Philippa Kaur

THEY PROMISED to “deliver excitement and drama never before seen in football”, and for a few short days they succeeded—just not in the way they had hoped. On April 18th a dozen of Europe’s top football clubs announced plans to disrupt the game with a breakaway “Super League”. Investors cheered. But fans revolted, broadcasters turned up their noses and governments vowed to block the plan. Within 48 hours half of its founding members dropped out. It was soon declared dead.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

THEY HAVE already been dubbed the “dirty dozen”. On April 18th 12 of Europe’s best-known football clubs announced that they intended to form a breakaway “Super League”, an annual competition for the top teams in Europe—and so the world. It could kick off as soon as August. The boss of Europe’s football association, UEFA, declared the idea “a spit in the face of all football lovers”. Fans draped their clubs’ stadiums with banners condemning the plan.The intensity of opposition to the idea means that the new league may struggle to go ahead in its proposed form. But it could yet lead to a compromise that is in the interests of both clubs and fans.The plan is that each year 20 clubs would compete in a Europe-wide league. Fifteen “founding” clubs would be guaranteed a spot every year, with no threat of relegation. The remaining five places would be awarded competitively. The 12 clubs that have so far signed up comprise England’s “big six” (Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham), plus three from Spain (Barcelona, Atletico Madrid and Real Madrid) and three from Italy (AC Milan, Inter Milan and Juventus). JPMorgan Chase is reportedly stumping up more than €3bn ($3.6bn) to get the league off the ground. An equivalent women’s competition is planned “as soon as practicable”.Such a league has been talked about since the 1980s. The Champions League, run by UEFA, allows relatively few chances for Europe’s great football clubs to meet. Barcelona and Bayern Munich, for instance, have faced each other fewer than a dozen times; both have been around for 121 years and organised European competitions date back to the 1950s. Big clashes bring in more viewers, and therefore more valuable broadcasting rights. What’s more, a league with only 20 members would mean each got a bigger slice of the pie than in the Champions League, which has room for 32 teams (and will soon take 36). A closed league offers the chance to agree limits on wages, as is common in America; the Super League says all founding clubs will sign up to a “spending framework”.The biggest prize for clubs, however, is the idea of ending the risk of relegation. Unlike American clubs, European sides play in leagues where poor performance means demotion to a lower tier, and correspondingly less money from broadcasting deals. Several of the Super League’s founders have American owners, who look at the European system and say, “Why this insecurity? In America we don’t have that,” observes François Godard of Enders Analysis, a research firm. Removing relegation risk will make it much easier for clubs to borrow against their future earnings, he says. Shares of Manchester United rose by 7% and those of Juventus by 18% the day after the plans were announced. (Exor, which is a big shareholder in Juventus, also owns a stake in The Economist’s parent company; Andrea Agnelli, one of the architects of the Super League, sits on Exor’s board.)Though an elite European league has been an ambition for years, covid-19 has provided the opportunity. Less money from ticket sales, broadcast rights and sponsorships, and delayed transfer payments, have pushed the big clubs to consider radical changes. And the pandemic has made it harder for the smaller teams to hold out against the changes. The Super League promises that it will share some of its revenues with teams in lowlier leagues. A financial stake in the new venture’s success could dissuade the lesser clubs’ owners from kicking up a fuss, says Stefan Szymanski, a football economist at the University of Michigan.Existing leagues are predictably unhappy about the potential new rival. The dozen say they want to remain in domestic competitions, but could secede if that option becomes more lucrative. The Champions League and the big national leagues would be far less valuable without their biggest names. The English Premier League will soon be auctioning a new period of broadcasting rights; they will be worth much less until the Super League uncertainty is resolved, Mr Godard believes. Supporters are mostly unhappy, too. A snap poll by YouGov found that 79% of British football fans opposed the idea, 68% of them “strongly”. Among fans of clubs other than the “big six” opposition was stronger still. Many see the plans as greedy. Others consider the lack of relegation and promotion tantamount to cheating.The league has other obstacles to overcome. Though it bills itself as pan-European, it currently has teams from only three countries—indeed, more than half of them come from just three cities. Germany’s big teams, which are mostly fan-controlled, are unlikely to sign up; Mr Godard doubts that the Qatari owners of Paris Saint-Germain, France’s reigning champions, will want to burn political bridges by getting involved. Super League teams may find it harder to sign star players if UEFA makes good on its promise to block them from playing in competitions like the World Cup. And governments are flexing their muscles: Britain’s minister for culture, media and sport declared: “We will put everything on the table to prevent this from happening. We are examining every option from governance reform to competition law, and mechanisms that allow football to take place.”The most likely outcome may be some sort of compromise. That was the result in 1998, the last time the idea of an elite European competition was raised, after which UEFA responded by enlarging the Champions League. That would be no bad thing. “What the football authorities need to face up to is that there is something here that is desirable: to see the big clubs with the big stars play each other more often,” says Mr Szymanski. If they don’t provide it, someone will. More

