Crypto News: Toymakers’ Christmas wishes

Next week is Halloween, but you can forgive the big toy companies for looking past that. When they reported their earnings this week, Thomas Buckley writes, investors immediately sought clues about what items will be on letters to Santa this year. Plus: Meet the Baseball Bat Bros. who are driving kids' equipment choices, and learn why the NCAA's NIL problems might require borrowing a solution from baseball. If this email was forwarded to you, click here to sign up.

The past two years have been trying for the world's largest toy companies. Industry leaders Hasbro Inc. and Mattel Inc. have contended with a sharp slowdown in sales of G.I. Joe action figures, Fisher-Price's Clack & Quack Goose and the like. Parents desperately loaded up on toys during the Covid-19 pandemic to keep their children occupied at home, buoying the earnings and market values of the toy sellers. Then demand waned as families reemerged and redirected their spending toward experiences such as overseas travel and Taylor Swift concerts.

Retailers were then stuck with unsold inventory, and a slate of Hollywood films that was less "toyetic" than usual failed to provide a boost to the relevant intellectual property. It's taken the toymakers longer than anticipated to return to form: On Thursday, Hasbro lowered its full-year revenue forecast for the division that includes toys, saying the category had declined more than expected. Mattel on Wednesday cut its full-year revenue forecast, with strong sales of Hot Wheels miniature cars not enough to offset lower demand for Barbie dolls during the first nine months of the year.

Still, Mattel sounded upbeat about the coming holiday season, pointing to signs of a long-awaited turnaround during the industry's most crucial period. It expects sales in the current quarter to accelerate thanks to toys and dolls based on potential blockbusters, including Moana 2 from Walt Disney Co. and Wicked from Comcast Corp.'s Universal Pictures. Hot Wheels cars, which have been boosted by the series Hot Wheels Let's Race on Netflix Inc.'s streaming platform, along with new American Girl and Fisher-Price products, are also expected to be big.

Hot Wheels Let's Race has revved car sales at Mattel. Courtesy Netflix

In an interview, Mattel Chief Executive Officer Ynon Kreiz said he's anticipating a return to growth that will outpace the wider industry. "We expect a good holiday season for Mattel with more retail support, additional shelf space, greater representation across major holiday catalogs and increased marketing and promotions as compared to the prior year," Kreiz said. "Our research shows that more consumers plan to shop for toys in the fourth quarter, and that the majority of toy shoppers are looking for evergreen, well-known brands, which bodes well for Mattel." Revenue should increase 2%, according to the average of analyst estimates Bloomberg compiled.

The picture is more complicated at rival Hasbro, which faces a tougher holiday season without the same ties to big-budget movies. CEO Chris Cocks said on a conference call with investors that the pace of decline in the company's toy sales had moderated significantly in the third quarter compared with the first half of the year, a trend he believes will continue in the current quarter. But Hasbro's sales are still expected to fall 17% in the period, according to the average of analyst estimates Bloomberg compiled, before returning to growth next year. Earlier in October, Hasbro stuck a deal with Disney's Marvel to bring its superheroes into Hasbro's Magic: The Gathering game beginning in 2025, and in April, Hasbro signed an agreement with Playmates Toys to produce and distribute its first Power Rangers collection, also beginning next year.

With demand for toys softer in recent years, Mattel and Hasbro have sought to tap into other revenue streams, with Mattel co-producing the blockbuster Barbie movie last year and Hasbro focusing on growing its digital gaming division, which includes the popular Monopoly Go game.

The holiday season usually accounts for between 25% and 30% of these companies' annual sales. And, in a tepid industry, Mattel and Hasbro will compete ever more aggressively for their share of stockings.

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Will and John Taylor, aka the Baseball Bat Bros, at the Bend Elks' stadium. Photographer: Christine Dong for Bloomberg Businessweek

The sun is just setting over the Bend Elks' baseball stadium, so Will Taylor is standing at home plate getting ready for work. For him this means setting up a camera, lights and a pitching machine to do a job that's made him famous to millions of young players—and that didn't exist until he and his brother dreamed it up a few years ago: smashing baseballs on YouTube.

