Maryland Business

All an Atlantic Coast Conference spokeswoman and a spokesman for ESPN will say is “negotiations are ongoing.” Representatives from University of Maryland’s Department of Athletics won’t even talk about it.

But unconfirmed reports are running wild on the Internet and it appears Maryland and the ACC’s 11 other schools are due for a huge financial boon in 2011 as the conference nears a television deal that could increase each school’s share by roughly $7 million per year.

According to reports, the ACC has reached a 12-year, $1.86 billion television deal with sports giant ESPN, doubling the conference’s broadcast agreement with Raycom Sports and ESPN, which ends at the close of the 2010-2011 season.

Citing unnamed sources, the Sports Business Journal reported Monday that ESPN will pay the ACC $155 million a year to broadcast the conference’s football and basketball games through the 2022-23 season, more than double the approximately $75 million the ACC is making now.

Charlotte-based Raycom will continue its long association with the ACC by subleasing games from ESPN for regional syndication.

Maryland’s Department of Athletics serves 27 sports teams and has an annual expense budget of approximately $55 million, according to the school.

Translation: $7 million more a year will put each school’s share at about $13 million. That’ll make a nice difference for a school considered to have a mid-sized budget. And let’s not forget the cuts Maryland had to make in this most recent year’s athletics budget (for more details click here.)

And for the cherry on top of the sundae, rumors have it that Maryland could get an even bigger slice of  conference revenue sharing pie — but not with the ACC. According to The (Newport News, Va.) Daily Press’ Teel Time blog, the Big Ten Conference’s planned realignment could include Maryland. No one’s saying anything yet (again, unnamed sources cited here) but money-wise it’s huge: Big Ten schools receive about $22 million per year.

For you math nerds, that would be a near-quadrupling of Maryland’s conference money (although Maryland would have to play in a historically much tougher conference).

Either way it appears good financial times are ahead for Maryland athletics. Now about that football team …

Powered by Bookmarkify™

When you hear the words credit union, what other words immediately come to mind? How about private or exclusive?

If so, it seems you’re not alone.

The people over at SECU (that’s the State Employees’ Credit Union) have been doing their research, and they’ve found that the words “credit union” alone have stopped people from leaving banks to join credit unions.

“The term credit union is a barrier,” Rod Staatz, chief executive at SECU, said. “People believe it’s a club and it’s exclusive. They don’t want to be rejected.”

It turns out SECU is sort of a misnomer in that you don’t have to work for the state to join. Rather, a whole list of other people — alumni, students, staff and faculty of most Maryland colleges and universities are welcome, as are current and former employees of state, city, county or town agencies and labor union employees representing state employees.

Even spouses and family members of the above people can bank there. That opens membership up to a huge number of people.

SECU is working to get the word out that membership isn’t all that exclusive, because the team there is confident that once you go credit union, you never go back (to your bank). The main problem beyond the whole name thing is that most people don’t know what a credit union actually does.

So what’s the big difference between banks and credit unions? Banks are working to make money for their shareholders, while credit unions are nonprofits owned by their members. Any earnings the credit union makes, it filters back to its members through lower fees and loan rates.

Federally insured and state chartered credit unions are highly regulated, and held to the same or higher standards than banks.

And it’s not just SECU that’s on the scene. While it does have a large footprint in Maryland with 19 branches, a quick search of the National Credit Union Administration reveals that there are 108 credit unions in the state.

For a look at how credit unions are trying to market themselves, check out the above take on the Mac vs. PC commercial, subbing in credit unions and banks. It’s much better than this rap battle between banks and credit unions.

Powered by Bookmarkify™

Nuclear energy supporters got a boost Monday.

Companies like Baltimore’s Constellation Energy Group Inc. have their sights set on building new nuclear power plants, but getting the funding for the multi-billion dollar projects hasn’t been easy. Wall Street investors want some serious assurances that they’ll be paid back if they loan out the money and the companies default.

Enter President Obama.

On Monday he submitted his fiscal 2011 budget and it included an increase to the Department of Energy’s loan guarantee program. The president’s budget called for tripling the program from $18.5 billion to $54 billion, a move that could give larger guarantees to the companies already on the DoE’s loan guarantee shortlist (including Constellation), or it could add more companies into the mix.

Congress approved the $18.5 program in 2005 to kick start the industry, but the Energy Department has not doled out any loan guarantees. Most say that’s because the government and the nuclear industry can’t agree on how much money industry should have to put up.

The Hill caught up with Constellation’s James Connaughton on the topic, who said there have been ongoing negotiations over what percentage a company should pay the DoE to keep risk at a minimum.

