,
now we're talking in the 70s and80s. And then on top of that, I
was looking, you know, justbefore the podcast, at where
other OECD countries set theretirement age, and they're

(14:41):
moving towards 67 ours isbasically 67 they're moving
towards that. But most are

young at about 43

but they have room to improve the financial
health of their system bypushing the date later, we would
be going into the 70s, which ispretty breathtaking when you
think about it. And there'sjust. Not enough jobs as
greeters at Walmart for thatmany people.

They don't pretend that this is a system
that is supposed to fund itself.That is a defined contribution.
They said, Well, we're going tomake keep these up. I mean,

this is part of our, real part of our government
balance sheet, right? It's just,it's

something that the government commits to
providing the the inputs, thecontributions defray it, but
it's not expected that, youknow, they're gonna go take the
money and invest it in themarket and make enough and then,
you know, skim a bit off thetop, and yeah, people died
earlier in the 30s. And thissort of goes to what I was

(15:38):
saying about how, you know, thisis was sort of a promise, but
they knew people weren't alwaysgoing to die that young. It was
the 1930s the averages arepretty good. I mean, there was
no thinking that, you know thisprogram is going to be gone in
10 years, when life All right.

So you think, okay, neither one of us really
thinks that privatizing this isat all a reasonable or practical
idea. And yet it always keepscoming up. And I would just say
to end. The reason why it allkeeps coming up is that
absolutely the biggest winners,if it was to happen, would be
investment managers and peoplewho are already heavily invested
in the stock market, becauseyou'd be throwing a lot of money

(16:12):
into a system. It would liftitself up for some period of
time, just by that fact, and thepeople doing it would make a
boatload of money. So that'sprobably why we keep hearing
about it. But it's not reallypractical. You would

basically be creating a whole new banking
system, right, funded withtrillions of dollars, and it
would be sort of fed backed. Andthe problem is, if they lost
money like a bank does, and wantsome manager that took some
Treasury money failed, then theywould have to the government
would have to cover it. It's agood conversation to have

(16:45):
because it really I don't thinkthis is the intention of the
people who are talking aboutthis now and this privatization
idea, but it brings up the issueof, what are we going to do to
take care of elderly people? Ina capitalist society, we have a
ruthless capitalist society.That's fine. It is what it is.
Most societies are ruthless, butit's difficult for older people

(17:09):
because they have to compete ina private job market. And we
need to think about this everyonce in a while. We need to
reaffirm this promise, generallyunderrated, as the Twitter tools
would say, and it's foolish toexpect, you know, the young
people you know, living withfive roommates in a Hell's
Kitchen two bedroom who arefinancing their burritos to

(17:30):
contribute more. And it'sunrealistic to think that the
trillion, $3 trillion could beadequately invested, like, you
know, $50,000 in lotto, scratchoff winnings, and it's it's
irresponsible to threaten peoplewho paid in with benefit cuts.
So the solution is, suck it up,pay it but you're putting

(17:51):
people's social security

but I think what the what we will do is just put
our head in the sand until it'sabsolutely too late. So so the
it's about $3 trillion in theSocial Security Trust. The
market cap of the s, p5, 100 is60 trillion. So that it's not,

you know, but it would still be a huge it's and
that it's market warp,

to put, to put it into a little bit of perspective
for our octus listeners, theestimated market size of the
entire private credit market isabout 1.5 trillion to 3
trillion. So you'd be takingeverything that's in private
credit, which was astronomicallyhuge growth in the past few
years, and moving it into acompletely different ecosystem,

(18:31):
out of treasuries too. It's,it's totally unreasonable, yeah,
but if you that's a straw man,but I

generally agree with the metaphor, except, if
private credit were properlymarked, it would be worth about
20 grand.

