Raphael Stevens

Paramount Pictures spent around $5 million to fix the character design of Sonic in its 2020 “Sonic the Hedgehog” film.
The feature was a success at the box office and has spurred on two more films and a television series. Each follow-up film has outperformed the last.
A fourth installment in the film franchise is due out in 2027.

Paramount Pictures revamped version of Sonic the Hedgehog (r).
Source: Paramount Pictures

Sonic the Hedgehog may be able to run faster than the speed of light, but his film franchise nearly came to a screaming halt in 2019.
A less-than-three-minute trailer released early that year to tease the film’s release, which was just six months away, was widely panned by fans who took to social media to rail against Paramount’s character design. Dubbed “Ugly Sonic,” the blue creature that appeared on film was a far cry from the iconic video game speedster.

Cinematic Sonic, version 1, had more realistic facial features, including human-like teeth, and his body proportions were deemed inconsistent with the character fans grew up with in the ’90s.
“The trailer goes out, and I think it became the most viewed trailer in the history of Paramount Pictures. Which is amazing,” said Toby Ascher, who acquired the rights to Sonic and produced the film franchise. “The only problem was that 90% of people hated the trailer because of the design of Sonic.”
“All of a sudden we went from trying really, really hard to make a really, really faithful video game adaptation to being next in line of the people who had ruined video games for everyone. It just was a disaster of epic proportions,” Ascher added.
The studio pivoted, opting to redesign the title character and push the film’s release back three months to February 2020. The fix cost Paramount around $5 million but resulted in a franchise that has generated nearly $1.2 billion at the global box office. The studio hopes to build on that momentum with a fourth installment in the film franchise, set to debut in 2027.
“The Sonic franchise owes its box office success and longevity to a monumental decision early in the development of the first films’ marketing campaign,” said Paul Dergarabedian, senior media analyst at Comscore. “A re-design of a main character is no small thing. … These decisions can make or break what is every studio’s dream of having a single film turn into a long-term revenue generating franchise. The return on investment by turning an ‘ugly’ Sonic into a beautiful revenue generating franchise is undeniable.”

Bringing Sonic to the big screen

Ascher first acquired the rights to Sonic the Hedgehog in 2013, a time in Hollywood when video game-inspired films had failed to resonate with audiences.
“When we first started working on Sonic, making a video game adaptation was, like, a really bad idea,” he told CNBC.
No film based on a video game property had, to that point, managed to earn a positive rating from review aggregator Rotten Tomatoes. It wasn’t until 2019 that a video game-based film generated a “fresh” rating on the site, indicating more than 60% positive reviews.

Ben Schwartz voices Sonic in Paramount Pictures’ “Sonic the Hedgehog.”
Paramount Pictures

“I don’t think anyone in town really thought making a Sonic movie was a good idea,” Ascher said. “But, I think our strategy was that we had grown up with these games. We’ve grown up with these characters, and we wanted to treat them like any other character. We wanted to give them real emotional arcs, and real emotional stories where you could relate to them.”
Ascher noted that previous video game adaptations typically focused on worldbuilding rather than character development.
“What we’ve been able to do is inject into the franchise heart, and I think that that’s what’s made it different,” said Neal Moritz, Ascher’s producing partner and producer of franchises like “The Fast and the Furious” and “21 Jump Street.”
Both Ascher and Moritz noted that while the filmmaking team behind the first “Sonic the Hedgehog” film overhauled the main character’s design, the story remained pretty much the same.

‘We really screwed up’

The filmmaking team was blindsided by audiences’ reactions to the first trailer, but were resolute in trying to resolve the issue rather than shelve the film or release it in its current form.
Moritz said he made an “impassioned speech” to the heads of Paramount and Sega to allow the filmmakers to fix the mistake.

Paramount Pictures

As Moritz recalls, he told executives: “We really screwed up here, but there’s an incredible amount of interest and what we need to do is fix it … We need some more money and we need some more time. If you give that to us, I think we could turn this thing around.”
“I give both Paramount and Sega a lot of credit,” Moritz said. “They said ‘OK.'”
In the redesign, the team brought back Sonic’s iconic white gloves and classic red shoes. They reinfused the character with some of his cartoon roots, and six months after the first trailer, Paramount released a new iteration.
“The fans saw that we were trying to be really genuine in our love for this franchise,” Ascher said, noting that in the wake of the first trailer the team began engaging more with fans and focus groups to drum up feedback and inspiration.
The new trailer was well-received by fans, and three months later “Sonic the Hedgehog” opened to $58 million at the box office. The feature went on to collect $146 million domestically before the pandemic shuttered theaters. Globally, it pulled in $302 million.