The industry wants to keep the “credit cost” at 1 percent or below the anticipated total cost to build a new plant. A company would be required to pay DoE $100 million to reduce the risks for a $10 billion project, but industry critics have sought a much higher percentage. The guarantees would mean the government would step in to repay 80 percent of a loan should a company default.

Advocates say the loan guarantees do not amount to appropriations, so they don’t require an outlay of taxpayer dollars when projects are successfully completed. But opponents say that the projects often run over on time and cost, putting taxpayer money on the line for 80 percent of the project if it’s unsuccessful.

Looks like Congress will have to decide.

(photo above is a nuclear power plant at Cattenom, in Lorraine, France)

Powered by Bookmarkify™

Ever wonder how your bank can afford to hand over gift cards, iPods or even a wine tasting in Napa through its rewards cards?

Well, apparently putting your John Hancock on an electronic signature pad when you make a purchase instead of tapping in your PIN, allows the card companies to charge the retailer more. That fee gets redirected to the bank to pay for your rewards among other items, and it’s the reason why you only get points if you sign.

When you sign your name for a purchase the bank makes an average of 75 cents for every $100 you spend, more than double the fee for putting in your secret code, according to Andrew Martin’s article in New York Times.

Critics say that Visa and, to a lesser degree, MasterCard, don’t play fair by luring banks to issue more debit cards through higher fees charged to retailers.

“A dollar is no longer a dollar in this country,” said Mallory Duncan, senior vice president of the National Retail Federation, a trade association. “It’s a Visa dollar. It’s only worth 99 cents because they take a piece of every one.”

Merchants are stuck paying the fees, or else they risk losing sales from customers who swipe plastic at an increasingly high rate. (Debit is set to supplant cash as the most common form of payment by 2012, according to the Nilson Report, an industry newsletter).

Some quietly fight back by not accepting credit or debit cards — I’ve seen this mostly in restaurants and nail salons. On a recent trip to Home Anthology, a vintage furniture store in Catonsville, I noticed a sign at the register that asks customers to please use PINs when they swipe debit cards to cut down on their costs.

Lots of other retailers direct you to enter your PIN when you make a purchase, only grudgingly allowing you to sign by hitting the “cancel” button. I almost always go that route so I can rack up the points to get my “free” night at a hotel or flight.

When merchants do pay those fees, it sounds like the price of whatever you’ve purchased is padded to cover the debit signature or credit card purchases. Looks like those rewards aren’t free after all.

Powered by Bookmarkify™

It seems like a good problem to have but managing millions of dollars can come around to bite a pro football player in the tush.

That’s why the NFL Players’ Association has called upon Financial Finesse to help players out with planning ahead for their future without football.

“With no guarantees in NFL contracts and the potential for a 2011 lock out, we want to make sure our members are prepared for injury or anything that cripples their career,” said DeMaurice Smith, the NFLPA executive director. “We’d also like them to transition from football to a lifetime of financial security and independence — something that is possible only with smart financial planning.”

Financial Finesse is based in California and the NFLPA is in Washington, D.C.

I have written about this topic before and focused on pro baseball players, but saving money for the future can be an even tougher concept for football players.

As financial adviser Joe Geier told me then, football players are drafted and go straight to the NFL with a lot of money at a young age — many go from living it up in college to living it up in the league but with a mush bigger expense account.

Baseball players can be a little more worn down by the time they arrive in the majors. Most are drafted, spend a few years in the minors getting paid a pittance and have the chance to calm down a bit before they’re called up. While they are certainly capable of blowing through paychecks when they finally do get their millions, the problem is more prevalent in the NFL (and the NBA for the same reasons).

While much of the spending is for toys like a big house, cars, etc., another large part of players’ spending goes toward taking care of their family members. That plus taxes, and these guys aren’t as insanely wealthy as it might seem. (They’re just semi-crazy wealthy.)

I go back and forth between feeling sympathetic for players — mostly for the ones who don’t get their jerseys sold in stores but who protect the guy that makes 10 times as much as him — and thinking it shouldn’t be that hard to save money when you’re still paid a premium by anyone else’s standards.

What do you think?

Powered by Bookmarkify™

Just read an article in the most recent Business Week edition about home loans backed by the US Dept. of Agriculture (USDA Home Loans: Subprime Redux?). Gist of the article is that the loan program offers $0 down and 100% financing, conditions awfully similar to those subprime loans that have wreaked so much havoc.

A quick look at eligible areas for the program on the USDA website shows that there are some prime areas in the state. Links to search for eligible areas are on the left side.

Obviously, most of the urban areas in Baltimore City, Baltimore County, Howard County and others are ineligible but there are pockets that might work.

Is this a viable tool to get people in homes? Or, will it be another program that will cause headaches down the road?