ENERGY COMPANIES have no seat at the climate high table convened by President Joe Biden on April 22nd and 23rd, to which he has invited 40 other world leaders to discuss how to speed up the shift from dirty energy. From the sidelines, coal firms will scowl at efforts to curb demand in Asia and oil drillers wince at support for electric cars. Watching particularly closely will be those firms which have bet big on natural gas. As the energy transition gathers momentum, no fuel’s future is smokier than that of the least grubby hydrocarbon.Proponents see natural gas as the “bridge fuel” to a greener world. They include the five largest international oil companies: ExxonMobil, Chevron, Royal Dutch Shell, Total and BP. These supermajors saw gas rise from 39% of their combined hydrocarbon output in 2007 to 44% in 2019 (see chart 1). That year producers approved a record level of liquefied natural gas (LNG) capacity. Those projects will come online in a few years. Shell, which in 2016 paid $53bn for BG, a British gas behemoth, now says that its oil production peaked in 2019, but that it will expand its gas business with annual investments of about $4bn. Total expects its crude output to sink over the next decade, but for gas to rise from 40% to 50% of sales. In February Qatar Petroleum, a state-owned giant, said it would begin the largest LNG project in history.Yet there is intensifying debate over whether gas proves a bridge or a dead end. Mr Biden and his counterparts in other countries appear to be serious about achieving net-zero emissions by 2050, which would require accelerating the phase-out of all fossil fuels, gas included, unless paired with technology to capture and store emissions. Inexpensive wind and solar power already threaten gas-fired electricity, particularly in America and Europe. Even as demand looks uncertain, cheap gas from state-owned firms such as Qatar’s will add to global supply. Some companies’ bets will go bad.On the demand side, gas remains a sensible gamble in some ways. A gas-fired power plant belches about half the emissions of a coal-fired one. The fuel benefits from diverse sources of demand, too. In addition to producing electricity, gas is used to make fertiliser and generate heat for buildings and industry. Unlike exhaust from a car, emissions from a factory can theoretically be captured and stored below ground. Gas can also be used to generate hydrogen, which may in turn serve as a form of long-term energy storage.However, companies’ investments have not always gone as planned. A rush for gas between 2008 and 2014 was part of a broader stampede by energy giants, as higher energy prices spurred investments with little regard for costs, explains Michele Della Vigna, of Goldman Sachs, an investment bank. In late 2019 Chevron said it would write down as much as $11bn, largely owing to underperforming shale-gas assets in Appalachia. Gas comprised the bulk of the $15bn-22bn worth of impairments announced by Shell last June. In November ExxonMobil said it would write down the value of its gas portfolio by $17bn-20bn, its biggest impairment ever. ExxonMobil’s $41bn purchase in 2010 of XTO Energy, a shale-gas company, may be the worst-timed investment made by an oil major in the past 20 years.Two big questions now hang over future demand, each difficult to answer with any certainty. The first is how fast governments limit carbon emissions. The extraction, liquefaction and transport of gas produce their own emissions, on top of those from its eventual combustion. Gas production also releases methane, a greenhouse gas that is about 80 times more potent than carbon dioxide over a 20-year period. Adding methane leaks from fracking or pipelines, the Natural Resources Defence Council, an environmental group, calculates that American LNG exports in the next decade may produce greenhouse gases equivalent to the annual emissions of about 45m new cars—not counting burning the stuff for energy.Responding to climate concerns, the Netherlands and some Californian cities have already banned gas in new buildings. Britain will do so from 2025. “To put it mildly,” Werner Hoyer, head of the European Investment Bank, declared in January, “gas is over.” John Kerry, Mr Biden’s climate envoy, in January warned that gas infrastructure risked becoming stranded assets. The International Energy Agency (IEA), an intergovernmental group, reckons that demand growth will slow to about 1.2% a year until 2040, from an average of 2.2% in 2010-19. If governments move more aggressively to restrain temperatures, demand could be lower in 2040 than it was in 2019 (see chart 2). BP offers a more bearish scenario: if the world were to reach net-zero emissions by 2050, gas demand would peak within the next few years and nearly halve by mid-century. “For the business to survive,” argues Massimo Di Odoardo of Wood Mackenzie, an energy consultancy, “it’s not just about marketing gas. It’s about