The future of Sonic

The Sonic franchise has continued to thrive in the following years, with each follow-up feature outperforming the last.
“Sonic the Hedgehog 2” snared $190 million domestically and $403 million globally, while “Sonic the Hedgehog 3” tallied $235 million stateside and $485 million worldwide.
“That’s a big jump,” said Marc Weinstock, Paramount’s president of worldwide marketing and distribution. “I get excited that every new movie does better than the last one, which is rare.”
Following the success of the second “Sonic” film, the studio’s then-president and CEO of Paramount Pictures, Brian Robbins, greenlit a “Knuckles” series based on the franchise for the company’s streaming service, Paramount+, as well as a third Sonic film.
Sonic was becoming multi-platform, much like Robbins and Paramount had done for franchises like “Teenage Mutant Ninja Turtles,” “A Quiet Place,” “Spongebob Squarepants” and “Paw Patrol.”
The “Knuckles” show generated more than 11 million global viewing hours in its first 28 days on Parmount+.
The theatrical success also rocketed Sonic from a $70 million licensing business to one that generates more than $1 billion in retail revenue annually, according to Ivo Gerscovich, Sega’s senior vice president and chief business and brand officer of Sonic the Hedgehog.
“The great thing about Sonic — and the success of Sonic from the very beginning — is that we basically have listened to the fans from day one,” Robbins, now co-CEO of Paramount, said. “The fans are fanatical about this franchise and love this franchise and know this franchise. Because of that, they’ve become really key in shaping the franchise … They evangelize it.”

Still from Paramount’s “Sonic the Hedgehog 2.”

Fans inspired the casting of Keanu Reeves as Shadow, an archrival of Sonic, in the third Sonic film. And the filmmaking team says it continues to look to fans to inspire which characters it will add to the films and series next.
Ascher and Moritz both teased that the fourth Sonic film with again feature a new fan-favorite character, but said the team will continue to expand the franchise’s universe at a slow pace.
“If all of a sudden we bring every character, they are not going to get the time that the audience needs to understand them and relate to them and really fall in love with them,” Ascher said. “So, as we bring characters in, whether it’s film or it’s TV, the most important thing is that they have a good story that really showcases the character in an incredible way.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal owns Rotten Tomatoes and is the distributor of “The Fast and the Furious” films. More

The Los Angeles Dodgers have deferred over $1 billion in current player contracts in the past few years, an unprecedented amount that has made headlines this offseason.
The deferrals have sparked anger and derision among some baseball fans questioning their compliance with Major League Baseball regulations.
While teams have negotiated deferrals into contracts for decades, the Dodgers’ financial and team success has exacerbated current concerns over competitive imbalance in MLB.

Members of the Los Angeles Dodgers celebrate on the field after winning Game 5 to win the 2024 World Series presented by Capital One between the Los Angeles Dodgers and the New York Yankees at Yankee Stadium on Oct. 30, 2024.
Mike Lawrence | Major League Baseball | Getty Images

As Major League Baseball’s spring training kicks into gear, the Los Angeles Dodgers are wrapping up a nearly perfect offseason.
After the Dodgers captured the World Series in October, the team notched more wins in the winter. The club retained key players, brought in coveted free agents and deferred over $130 million in new contracts — sending many baseball fans into an uproar that has reignited backlash to the sport’s financial model.

Criticism of the Dodgers deferring money, or delaying paying players much of their salary until after their contract with the team ends, first began in 2023. The team signed Shohei Ohtani to a then-record 10-year, $700 million deal, but deferred $680 million of that total. The team’s offseason this year amplified that criticism into outright fury, provoking allegations that the Dodgers manipulated MLB’s salary system to build a superteam.
While contract deferrals have become more common across MLB, the Dodgers have relied on them more than any other team. Of roughly $1.5 billion in known deferred money on active MLB contracts, the Dodgers account for about $1.04 billion — or two-thirds, according to data from sports contract website Spotrac compiled by CNBC.
Contract deferrals can provide advantages to both franchises and players, sports business experts told CNBC. But the practice is just one piece of larger criticism of the fairness and sustainability of MLB’s financial structure. Critics aren’t just angry at the Dodgers’ ability to defer money; they’re frustrated by what they see as a league with no salary cap creating unfavorable conditions for teams unable or unwilling to spend as much as the Dodgers do year after year.
“The Dodgers are definitely way, way, way out in their own space when it comes to these deferral deals,” said N. Jeremi Duru, law professor and director of the Sport & Society Initiative at American University.