Powered by Bookmarkify™

The Federal Deposit Insurance Corp. on Wednesday released an online toolkit aimed at arming borrowers, banks and others with information to prevent unnecessary foreclosures as well as foreclosure rescue scams.

The kit includes:

• Is Foreclosure Knocking at Your Door? brochure (available online and in print), which encourages consumers facing financing difficulties to contact their servicer, apply for a loan modification, and talk to a counselor.

• Beware of Foreclosure Rescue Scams brochure (available online and in print), which provides information on common scams, tips for detecting fraudulent deals, and resources for reporting criminal activity.

• Spring 2009 edition of FDIC Consumer News, which features advice for consumers on avoiding foreclosure rescue and loan modification schemes.

The tool kit and other helpful resources are available on the FDIC’s foreclosure prevention Web page at www.fdic.gov/foreclosureprevention.

Powered by Bookmarkify™

Ever since I missed dining next to VP Joe Biden and his wife Jill by mere minutes (they patronized Booeymonger deli in Chevy Chase for brunch recently), I’ve been hoping for re-do. What are the perks of Bethesda living, after all, if not an occasional political-celebrity sighting?

Maybe if I’d hung around the Bethesda office of Gelman, Rosenberg and Freedman, I’d have gotten lucky.

The Bidens used the Montgomery Co. CPA firm to prepare their 2008 taxes (PDF). For the nosy journalist in all of us, the couple collectively made $269,256 in ‘08 – an impressive sum, but peanuts compared to the Obamas’ 2.7 million (PDF).

To their credit, the Obamas were generous with their earnings, donating $172,050 to charity, compared to the Bidens’ $1,885.

Powered by Bookmarkify™

This is the first in an occasional series of interviews with local business leaders who blog or use social media to promote themselves or their industry. Our goal is to show the business and legal community how you can harness the power of the Web professionally. If you’re interested in participating, contact @mddailyrecord on Twitter or email jackie.sauter[at]mddailyrecord.com.

In step with Tom Hood, CEO of the Maryland Association of CPAs

Hi, Tom. Tell us about yourself and where you blog from.

I’m a CPA and the CEO of the Maryland Association of CPAs. I blog from Baltimore (and wherever I am) at three different Web sites.

MACPA was the first state CPA society on Youtube, had the first blog, was the first on Second Life and first to podcast. We also developed an online self-study application for CPAs to learn about Web 2.0 & social media at cpalearning2.com. For background on why we think this is important check out this YouTube video.

What are your blogs about?

Cpasuccess.com is about being successful as a CPA in today’s environment. It often includes Maryland specific updates. Our targeted audience is obviously Maryland CPAs (covering our 12,000 members), but it also has a national audience.

Newcpas.com is for new / young professionals, especially those pursuing a career as a Certified Public Accountant.

Cpalegislativeinsider.com covers the Maryland General Assembly and developments effecting CPAs in Maryland.

How long have you been blogging? What prompted you to start? Read the rest of this entry »

Powered by Bookmarkify™

Members of the corporate elite, like Legg Mason Inc., could soon find themselves dethroned.

Don’t worry, they’re not getting delisted from the stock exchange or getting acquired. Let me explain. Each year, Standard & Poor’s publishes a list of companies that have increased their payouts to shareholders for at least 25 years, and the number of companies eligible to make the list is falling faster than you can say dividend.

The list, known as S&P’s “Dividend Aristocrats Index” is in danger of falling below 40 companies for the first time since 1992. There were 52 elite firms on the list last year.

Dividend stalwarts like Baltimore’s Legg,  General Electric Co., Gannett Co. and Pfizer Inc. could all disappear from the list, either for cutting payouts or keeping dividends flat in the last year. Here’s the breakdown according to Bloomberg:

Forty-six companies in the S&P 500 have announced dividend reductions totaling $42 billion in 2009, exceeding the full-year record of $40.6 billion set in 2008, according to Howard Silverblatt, senior index analyst at S&P. He forecasts that the combined payout this year will be $21.97 a share, down 23 percent from $28.39 last year. That would be the biggest decline since 1938, when it dropped 36 percent.

Keeping a record of the most generous dividend payouts has played an important role–companies on the index have returned an annualized 9.1 percent a year since 1989, compared to 6.6 percent returns for the S&P 500. Losses among the aristocrats were as high as 49 percent from the 2007 peak, compared to 57 percent on the S&P.

But now the folks over at the S&P are considering changing the rules to keep the list above 40 companies, raising the ire of some truly elite firms, like Illinois-based Abbott Laboratories, maker of insulin pumps and heart stents, which has topped its dividend offering for the last 37 years.

What do you think? Should the rules change to accommodate this awful economy or should the list of corporate royals reflect the tough times corporate giants are feeling?

Powered by Bookmarkify™