Unknown (18:47):
We'll end it on that. Apologies to

all our listeners for that

Unknown (18:55):
one. Checks. Notes, everyone, okay, but, but Kevin,

speaking of caring about the olds, yep. How
about a brand that's beencounting points since the Reagan
era, but just counted its wayinto a restructuring? Yeah. But
first, before we get into thenews, this episode is
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Well, thank you athletic greens for I don't know
if that if they're gonna keepsponsoring us, Kevin,

Unknown (20:22):
but they really love us. Let's we're doing

something new now. We're gonna check in on
some other stuff. We've coveredsome big collapses on the show.
Today. We're looking at whathappened after the stories don't
really ever end. They movethrough the courtroom,
restructuring plans, planconfirmation, leadership
changes. Then they go out intothe post reorg world, where they
live or die or just go back intothe hole they came from.

Yeah, it's a segment I like to call, let's
remember a shit go. We'rechecking back in on a few major
names, Purdue, pharma, Stoli,Hooters, Red Lobster. Here's
where they are now and what'sactually happening. Remember
berries, Purdue? Purdue not thefolks who kill you with bacon,
but the folks who kill you whenan opioid crazed addict that's

allegedly KILL YOU bacon and probably killed
you.

That's this month. Just a few days ago,
there was announced that all 50US states and several Rando US
territories. Props to ourlisteners in Guam st John, have
signed on to the 7.4 billionrevised Sackler deal, which I
have been predicting ever sinceColleen McMahon first blew up

(21:34):
that plan. The vote deadline isSeptember 30. The issue is that
if enough people opt out or donot opt in to the releases for
the Sacklers, then the plan goesaway. But nobody seems very
concerned about that. It feelslike finally they are getting
this one wrapped up on June 25it was announced that $225

(21:56):
million of the amount wasflagged for restitution, rather
than paying direct victimpayments. But of course, most of
the payments are are not goingto be direct victim payments,
because they're going to theStates and in counties and
authorities. So I wouldn't beexpecting that check in the
mail, that massive check toosoon. But it looks like this

(22:20):
thing is finally wrapping up.

Next up, Stoli, the vodka company that also owns
Kentucky owl. That's the if yourlisteners might remember Pat
Mohan. Patrick Mohan came outand told us about bourbon. He
has since been sending meInstagram ads that he's getting
for cut rate, Kentucky oilbatches, Kentucky owl batches of
verb bourbon or special, they'vebasically like fell off the back

(22:43):
of a truck. Yeah, there's a lotof fell off the back. We need to
get Social Security bourbon outthere, but, but in that case,
actually, it's they might beheading to a pretty interesting
confirmation hearing, becausethey just got their disclosure
statement approved, but theirsecured lenders are still
fighting on valuation, includingbarrel the issue we spoke about

(23:04):
of like, how do you value all ofthese barrels of whiskey that's
aging to become bourbon at somepoint? So we might have a really
interesting confirmation hearingthere, but, but if I was a
betting man, I'd say settlement,because that's what always
happens in these cases. Hootersalso interesting. We had some
fun with that one. That is thesecuritization structure. They

(23:24):
did a, you know, theysecuritized their some of their
franchises and stores before,prior to the bankruptcy, and
then going in, they put thesecuritization structure and the
non securitized entitiestogether, in which was a
surprise to all of us. Asplanned, they closed 30
corporate owned stores. They'verolled out sort of their new

(23:45):
footprint. The lenders and thesecuritization side want to take
over. That was the plan. But nowHulk Hogan's real American beer
company submitted an all cashbid to buy the

brand. Is that sold only in Tampa and Fort
Lauderdale?

Well, I don't know, Kevin, but I'm not saying
anything, because Hulk Hogan isa destroyed Gawker, and it's not
going to happen. God bless

you. Okay. Oh, good. Good point. Good. God
bless you. Love you. Great work.I'm a Hulkamania. Definitely was
never rooting for the Irishpeople. Don't know this, but I
tear my shirt off every night inhonor waste. Yeah, exactly.

But basically, it's interesting. There could be
a bidding war in the context ofthe securitization structure. So
it could be really thorny.

Next everybody's favorite biscuits place Red
Lobster, filed for Chapter 11back in May 2024, emerged in
September 2024, with a fun newname, RL investor holdings,
because these companies alwayshave to pick a new completely
anonymous name for thereorganized entity, and then

(24:46):
just a couple days ago, theyrelaunched crab fest with
seafood boils and cocktailsincluding Purple Haze by Dr Dre
and Snoop Dogg. Hug, which makesme feel so fucking, that's a
trick.