The benefits of deferrals

Teams kick salary down the road for a simple reason: They save money now, controlling the cost of a star-studded roster. They may decide present success is worth future liabilities.

Unlike many other professional sports leagues, MLB doesn’t have a salary cap limiting how much teams can pay players. It does, however, enforce a “competitive balance tax,” which levies a fee on teams that exceed a certain payroll threshold. The tax payment depends on the amount by which the payroll exceeds the threshold.
For luxury tax purposes, a team’s payroll is calculated by summing the average annual values of each contract, according to MLB’s current collective bargaining agreement. For contracts with deferred salary, that number typically turns out smaller than if the pay weren’t deferred, so teams can use the practice to lower their tax bills.
The Dodgers, for instance, would have paid Ohtani $70 million a year on a standard version of his contract. But with deferrals, his yearly salary for luxury tax purposes is only $46 million, according to FanGraphs.
Most teams would not feel comfortable punting over $1 billion in salaries to the future, but the Dodgers are one of MLB’s most popular and financially successful franchises. They’ve led the league in home attendance every season since 2013, according to ESPN, and are the second-most valuable team in the league behind the New York Yankees, according to Forbes.
The Dodgers’ market size and global reach grant them the “firepower” to ink expensive but deferred contracts, said David Carter, sports business professor at the University of Southern California and founder of consulting firm Sports Business Group.
“How far down the road can you see revenue coming in from media deals, particularly your local or regional deal? What about sponsorship and sponsorship upside, and what about ticketing? And the Dodgers have been off the charts in those areas for a very long time,” Carter told CNBC.
The Dodgers declined to comment on their use of deferrals.
The benefits of deferrals for players are less obvious. Just as teams save money on tax bills for considerations of how money depreciates over time, players lose out by delaying their payments, Robert Raiola, director of the sports and entertainment group at accounting firm PKF O’Connor Davies, told CNBC.
But players can sacrifice money now to help a club build a World Series contender. Dodgers All-Stars Freddie Freeman and Mookie Betts accepted a combined $172 million in deferrals in the years before Ohtani’s deal.

Freddie Freeman #5 of the Los Angeles Dodgers celebrates as he walks to first base after hitting a grand slam home run in the 10th inning during Game 1 of the 2024 World Series presented by Capital One between the New York Yankees and the Los Angeles Dodgers at Dodger Stadium on Friday, October 25, 2024 in Los Angeles, California.
Rob Tringali | Major League Baseball | Getty Images

And they can recoup some of those losses by deploying strategies, like negotiating for a signing bonus in a contract, to minimize their personal tax bill.
Signing bonuses are taxed by a player’s state of residency, not the states where they play games, so players who live in a state with a smaller or no income tax can receive a larger chunk of the bonus, Raiola said.
Some players with contract deferrals can also save on or avoid state taxes on their deferred payouts if they move to a different state or country. Federal tax law prohibits states from taxing the retirement income of nonresidents, and deferral plans that include relatively equal payments over at least 10 years, like Ohtani’s contract does, stand to qualify as retirement income.

The state of the game

The Dodgers’ extensive usage of deferrals has drawn ire from some baseball fans. As more and more reports of Dodger free agent signings receiving deferred money surfaced on social media this offseason, commentators accused the team of skirting the competitive balance tax and sarcastically compared the Dodgers to buy now, pay later services like Klarna.
Sports business experts stress that the Dodgers are following the rules and are far from the first organization to defer payments. Many current and retired MLB players are still receiving deferred payments from deals struck years ago with former teams — the most notable of which is Bobby Bonilla’s agreement with the New York Mets.
The Dodgers’ ability to shell out on salaries both now and later has sparked fresh complaints about the league’s competitive balance. Even by reducing their tax payments with deferrals, the Dodgers will still pay a league-leading $142 million in luxury taxes in 2025, according to Spotrac. The current deferral debate is a microcosm of a broader gripe that the wealthiest and most successful MLB franchises can use their financial muscle to eliminate parity within the sport.
“Without question, I think there’s a lot of concern from a lot of corners that this is bad for the competitiveness of baseball,” Duru said.

