>> the big names in sport come to bloomberg. we are going to talk to the people leading red bull and arsenal to commercial and sporting success. >> getting personal. attemptsh president's to jumpstart the economy are overshadowed by his affair. >> shares in the uk's largest luxury goods maker surged as its digital presence delivers. good morning. you are watching "the pulse." we are live from bloomberg's european headquarters here in london.

>> this is the big interview of the day. we have some big interviews, bringing you and talking about global business of sport. there is a big event going on downstairs with some of the leading minds in the sporting world. >> two of the top attendees will join "the pulse" today. one is the principle of the red bull formula one team. hims chief executive called his ideal successor. this is the guy they could be running f-1. red bull has dominated the circuit in the past few years. we have seen changes to the rules coming on the horizon. the 2013 car will look very different from the 2014 cars. big rule changes. we will talk to him about that. >> we are also going to be joined by the chief commercial officer of arsenal, tom fox. he will explain how he is working to promote the club to an international fan base.

>> we will also hear from the ceo of the brooklyn nets. find out why he is feeling lucky ahead of the nba face-off in london. they are playing the atlanta hawks. >> let's focus on france now. the questions were avoidable. francois hollande's policy conference was overshadowed by his personal life. >> he vowed to clear up the -- well, who is going to be the first lady, saying he will make big decisions on the economy. he will make a decision on who is going to be the first lady before his trip to the united states. >> it is such a bizarre situation. of -- because barack obama needs to know. the french people can be kept in the dark. the four that trip, everyone must know. >> this is the big decision he is going to make. not the french economy, not sorting out the international story when it comes to french foreign policy, who is the first lady.

let's talk to caroline hyde. she joins us from paris. she was at the press conference yesterday. >> i was one of the 600 journalists packed into the palace. dripping withroom chandeliers, gold, red velvet. be aor what was meant to fight for francois hollande political life. laying out the agenda for where the economy was going. instead, the questions came thick and fast about his personal life. at least 4 questions were asked, the first one about his first lady. he is not married to her, but she is a long-term partner. that was the first question with the alleged affair swirling in the press. what of the first lady? he dodged the question. >> everyone in his or her

personal life can go through ordeals. that is the case for us. these are painful moments. i have a single principle, which is that private matters are dealt with in private. >> for now, no answer. we all have to wait until february 11, when he has a trip to the united eight, to clear up whether she will remain his first lady. sticking up --y he is not clearly sticking by her. the rumors are rife. every single french person has a little bit of an inkling that he has a new first lady. >> private matters are private. maybe that was true 20 years ago. times have changed, especially with the internet. he refused to give any clarity at all about his personal life. what about for policy? >> much more.

this is what he wanted the agenda to be about. from theu-turn previous president, who promised a crackdown on the rich. he has promised to bring in the business and tell them that the economy is going to be higher. he unveiled the so-called responsibility packed. that is to cut labor charges. he outlined that 30 billion euros will be wiped off of labor charges. also, simplifying regulation. he said he would overhaul regulation. in return, he needs companies to hire. he unveiled that they would be offering 50,000 new jobs to the youth this year. the lobby for business saying that if you cut charges by 100 billion euros, we can multiply that by 20. you would be hiring some one million more people in the economy. this is so necessary. this is a man with his popularity at record lows

nearly. unemployment at a 16-year high. the economy remains sluggish for two years. you need to turn this around. drastic measures for a socialist president, now trying to woo in the business leaders. >> thank you so much. caroline hyde with the very latest from paris. we will continue the conversation in just a few minutes. by the frenchned socialist mp. >> looking forward to that conversation. it seems digital was making all the difference. manus cranny has been pouring over the figures. how did they do it? >> you have got to say that angela has gone along with christopher bailey. asia, tech, and beauty. retail, 67% of their business. that is where you saw a strong showing, stronger than the

market had look for in terms of the numbers. digital is about 10% of their business in terms of revenue. three times the size of the industry with digital delivery. they are converted. what do they mean by that? you come into the store and then go online. you are spending money. you are engaging, they are converting. you are spending. you have a complementary mix. a compelling christmas, digital innovation have been the keys. when it comes to the beauty component, they are saying that we tried a promo called beauty box just before christmas and it looks like it worked. they want beauty to be about 140 million pounds worth of contributions through 2014. that beauty is the entrée into the burberry spirit. margin, experience the product, grow up, earn more, and you get to buy the 1500 pounds tote three -- coat.