Unknown (25:06):
Do you remember? You want

to have a great story? I remember when Dr Dre
and Snoop weren't like this.It's like, oh, like they were
actually like, real cool name,like Eddie Murphy syndrome, for
someone who is just good andreal and then just fucking red
lobster. I mean, first of all,collab culture is out of totally

(25:29):
out of control. I think Imentioned the Gucci Cadillac so
far ahead of its time.Everything is a collab. I saw a
Jeep collab sneakers the otherday, like and Chevrolet collab
jeans, jeans branded byChevrolet. That's crazy. So that
focused on on hospitalityenhancements, affordability,

(25:51):
menu items under $20 whichthat's where we are nowadays,
folks and fan favorites likehush puppies, which are easily
the greatest thing any human hasever put in their mouths. Their
post bankruptcy strategy alsoemphasizes cost controls.

No no endless shrimp No. For

you, the $11 million endless shrimp budget
hole that that foreshadowed thebankruptcy is gone. They're
closing restaurants. They'reright sizing under performers. I
hope they're taking advantage ofthe HBO thing with them buying
and basically an entire RedLobster and resetting it.
They're streamlining andmodernizing. So look, there may

(26:31):
be hope for red

lob. There's some glowing stories about the new
CEO. It seems like they're onthe up and up.

I just can't wait until you know, 20 years from
now, when you know, Tyler theCreator has a signature beverage
at the Red Lobster. That's howlame I am, by the way, I Tyler
the Creator is all I could comeup with. I should have asked my
kid, but I

was, I was thinking about what this purple
haze drink would taste like. AndI remembered when I was a summer
associate. It was the summer inNew York of The Incredible Hulk
drink or and it was, it was ahalf and half Hennessy and
hypnotic. And it was basically,

Unknown (27:05):
like the most expensive, stupid drink you
could buy. And we were just, youknow, assholes, and we would get
them at all these, at all thesesummer associate drinks. And it
was so sweet and so close. So

here's what I imagine. But it's so expensive.
Oh, sorry, sorry. No, no, no,it's okay. It's just expensive
and disgusting. If it's NewYork, that's like $28 but

it's Hennessy. Is not. I mean, Hennessy, you know,
mixing Hennessy with this swillof hypnotic, I don't know if
they make hypnotic anymore, but

it's the MCU of bankruptcy, all the spin offs,
NO CAPES,

all those names. Yeah, that was great to check in
on them. Let's pivot from creditcreditors to calories. It's time
to talk fast food and curlyfries.

Yeah? Curly Fries are the best man. Pop seckhart
used to run a Hardee's curly

Yeah, no, for listeners, should know that we
are not coming to this. I thisfried chicken debate you might
have seen on the internet withnot from expertise. Kevin is
fried chicken royalty. He grewup in a fried chicken Yeah,
franchise

household. My pops would call me the chicken
prince. He would call my he hada fun habit of calling my older
brother the heir and me thespare of the chicken empire.
Absolutely. So what we're goingto talk about is we're going to
take a break from bankruptciesand bond docs. We're not talking
about TV shows, because a TVshow this week is everything

(28:26):
stinks. It's just that it'sreally brutal. I mean, they it's
the streaming era has notmollified the problem with
Summer TV. I mean, ever sinceMelrose Place, we've been hoping
that, you know, Summer TVwouldn't suck, but it does. So
the issue is fried chicken,specifically, who makes the best
chicken sandwich in America, andwhy it matters more than we want

(28:48):
to admit. Again. Jasondiscloses, I grew up as a young
man, my formative years werespent in Church's fried chickens
in Miami, and so I know friedchicken. I'm an expert. I have
made terrifying restaurant friedchicken. Therefore my opinions

(29:09):
count, and Jason's, do not askhim. Ask, ask the yinzer about
pramandies or something. You gotto put that out there, because
what the opinions you will hearfrom me are

Unknown (29:18):
Capricorn. It's capicola, not GABA ghoul ago. So

what we're talking about here is you can't
do this at home. I know there'ssome people out there with some
old Korean recipe, but again,you know the point here is, I'm
just demonstrating my expertiseto return to people that my
opinions are the correct ones.We'll let you give yours,

though, unlike some other financial news
outlets, we come, we come tothis topic with expertise.