NEW YORK, NEW YORK – OCTOBER 30: Stan Kasten, President and CEO of the Los Angeles Dodgers, celebrates with the Commissioner’s Trophy after defeating the New York Yankees 7-6 in Game Five to win the 2024 World Series at Yankee Stadium on October 30, 2024 in the Bronx borough of New York City. (Photo by Elsa/Getty Images)
Elsa | Getty Images Sport | Getty Images

Complaints about the best teams dominating the league are nothing new, and MLB does have a revenue-sharing system that redistributes income to the lowest-earning franchises. But some current trends in baseball are amplifying these fears. MLB teams earn much of their revenue from their media rights deals with regional sports networks, many of which have faced financial crises in the past few years.
The Dodgers, meanwhile, enjoy one of the more stable broadcasting arrangements in the league. The team’s current contract, inked in 2013 with Time Warner Cable (now owned by Charter Communications), is reportedly worth between $7 billion and $8 billion over 25 years, according to the Los Angeles Times.
The Dodgers are also at the forefront of MLB’s global expansion efforts, especially in Asia. Already one of the most recognizable MLB teams worldwide, the Dodgers feature three top Japanese players (Ohtani, Yamamoto and Roki Sasaki). All Dodgers games are broadcast in Japan, and this year the team will open its season in Tokyo.
Steven Bank, a business law professor at the University of California, Los Angeles, said the Dodgers are beginning to resemble soccer “superclubs”: historically successful teams like Manchester United that have global fanbases. MLB has to maintain a delicate balance between its biggest names racking up championships and other teams having a chance to win, he said.
“There is an argument from a business perspective that superclubs draw more eyeballs and that that benefits everybody,” Bank said.
Case in point: TV ratings for the Yankees-Dodgers World Series in 2024 jumped 67% from 2023’s championship series between the Texas Rangers and the Arizona Diamondbacks and set several postseason viewing records in Japan.
MLB wants to maintain the competitiveness of the sport, Carter said, but above all the league’s job is to increase the value of its franchises — even if some teams benefit more than others.
“Ultimately, it’s best for the league if these big-market franchises do really well,” Carter told CNBC.

What’s next for MLB

Deferrals will likely remain a contentious topic in MLB for years to come, especially before the league’s collective bargaining agreement expires at the end of 2026.
The league previously tried to eliminate deferrals during negotiations for its last CBA, which took effect in 2022. Commissioner Rob Manfred said in December that deferrals can “at some point become problematic.”
He pointed to a repayment crisis two decades ago, when former Diamondbacks owner Jerry Colangelo negotiated about $250 million in deferred salaries to build a roster that ultimately won the World Series in 2001. The team then faced financial turmoil, raising ticket prices and trading star players to help pay off its debts. The episode spurred MLB to change its rules: Team ownership must now have the funds for deferred salary fully available within a year and a half of a contract being signed, according to the MLB collective bargaining agreement.
“We’ve strengthened our rules in terms of the funding of deferred compensation in order to avoid that kind of problem. But, you know, look, obviously the bigger the numbers get, the bigger the concern,” he said.
MLB referred a CNBC interview request to Manfred’s comments.
Any MLB effort to stop deferrals will likely face opposition from the players union, Duru said, and a prolonged disagreement over the issue could lead to a work stoppage for the league.
For now, deferrals aren’t going anywhere in MLB. Raiola said he expects to see more teams located in higher-tax states to “catch on” and negotiate deferred contracts.
The Dodgers haven’t been the only franchise pushing salary to the future this offseason. Alex Bregman deferred $60 million of his $120 million contract with the Boston Red Sox, while Anthony Santander will receive $61.75 million of his $92.5 million deal with the Toronto Blue Jays as deferred compensation.
It’s not just baseball fans who are upset with the practice. Some California politicians, displeased about the possibility of athletes retiring elsewhere and depriving the state of income taxes, are taking matters into their own hands.
In March 2024, state Sen. Josh Becker introduced legislation that would call on Congress to impose a cap on deferred compensation. The bill, which calls out Ohtani’s contract and claims he could save over $90 million in taxes if he were to retire outside of California, passed the state Senate but was withdrawn by Becker after it received insufficient support in the state Assembly.
“Ohtani’s dodging taxes like curveballs,” Becker told CNBC. “Everyone else is playing fair.”
Becker said deferred compensation was originally intended to help people retiring from more typical jobs, rather than professional athletes. He hopes to reintroduce the bill next year.
Malia Cohen, California’s state controller and a bill sponsor, said the state’s wealthiest residents have an “outsize impact” on California’s income tax revenue and should pay their fair share. Additional tax revenue would help all Californians, she added.
The Dodgers, especially Ohtani, are at the epicenter of the deferral controversy because of the sheer amount of money involved, USC’s Carter said. But until the rules change, the team is entitled to continue its spending spree.
“Everybody seems to be skiing inbounds now,” Carter said. “And so until that’s no longer the case, then this issue need not really be actively revisited.” More