marketing gas and managing emissions.”The second question with respect to demand is how quickly rival technologies advance. Already, about two-thirds of the world’s population lives in places where power from new wind and solar farms is cheaper than from new gas plants, according to BloombergNEF, a data provider. Electric heat pumps threaten gas in buildings. In future, gas with carbon capture and storage (CCS) may prove more expensive than hydrogen generated by renewable electricity. Mr Biden’s proposed $2trn infrastructure bill includes support for CCS, but also for technologies that could challenge gas’s role across industry, power and heating.The European Union aspires to make its members leaders in hydrogen, which some hope could one day replace gas in many applications while using existing pipelines and other infrastructure.Then there is the matter of supply. Maarten Wetselaar, Shell’s gas chief, says that the industry once expected the market to be undersupplied and the price to be set by the marginal customer. Instead, he notes, American shale means the world has plenty of gas. On top of that, private companies must compete with state firms in Qatar and Russia, which can extract gas cheaply and have a political imperative to monetise reserves while they can. Qatar’s new project will increase its LNG capacity by 40% by 2026.What is more, a growing spot market and shaky demand have made LNG buyers less interested in traditional long-term contracts. At least a quarter of LNG supply is now uncontracted, estimates Mr Di Odoardo. As approved projects come online, the share of uncontracted LNG may exceed 50% by 2030.All this is prompting some in the industry to rethink their embrace of gas. Last July Dominion Energy, an American utility, cancelled plans for a controversial pipeline and sold its entire pipeline business to Berkshire Hathaway, a huge conglomerate, for $9.7bn. In November Engie, a French energy company, scrapped plans to sign an LNG contract with NextDecade, an American firm, over concerns about shale emissions. Other firms are trying to adapt to a gas business that looks set to grow both more competitive and more complex.Big players are now applying a higher cost of capital to their hydrocarbon investments, notes Mr Della Vigna, with a greater focus on profitability. Scale is turning to their advantage, too.Take Shell. The company’s share of gas production actually fell in recent years, as it sold off less profitable gas assets in America and Nigeria. Mr Wetselaar maintains that Shell is well positioned to deal with the market’s new realities. Unlike smaller players, which depend on long-term supply contracts to attract financing for new projects, Shell can use its balance-sheet. Trading capabilities make it easier to sell LNG to diverse buyers. For those who want zero-emissions energy, Shell has already sold ten “carbon neutral” LNG cargoes, paired with offsets.Total, another European oil major, plans to double its LNG sales over the coming decade, while touting its plans to reduce methane emissions. ExxonMobil reckons that its new investments in CCS will both limit emissions and support its traditional business.Such plans are unlikely to sway those who want investment in all fossil fuels to plunge. Companies’ plans can be disrupted by any number of forces—in March an attack in Mozambique prompted Total to suspend a giant LNG project there. The changing market means only the most profitable, safe projects backed by the strongest firms are likely to move forward.NextDecade, having failed to secure Engie as a customer, has postponed a final investment decision on one proposed facility in Texas and scrapped another. It had sought to build an LNG import terminal in Ireland, too. In January Irish officials let a preliminary agreement with NextDecade expire. Gas may not quite be over. But the industry may increasingly be defined not by the projects that advance but those that do not. ■ More

ACCORDING TO INDUSTRY lore, lipstick sales increase in recessions as women opt for affordable indulgences. This time it has been firms peddling masks and video-conferencing software that have prospered. But as face-to-face life slowly resumes in much of the world, purveyors of shampoo, skin creams, perfumes and the like are wondering how the pandemic will have changed beauty habits. At L’Oréal, the world’s biggest such firm, it will be up to a fresh face to navigate this new world.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

THERE COMES a time when even the most glittering career must come to an end. Choosing the right moment to retire is difficult enough, but many people also struggle to imagine what they could possibly do next. In their new book, “Changing Gear”, Jan Hall, a former headhunter, and Jon Stokes, a psychologist, discuss the strategies that people can follow when approaching the “third stage” of life, after their childhood and their careers.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

WHEN UBER came to South-East Asia, the Silicon Valley ride-hailing giant coaxed customers into cabs with free ice cream, a tactic it had deployed in Western markets. Grab, a local rival based in Singapore, plied riders with durian, a pungent tropical fruit that repels many Westerners but is beloved of people in places like Indonesia, Malaysia and Thailand. GrabDurian, as it called the effort, delivered several varieties of the fruit (as well as desserts made from the stuff). After years of brutal rivalry Grab acquired Uber’s South-East Asian operations in 2018. The tale lives on as a lesson for doing business in the region, which is home to nearly 700m people. Digital services such as ride-hailing and food delivery can thrive—so long as they adapt to local conditions.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