Taylor is the charismatic co-founder and star of the Baseball Bat Bros, who've become a singular force in the billion-dollar market for baseball equipment. Part MrBeast, part Consumer Reports, the channel pumps out a steady stream of slickly edited, high-energy videos in which Taylor reviews the latest bats or attempts zany stunts with them. His formula has hooked legions of players, from Little Leaguers to the college ranks, who treat Taylor's opinions like Holy Scripture and buy the bats he thinks are best.

Or they have a parent do so, because even youth bats can run as high as $500. That's how I first discovered Taylor: trying—and failing—to buy a bat he'd endorsed. It wasn't available because, as the manager at my local Dick's Sporting Goods explained, "a guy on YouTube recommended it" and cleared out his inventory practically overnight. That's not unusual. "The stuff Will likes is what's going to be most popular," says Andrew Dowis, who runs JustBats.com and other sports retail sites. "He has the biggest influence on the bat market of anybody in baseball, professionals included."

That's why I'm in Bend, Oregon, on this cool summer evening. As a baseball dad-slash-business reporter, I want to understand how Taylor, a former third-string college catcher who quit the sport a decade ago because he couldn't get playing time, has improbably emerged as perhaps the biggest baseball bat influencer on the planet.

Before the World Series starts tonight, read more from Joshua Green about this niche baseball empire: The Influencer Bros Selling More Baseball Bats Than the Pros.

Illustration: Nathan McKee for Bloomberg Businessweek

If you follow college football, you've probably heard about Matthew Sluka. He's the quarterback at the University of Nevada at Las Vegas who decided to sit out the remainder of this season because of a pay dispute. Sluka played four seasons at the College of the Holy Cross, where he won more than he lost and set a record for rushing yards in a single game for a quarterback. Last December, after his head coach left for another job, Sluka put his name on the NCAA's official register of athletes looking to switch schools, known as the transfer portal.

The NCAA established the portal in 2018 to help ease the work of administrators. A pair of momentous rule changes have since transformed it into a multibillion-dollar clearinghouse for athletic talent. In 2021, under pressure from state lawmakers and federal courts, the NCAA freed players to change schools without the penalty of having to sit out a season. And for the first time it allowed them to earn money through name, image and likeness (NIL) marketing deals.

Sluka had one year of eligibility left when he entered the portal. In January, his agent told the Associated Press, an assistant coach at UNLV promised him a pay package of $100,000 if he enrolled there. There was no written agreement; according to NCAA rules, that would have to wait until Sluka joined the Rebels. Because schools are still prohibited from paying players directly, the money was supposed to come from a group called Friends of UNILV (get it?), one of hundreds of so-called collectives that have emerged in the past three years to raise funds and pay players via NIL contracts.

Over the summer, Sluka transferred to UNLV. He started the first three games of this season, all wins. But the money was not forthcoming. When Sluka's agent followed up, he told the AP, Friends of UNILV offered substantially less than they'd originally promised. When Sluka tried to talk with his coaches about it, his father told the AP, they refused to discuss it. In September, Sluka withdrew from the team. Because he didn't play four games with UNLV, he can still be on the field for another school next season.

Ira Boudway, in the latest Field Day column for Businessweek, writes about how the powers that be in college sports are slowly reckoning with the need to pay players directly and why a collective bargaining agreement might help: College Football Needs to Learn a Lesson From MLB.

$3 Billion

That's the cost of repairs needed at New York's Grand Central Terminal, where a shambles of rusting I-beams, corroding rebar and crumbling concrete sit beneath JPMorgan Chase & Co.'s new headquarters.

"Nearshoring will continue, independent of who wins the US elections. Both of the candidates know strengthening the region benefits all three countries. Now is the time to invest in Mexico and invest in North America."

Maximo Vedoya

Ternium CEO, at the BloombergNEF event

New President Claudia Sheinbaum wants to make sure Mexico doesn't squander its moment to become a manufacturing hub.

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