American will start testing free inflight internet service on three routes next week.
The carrier is under pressure to offer complimentary Wi-Fi as more airlines launch the service free of charge.
American has been in the process of working to win back customers after a failed business travel sales strategy last year.

The main cabin of a American Airlines Boeing 777-300ER jet. 
Mary Altaffer | AP

American Airlines is planning to test complimentary inflight Wi-Fi starting next week as pressure mounts on carriers to offer the service free of charge.
The tests will be available on three flights: Between hub Charlotte Douglas International Airport in North Carolina and Raleigh-Durham International Airport; Charlotte and Jacksonville International Airport in Florida; and between Miami International Airport and Chicago O’Hare International Airport.

More and more carriers have either launched or are preparing to offer free inflight Wi-Fi, making it harder for competitors to charge for connectivity. American’s prices vary and are some of the U.S. industry’s highest, with flight passes often topping $20.
It was not immediately clear whether American will expand complimentary service to larger swaths of its network, and if so, when.

Delta Air Lines two years ago announced it would make Wi-Fi free for members of its SkyMiles loyalty program, following JetBlue Airways. United Airlines plans to offer complimentary Wi-Fi on board this year using Elon Musk’s Starlink satellite Wi-Fi, a service Hawaiian Airlines, which was acquired by Alaska Airlines, also uses.
“Through this test, we’ll be assessing customer take rates for inflight Wi-Fi, evaluating our provider and aircraft capacity, and – perhaps most important – measuring the impact to customer satisfaction,” American’s chief customer officer, Heather Garboden, said in a staff memo Friday.
In addition to facing more competition for a complimentary service, Fort Worth, Texas-based American has been in the process of working to win back customers after a failed business travel sales strategy last year.
“While relatively small in scope, this is already a big stride in our organization’s very critical work to give our customers what we know they want,” Garboden said.

Read more CNBC airline news More

The makers of Easter egg dye kits are bracing for the potential fallout if the egg shortage doesn’t begin to clear up before the April 20 holiday.
For many companies that specialize in these activity sets, egg dye kits and related products make up a significant share of annual revenue.
Some companies still expect to see solid business this Easter, bolstered by three extra weeks of selling and the draw of the tradition.

Melkinimages | E+ | Getty Images

The egg aisle is anything but cheaper by the dozen these days — and that’s becoming a big problem ahead of the Easter holiday.
The makers of Easter egg dye kits are bracing for the potential fallout if the egg shortage doesn’t begin to clear up before the April 20 holiday. For many companies that specialize in these activity sets, egg dye kits and related products make up a significant share of annual revenue. Diminished sales could have a major impact on their bottom lines.