All right, one more tidbit. The best part of
making this stuff is theshortening for it came in foot
by it was pure, like beeftallow, RFK, Jr was solid,
solid, solid. It was shortening,yeah, and it would come in cube.
Is that were one foot by onefoot, side to side, so a cubic
square foot, and it was wrappedin like foil, like a stick of

(30:06):
butter, and it had markings onthe side so that you know how
much to cut off and drop in thefryer. Just delight.

Just was that the only thing it was fried in? Or
was there also oil? Did you addthe tallow for flavor? Or was it
100%

No, no, no, the tallow was doing and this is why
churches was always better thanKFC to read. KFC cut the bird
into eight pieces. Ridiculous. Acrime, four breasts on one bird.
Oh, right, right. Gross. A lotof and they did. They did not
use the good stuff because, oh,man, it was, it was good. Okay,

Kevin, thank you for your expertise. But the
truth is, when we're talkingabout chicken sandwiches, and
the chicken sandwich wars thatwe're going to get into this is
basically a brand strategy casesummary. It's a combination of
pricing power, private equityownership, franchise models and
consumer loyalty. All those cometogether in a sesame seed bun

(30:55):
and mix themselves up. Andsometimes you had great chicken
sandwiches that fell off a clifffor one of these reasons,
private equity. But that's thequestion, Who has the best
chicken sandwich in America? Andwhat does that pick say about
how we understand value, taste,brand loyalty in a high rate,
low trust

economy? We're done with Wade me as an expert,
I'll get right into it. Yes, thebest is Chick fil A is the best
chicken sandwich, the plain one.And spicy isn't spicy enough,
but we're talking about theplain stuff. It's the most
consistent. It's the same everytime. And as a fast food
aficionado, obviously veryimportant to me that you're

(31:34):
never going to be disappointedwith it. It's got the pickle
still privately owned,unfortunately privately owned by
the worst people you've everheard about, allegedly, and that
brand perception is part ofChick fil A, and the fact that
they're as successful as theyare, despite that in places like

(31:54):
New York City Miami, is Pretty,pretty impressive. High
throughput, high margins, highlabor costs, because they have
to have like, 17 people at everydrive through with iPads and,
God, it must cost a ton of moneyhave that little tent. But
generally, I gotta say they'rethe best.

Okay, in your opinion, my my submission for
the best chicken sandwich inAmerica is Wendy's spicy
chicken. I modify it a bit. Inmy order, I asked them to put
everything they would usuallyput on a hamburger, like
ketchup, Mayo, mustard, pickles,onion. You call

that ketchup on a chicken sandwich, all of it
mixed together. That's a boldthat's a bowl. All of

it in there, except for tomato, because the
tomatoes at any of these fastfood places are gross. And that
is my sandwich. I think it's anunderrated classic. They won't
take

it off the menu. Do you put, do you put ketchup
on hot dogs? No, I

don't put, I don't eat ketchup in almost any
other setting, but ketchup andhot dog. Sure. I guess I would
like dirty water dog in NewYork. I would always, I would be
the weirdo getting thesauerkraut,

even though Still waters run deep. Man. All right,

so spicy, Wendy's spicy chicken. I'll also add a
little bit of their chili sauceon there. High quality stuff.
Great, great flavor. And Iactually really like the fact
that they're not a chicken onlyplace, and they still manage to
turn out a really good

product. I mean, my problem with it is I always
say I'm going to order theirchicken sandwich and I get
because the square burgers withthe regular sides just kill me.
I need it. Well, who ownsWendy's? It's not Dave Thomas
anymore. I missed that.