TAKE OUR cash, or at least our shares. That appears to be Microsoft’s mantra these days. After failing to acquire the American operations of TikTok, a short-video app, last year, the software giant was recently rumoured to be in takeover talks with Pinterest, a virtual pin-board, and Discord, an online-chat service. And on April 12th the firm announced that it would acquire Nuance, a speech-recognition specialist, for nearly $20bn in cash—its second-biggest acquisition ever.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

IF YOU ARE an emblem of American harmony like Coca-Cola, you play your politics carefully, especially on issues as divisive as race and voting. The soft-drinks company did so brilliantly in 1964 when the elite of Atlanta—home to both Coca-Cola and Martin Luther King—threatened to snub the civil-rights leader on his return from winning the Nobel peace prize. Appalled at the potential embarrassment, Coca-Cola’s current and former executives worked quietly behind the scenes to persuade other industrialists to attend a dinner in King’s honour. They even sang “We Shall Overcome”.Coca-Cola has weighed in this year, too, before and after Brian Kemp, Georgia’s Republican governor, signed a new law on March 31st that critics said would supress black voters. The firm’s discreet efforts to soften aspects of the bill before its passage backfired twice over. First civil-rights groups accused it of pusillanimity. When its boss, James Quincey, subsequently joined other Atlanta natives such as Delta Air Lines in expressing disappointment at the outcome, Republicans branded Coke and the others “woke” hypocrites.On April 14th hundreds of firms, including giants like Amazon and Google, and prominent businesspeople, among them Warren Buffett, published a letter opposing “any discriminatory legislation” making it harder to vote. One prominent signatory, Kenneth Frazier of Merck, a drugmaker, told the New York Times it was meant to be non-partisan. In the words of William George of Harvard Business School, himself a former CEO, voter suppression “puts democracy at risk, and that puts capitalism at risk”.Republicans, who have been pushing the bills in response to Donald Trump’s big lie that he was denied a second presidential firm by widespread fraud, call the corporate finger-wagging nakedly political. That so many household brands and boardroom grandees nevertheless increasingly wag their fingers at the traditionally business-friendly Republican Party shows that they are prepared to break a code of political silence that has served corporations well since the dawn of American capitalism. Why? And what effect will it ultimately have on their business?America Inc was built on top of an innovation—the joint-stock company—that allowed businesses to put politics at arm’s length. Before the widespread introduction of this corporate structure in the first half of the 19th century, companies needed to secure a government charter to operate, which often involved greasing plenty of official palms. Afterwards they needed only a business plan and willing investors. The result was the most fecund business environment of all time.In the early 20th century many bosses used their companies’ wealth to buy cronies in government, as well as political favours. In the aftermath of the second world war, the door between industry and political office was not so much revolving as wide open. “Electric Charlie” Wilson, boss of General Electric, and “Engine Charlie” Wilson, boss of General Motors, worked for several administrations in the 1940s and 50s. The period until the 1960s was a time of what John Kenneth Galbraith, a gadfly economist, called “countervailing power”. Big business was in a well-balanced scrum with big government and big labour. Some CEOs behaved like industrial statesmen, offering jobs for life to workers, building villages and golf courses, and presenting themselves as guardians of society.That equilibrium was shaken in 1970 by Milton Friedman, a Nobel-prizewinning champion of laissez-faire economics. He argued that executives’ sole responsibility was to shareholders. So long as markets were free and competition fierce, maximising shareholder value would help society, by ensuring better products for customers and better conditions for workers. Firms that failed on either count would see buyers and employees defect to rival firms. Republicans like Ronald Reagan embraced Friedman through shrinking government and deregulating the economy. This gave rise to superstar firms and the cult of the celebrity CEO in the 1980s and 90s.Even so, businessmen held their tongues on political matters. Instead, they put their faith in paid lobbyists and used industry groups like the Business Roundtable to campaign on their behalf. The lobbying concerned almost exclusively matters of direct concern to their bottom lines, such as taxes, regulations or immigration policies that might affect their employees. They studiously kept out of the broader political hurly-burly.Corporate cash continues to flow into politics. But in recent years it is accompanied by a parallel stream of CEO activism. Weber Shandwick, a public-relations firm, dates this phenomenon back to 2004 when Marilyn Carlson Nelson, boss of Carlson Companies, a travel business, took a stand against sex trafficking. Her fellow travel bosses thought such