“I think sales will be down,” said Ashley Phelps, founder and CEO of Color Kitchen, a plant-based baking decoration company. “That remains to be seen, but I think it probably will be.”
Wholesale egg prices have eclipsed record levels, reaching a high of $8.58 per dozen amid a domestic bird flu outbreak, according to global commodity data firm Expana. More than 52 million egg-laying birds have died, leaving the national flock at just 280 million, a critically low level, said Ryan Hojnowski, a market reporter at Expana.
He noted that rising prices have slowed consumer demand as retail egg prices average around $6 per dozen or higher. Additionally, many stores have implemented purchasing limits, restricting the number of cartons that customers can buy at one time.
The combination of inflated price and limited availability could curtail sales of eggs for the Easter holiday, ultimately affecting the demand for egg dye kits.
Natural Earth Paint, a company that manufactures natural art supplies and craft kits for kids, typically sells between 40,000 and 50,000 egg dye kits around the Easter holiday, according to founder Leah Fanning. So far this year, the company’s retail partners have ordered only 7,000 kits.

“It’s definitely a huge drop,” Fanning said, noting that most buyers have cited the egg shortage for the smaller orders.
Fanning told CNBC that the egg dye kits have been Natural Earth Paint’s bestselling product for 13 years and kept the company in business for its first eight years. Of the company’s more than 40 products, the egg dye kit remains its “absolute bestseller.”
She noted that while the majority of Natural Earth Paint’s sales come from retail locations, online sales typically pick up around three weeks before Easter. That leaves the chance that direct-to-consumer sales could get a boost in mid-March.

A sign in a supermarket in New York City asks customers to limit their purchase of eggs to one carton, Feb. 13, 2025. The avian flu epidemic in the U.S. has sharply reduced the supply and raised the prices of eggs.
Anadolu | Getty Images

Color Kitchen said its Easter items represent 20% of the company’s total stock of items and outpace sales of all other items, including its Christmas icing kits.
Phelps noted that most retailers order these egg kits months ahead of the holiday to ensure they are in stock immediately after Valentine’s Day. She said retailers “took a little less product this year” given sensitivity to the inflationary environment.
“The other concern is that, some of the grocery stories, if they don’t sell through, then we get charged back for product that goes discounted to try and move it out of the store,” Phelps said. “So, that’s where we’ll get hit if the stuff that’s already been shipped out to grocery stores does not sell. That could potentially be very bad.”
Phelps said 75% of Color Kitchen sales are from the shelf. The remaining 25% is from direct-to-consumer sales on its website and on sites such as Amazon.

Walking on eggshells

There are some companies that still expect to see solid business this Easter. The holiday takes place in late April, giving companies three more weeks of sales compared with last year.
Hey Buddy Hey Pal, a company that makes the Eggmazing Egg Decorator, a crafting tool that spins eggs so kids can use markers to color them, generates between 85% and 90% of its annual revenue from its Easter product. Last year, the company generated $14 million in sales, a 22% bump from the year prior.
Curtis McGill, co-founder of Hey Buddy Hey Pal, said retailers have ordered fewer of its products this year. Still, the company said it expects another jump of 18% in annual revenue as it’s set to sell between 600,000 and 700,000 egg decorators this year.
Even as egg prices boil over, some dye kit makers see egg decorating as an essential tradition that few families will opt to skip, even if they reduce the number of eggs they use.
Paas, the leader in the egg dye kit space, expects that some families will decorate fewer eggs this year, but said many will still participate in the tradition.
“It’s just such a sticky tradition,” said Joe Ens, CEO of Signature Brands, which owns the 140-year-old iconic Paas brand.
The company recently completed a survey of 120 consumers and found that 94% of them still plan on decorating eggs this holiday.
“And the reason for that, other than the tradition being so important to consumers, is if you really break down the cost of the tradition, it is arguably the most affordable family tradition during any holiday,” he said.
Paas expects to sell more than 10 million kits this year, one of the company’s strongest sell-ins ever, he said.

Arts and crafts store chain Michaels said it’s already seeing shoppers opt for egg-inspired products. The company told CNBC that 43% of its total Easter sales so far this year have been for plaster, plastic and craft eggs.
Michaels said a particular craft egg kit designed to “mimic the traditional egg-decorating experience” is selling nearly three times faster than the company had anticipated.
Similarly, Hey Buddy Hey Pal expects some families may opt to purchase wooden eggs instead of real ones. Though the alternatives are typically more expensive than real eggs, they’re an opportunity to keep the creations around long after the holiday is over.
“A lot could happen between now and then, we can continue to see an outbreak of avian flu and some different egg farms that hadn’t been affected,” said McGill. “It could get worse before it gets better. That’s not the projections, but at this point … I’m just gonna hold my breath until we get to April the 20th.” More