No, no, Dave Thomas sold. It's a mix of
institutional investorinvestors, mutual funds, retail
shareholders and try onpartners. So it's a public
company. Kevin Wendy's versusChick fil A is a public company.
You can buy the shares on thestock market. And I think to me,
that's a it's even moreimpressive that they've managed
to keep the quality high, whichI think they do. I think the
fries are great. I think you goto a Wendy's, it's generally

(33:47):
good. And I think that's hard todo for a public company that has
as many locations as they

do. Dave Thomas would be proud,

Unknown (33:54):
yeah. And Wendy, I think if he could read, reading
this would make me very happy.

Wendy was his adopted daughter. Apparently,
Dave Thomas was, like, he wasmention of all mensch, yeah,
like,

a six like, but functionally illiterate. Just
fascinating. Why haven't

Unknown (34:08):
they made that biopic? The founder was pretty good. Did
you remember that I

did again? This is my this is the family
business. Like, if I was spoketo you? Do people in the mafia?
Watch sopranos, of

course. Well, next up, this is an honorable
mention for me, for pop isPopeyes. I know that they're
more like fried chicken and lesssandwiches, but you know, some
people out there in the worldhave said that KFC is better
than Popeyes, and I just want tosay unequivocally, that's just
ill informed and incorrect.

The worst, the KFC is the worst at everything.
Yeah, even they're like, not,not just mass church, but I
understand, oh no, yeah. I mean,I appreciate Popeyes now,
churches was owned by the samecompany that owned Popeyes for a
while, and then it filed forbankruptcy. Churches in it. They
threw churches in America'sfavorite chicken, and then they

(34:57):
pried them apart in a bankruptcyin like, the mid 90s. Yeah.

They should know. This is how this is Kevin's
bankruptcy origin story.

Exactly. My dad was on the franchise committee.
All right.

Anyways, Popeyes, great sides, great chicken. Good
sandwiches. I would rather eat aWendy's spicy chicken any day
over the Popeye sandwich. Butthat's more about the sandwich
part than the chicken part. Ithink Popeyes does a great job.
I forgot to mention, Popeyes isowned by Restaurant Brands
International, so I guess it's aprivately held, okay,

but not private equity, yeah, my issue with
Popeyes versus Chick fil A is, Ithink Chick fil A does a better
job of consistency. I thinkPopeyes different locations. You
might I have been to Popeyes orthe sandwich and been dearly
disappointed, and I can't,you're right. Okay, that's fair.
You're right. But I mean, myhonorable mention. And I just, I

(35:43):
cannot believe this is beingignored in the current chicken
discourse. And that is theBurger King, original chicken, a
nostalgic favorite, made ofground up chicken bits, sort of
Wiener Schnitzel. I mean,financially, the worst fucking
company you've ever seen. Imean, I grew up Burger King is

(36:04):
headquartered in Miami, yeah,something else I have
experienced with and I hadfriends who like, like, people
down here are loyal to it.People down there really dig it.
And they, they were always onthe precipice of bankruptcy, one
of the early companies, fastfood companies, that was ruined
by private equity. I think theywere Texas, Pacific at one
point, and like they wereconstantly laying off vice

(36:26):
presidents, a total mess. BurgerKing, financially a disaster,
but, but it's, it's like eatinga fast food relic. To me, it
tastes like I have snuck out ofhigh school at lunch. I'm eating
an angsty end of Cold War vibestastes like sesame flavored non

(36:48):
meat filler, delightful, ownedby the same company as Popeyes,
again, underperforms massively.Burger King is never a good

company. Burger King's chicken sandwich came
before McDonald's, andMcDonald's just copied them with
exactly the same thing. So of

course, no McDonald's. We're

gonna move on, Kevin. We don't have TV to talk
about this week. So we got onemore fun topic. We got, we got
the Lakers sale.

I mean, it's the richest team sale in sports
history, $10 billion purchasedby Mark Walter in the same group
that owns the Los AngelesDodgers, which has to make
Lakers fans feel good, not justbecause they're all Dodgers
fans.

Is there a market of sports

everyone's asking strangely, rather than sort of
being like, Wow, $10 billion

it is the biggest sale. It's the biggest sports
team sale in raw number dollarsever. I think,

yeah. I mean, it's got to be meaning they
haven't inflation adjusted it.It's telling. And I mean, you
have the number when you talkabout how much bus paid for the
Lakers, yeah, 1979 but you knowwhat everyone's talking about
is, would they have made moremoney if they just put the
purchase price for the Lakers,yeah, in the stock market in an

(38:01):
index fund, even though thosedidn't exist.