pronouncements would hurt the industry’s neutral image. Instead, she was treated as a heroine by customers. CEOs in other industries took note. Gingerly at first and more conspicuously in the past five years or so, they began weighing in on subjects from the #MeToo and Black Lives Matter (BLM) movements to religious-freedom laws, gun control, gay rights and transgender-bathroom bills. Mr Trump’s divisive actions, such as a temporary ban on visitors from some Muslim countries, withdrawal from the Paris climate agreement or reaction to racist protests in Charlottesville, caused outrage across corporate America (even as it lapped up his tax cuts).Mr Trump’s tenure also coincided with a period when public trust in government was already in decline, while that in business was rising. Despite companies’ and bosses’ image as handmaidens of heartless capitalism, Americans trust business a bit more than they do government or NGOs. Edelman, another PR firm, finds that 63% of Americans think CEOs should step in when governments do not fix societies’ problems. Heeding the call, in August 2019 members of the Business Roundtable, including bosses of 150 blue chips in the S&P 500 index, pledged to consider not just shareholders but also workers, suppliers, customers, the environment and other “stakeholders” in corporate decisions.The trouble with such CEO advocacy is a lack of clarity about its motivations and impact—on the issues themselves, as well on the businesses in whose name it is undertaken. Although a lot of it is probably well-meaning, it is muddied by suspicions of hypocrisy and grandstanding. Before Christmas The North Face rejected an order from a Texas oil company for 400 of its pricey outdoor jackets because it did not want its brand associated with fossil fuels. This month an oil-industry group in Colorado awarded the company a tongue-in-cheek “extraordinary customer award”. It noted that many of its clothing products are made with products of petroleum—including its jackets.In terms of its impact on hot-button issues, corporate activism can backfire if it causes the party against which it is directed to dig in its heels. Jeffrey Sonnenfeld of the Yale School of Management, who organised a gathering of CEOs on April 10th to discuss voter laws, acknowledges partisanship is involved. He believes both business and Mr Biden share a common interest in the centre ground. In the face of opposition from seemingly sanctimonious companies, the Republicans may be even more emboldened to press on with restrictive voter laws—just to rub it in.Chief executives claim that they simply have no choice but to tackle societal concerns because in the age of social media their customers, employees and shareholders demand it. The evidence for such assertions is mixed.Start with consumers. Some polls show that supporters of each party would buy more goods from companies that lean either right or left. But other research has found that consumers were more likely to remember a product they stopped using in protest at what a CEO said rather than one they started using in support. After a shooting spree in one of its superstores in 2019 Walmart banned some sales of gun ammunition. A subsequent study found that footfall in Walmart stores in Republican districts fell more sharply as a result than they rose in Democratic ones.The impact on employees is also inconclusive. Many tech firms in the knowledge economy are happy to wear their leftie leanings on their sleeves, believing this will attract bright millennial workers who tend to share such views. But it can go too far. Lincoln Network, a conservative-leaning consultancy, found that firms promoting a political agenda can have an oppressive internal monoculture, which stifles creativity rather than fostering it. Then there are the shareholders. Bosses rarely consult them before making political statements. Lucian Bebchuk of Harvard Law School found that among signatories of the Business Roundtable’s stakeholder pledge only one of 48 for whom data were available had consulted their board beforehand. That suggests a lot of the pro-social rhetoric is lip service.Investors seem to see it that way. The share prices of S&P 500 companies whose bosses signed that declaration—which, if taken at face value, would mean that shareholders would have to share the spoils with other stakeholders—performed almost identically to those of companies whose CEOs were not among the signatories. That implies that markets did not consider the rhetoric to be of material importance. The fact that some of the loudest proponents of stakeholder capitalism, such as Salesforce, laid off workers amid the pandemic despite record revenues suggests that investors may be onto something.In time, shareholders themselves may become more political. The rise of investment funds that consider environmental, social and governance (ESG) factors suggests an appetite for certain forms of social stance-taking when allocating capital. ESG investors are often willing to accept somewhat lower yields for corporate bonds tied to some do-gooding metrics. After studying ten years’ worth of public-interest proposals at S&P 500 companies, on everything from economic inequality to animal welfare, Roberto Tallarita, also of Harvard Law School, found that virtually no such proposals pass. But support for them is on the rise. In 2010 18% of shareholders voted for them, on average. By 2019 this had risen to 28%. One day the boardroom may become as political as the corner office. In the meantime, CEO pontificating is likely only to get louder. More