This is the, if you're an ex person that follows
a bunch of fintwit and a bunchof sports accounts, this seemed
to be what, what the concentriccircles were talking about after
the sale. Yeah, exactly. So Ican go through the numbers
quickly for you. Kevin, the salein 1979 or the purchase by the
bus family was $67.5 million butthat included the kings and the
forum, both of which were soldlater, we found that the the

(38:26):
Lakers themselves were allocatedat $20 million in that sale. So
if you took the $20 million andyou put it into the stock
market, you actually would notget to $10 billion but if you
took the $67.5 million and putit into the stock market in 1979
you would get well above the $10billion and then that led to
some people on on X, fightingwith each other about those

(38:47):
facts. And then somebody came inand actually tried to do the
even harder math, which was tosay, Okay, we recognize that the
kings in the forums were sold atsome point, but let's value in
the let's let's X out that it's

amazing the forum is still there. What basketball
arena from like 1975

so here's the thing, if you really get into
the math and stuff, it seemslike the bus family made about
10.5% annualized on this, whichis great. And if you had just
purely gone, you know, YOLO,into the s and p5 100, you'd be
at about 11.5% annually. Ishould say, after many years of
good run, a great run. Yeah,well, it's not always 11.5% in

(39:28):
the in the SP annually, Ipromise you, and it won't be in
the future. So the questionKevin is, if it's kind of a
wash, would you rather want thehassle of owning would you
rather just be on a yacht

in the in I want the Lakers, man. I want, you
know, magic and James worthy andincredible cream. I want, like
the 80s rivalries, oh, and ourproducer.

Our producer, Tanya has to mention that owning
the Lakers is basically just aplatform to give Kobe to the
world. She

has a Kobe tattoo. People, but yes, first
of all, they were payingthemselves. They were serving as
officers. And bus did not have awhole lot of other businesses
left at this point. So it waslike the family business, you
know, he passed it on toJeannie. That's something that's
worth something. So it's notlike they were, you know, if you
put the money in the market, youcan get dividends, but not on a

(40:21):
lot of

things. In either scenario, they're fine. They're
not the shoe shine boy in aDickens. And you

want to get you want to have the fun, man, you
get the party you get to withJack Nicholson. You're a
superstar in Los Angeles.

Billionaires, either getting into politics or
sports means that there'ssomething bigger than the num
the zeros, and it is sort of thenotoriety or being part of
something.

Yeah, you don't hear if you're like, a
billionaire, you're not, you'renot getting into it for like,
money. That's that's playingaround. Stuff is benzos. Been
able to buy a team. He keepstalking about buying a team. He
thought he was gonna get thereds. He's

got to land the plane with getting married in
Venice without the populacerevolting against him first, and
we were just told that he mightbe trying to bring the team back
to Seattle, which would totallylaunder his reputation. That
would be sports watching. Theywould love him. The greatest
sports

watching ever. Seattle folks say, thanks for
offering us an expansion teamafter we just watched the
thunder win the championship.For people who

don't know that the Sonics played in Seattle for
many years were beloved, andthen got sort of just just just
ripped out of the city for nogoddamn good reason and sent to
Oklahoma City, which has had nobusiness having a team. And now
they won the championship andseemed to be set up to keep
winning championships for theforeseeable future, because
their team is incredibly young.And,

yeah, they'll

start. So another thing I should say, you know, my
my, my daughter really lovesbasketball, and I've been trying
to watch more WNBA with her. AndI thought I'd want to, you know,
hear Kevin, if you have anythoughts on Sophia Cunningham
and Caitlin Clark and what'sgoing on. I

mean, Sophia Cunningham, part three, indeed,
part bodyguard, full marketinggold mine. She didn't just show
up to play. She showed up toprotect Caitlin Clark, the
league's most valuable asset,and immediately plunged
someone's face into the woodwith a forearm shiver. Yep, she

(42:21):
is the fevers very own. UlfSamuelson, oh, my god, thanks to
you favorite, reminding me,

Sophia Cunningham is sort of the old Samuel sim
for these

there. She has a black belt in Taekwondo at age
six. That's amazing. She wasjust signed in February, and her
gig is to actually protectCaitlin Clark. Clark got knocked
around. She really, facedreally, really, and then a kind
of brutal moving screen afterthe whistle and Cunningham just

(42:55):
put in literally Pope Clark gotpoked in the eye, and Cunningham
decided to put her floor, elbowinto the the thoracic vertebrae
of another player, and just takeher into the front row. And
what's

fun to watch? And I don't think that it's like a
whole sport being kind ofcreated in our eye, in our in as
we watch it, because I don'tthink anybody envisioned the
Clayton Caitlin Clarkphenomenon, the reaction of the
players who are already therewho are great and think they're
great, and just don't get anykind of take it out. Yeah.

I mean, to be clear, I don't want to say they
shouldn't go after CaitlinClark. They should absolutely go
after Caitlin Okay, that's whatthey're supposed to do. This is
a Kevin takes, you, take you,take the superstar. You got to
take them out of the game, andClark's teammates are supposed
to protect her. Okay, yeah, it'sfun. I mean, I haven't been this
excited about a non NBAbasketball in

trying to watch these games, I've been trying to
explain to my wife howincredibly hard it is because
they're on five differentstreaming services, and most of
them you even if you have theleague I don't have the league
pass, so I don't know. I thinkyou have to buy the league pass
to see them, basically, becauseotherwise it's a combination of
to be and some other nonsense,and it's really impossible. And

(44:11):
so we were ended up with mydaughter. I was watching, I was
looking on YouTube, and there's,there's a guy who just takes
videos of his TV with

Unknown (44:20):
with a iPhone, like,

a bit like the Russian guy, he

Unknown (44:26):
does like a cut. So it's like a 2025, minute cut of
the game that he did all fromhis own iPhone. People are
incredible. People are watchinggames. God bless

people. People are watching games on Tiktok,
live. Wow, cool. I mean thefranchise Indiana, what my pops
always called India, no place.The franchise is 370 million, up
nearly five times from 2023

just from drafting Caitlyn Clark, and the
entire league has gone up. Yeah,worth

more than a bill. It's up over a billion. So it's
been worth considerably morethan a billion. So it's.
Somebody's finding it on TVsomewhere.

I'm enjoying watching these games. I just
wish they would put together anormal TV package and have them
in like the two places.

This is all just makes me think of this as legacy
leverage and a reminder thatvalue is not always about points
on the board. It's about thegood times you had along the
way. It's not all about money,folks.

It's about protecting your teammate.

That is episode 10, and I want you all to know
that if you don't like thisepisode and you say something
nasty to Jason, I'll put you inthe front row. I am Sophia
Cunningham. I am this show'sSophia next to Caitlin Clark
over there. Except I, except I'mthe one who's more likely to go

one person. We gotta check in with Chamath
palihapiti. He's our most loyallistener. Oh

Christ, if you're still with us, congratulations.

If you learned something great, if you just
stayed for the chicken sandwichdebate, also great. We respect
utility in all forms.

Please be sure to follow us on LinkedIn or X,
formerly known as Twitter. Ihave to say that because, as
employees of a company that alsohas a formerly known as you
know, we gotta be brothers inarms. Send us your favorite
under the radar credit story ora next door post so unhinged it
belongs in a Clear Lake.

Big thanks to Tanya Hubbard, who makes us
sound like we know what we'redoing and keeps this show from
turning into a $10 billion assetwith no governance

plan. We'll be back in two weeks until then,
avoid the shrimp specials anddon't structure your retirement
around fives in a discounted GLPone deal. Also, remember to keep
your hair spotless and clean.Wash it at least every two
weeks. Once every two weeks you

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EP 10 | Social Security, Chicken Sandwiches & $10B Lakers Math

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}EP 10 | Social Security, Chicken Sandwiches & $10B Lakers Math