they are converting. that is a critical part. >> it will be a tough year for european luxury. burberry has the beauty products online. overall, it will be quite tough as chinese spending may have slowed down a bit. at play is a new regime in china. that is going to impact not just the amount spent domestically, but also the nuances between hard luxury and soft luxury. luxury, as an industry, underperformed for the first time the general market in five years. a ceo summed it up beautifully. there is more pressure coming from china. the yen continues to weaken in japan. goldman sachs says you will see intensified anticorruption rhetoric and occupants coming from china. there are a lot of headwinds out there. burberry is focusing on one. foreign exchange.

it will be a continued headwind for burberry going into the second half. the question is, can they sustain their margins? we have talked about this. some of the products, specifically within beauty, deliver nice, upbeat margins. bags are us. i cannot see myself with one of those huge, big bags. but the coats? oh yes. >> i would love to see men wearing bags again because then i would have to carry less. the chinese private equity firm is considering a bid. i am going to get you a bag. [laughter] >> guy and i. >> no. the future.men are >> not the kind of bags you are thinking about, i think. making a bid.s jonathan ferro joins us with more. >> i am not going to talk about

handbags. but a company with $6.8 billion at play. interested in united biscuits. normally people in this country would not have heard of them, but brands they definitely have heard of. digestive, penguin biscuits. it is a brand we all know in this country. a chinese private equity company could you looking to buy. know, according to those people, that they are examining a bit. they are in talks with blackstone and tai partners. not clear whether this will transfer to a did. >> are -- is there money in biscuits? >> there certainly is. it was bought in 2006 for $1.6 billion. they spun off kp snacks. it remains to be seen how much

will be gotten for this company itself. you have chinese equity firms looking to buy established bands in developed markets. >> they certainly have a lot of cash to spend. thank you very much. the latest on united biscuits. radart else is on our this morning? the world bank has raised its global growth forecast. a doubling compared to 2012. a lender has predicted the world economy will grow by 3.2% this year. >> the airbus group chief he is in officer says merger talks for the company's space unit. he said he would also contemplate taking control of the missile business. this comes following a combination of the space and defense units that led to the loss of 5800 jobs. >> what else is on our radar? mary berra heads to the corner

office. she officially takes over as general motors ceo. the company declared a dividend for the first time since 2008. gm made another big announcement. it appointed chuck stephens as its new chief financial officer. backming up, we will head to paris to talk to a french mp about president along policy 'somises -- president hollande policy promises. do they go far enough to save the economy? that is next. >> and revved your engine. we are speaking to the man at the helm of the red bull racing team. they dominated formula one for the last four years. what is the strategy for staying on top of the sport that is changing so much this year? ♪

>> welcome back to "the pulse." we are live on bloomberg tv, radio, and streaming on your tablet, your phone, and any windows as -- any windows phone as well. >> francois hollande managed to deflect questions about his personal life in his news conference yesterday. his focus was on how to fix the french economy. was he bold enough? for -- caroline hyde is in paris with more. off weston's fend

about his personal life. -- questions about his personal life. a member ofk with the socialist party. she is also vice president of the finance the mission. thank you for joining us this morning. are you worried about how much issues to do with his private presidentistracting hollande from setting the agenda in france? >> in france, we are protecting the private life. that has always been the case. , this is a principle on have greath intentions. i do not think he will be distracted by what has happened today in his private life. he has direction. our main need for economic

issues. rather than private life. >> you do not think it is eroding his credibility among the french electorate? look, we seeve a that the french do not care. maybe it is the french spirit. i do not know. private life is private life, even for president hollande. >> it is a painful time for him, as he says. he is trying to have this new agenda within the community. what did he say that was new yesterday? he outlined $30 billion -- artie billion euros, cutting down payroll charges. is that enough to start spurring innovation? >> after the decrease, france would be the average in europe, comparing taxes and wages. there is no issue regarding the

bet that france could business friendly. france is business friendly, definitely. there is a ranking showing that france is the number two for of worldwide3% innovation. >> the european commission has been calling for cuts to labor charges for a long time. many have said you are falling behind spain and ireland in terms of labor reform. why has it taken francois hollande so long? >> we need to tank -- we need to take into account everything. 365 billionith euros. decrease,30 billion france will be the european average. in terms of business spending -- >> what about the reigning in of the welfare state? you are a socialist and francois

hollande is a socialist resident. it is all about big state. now he is going to cut the amount of money. >> it is big state, for sure. what we need to look at is who is paying at the end of the day. than 50% of more their gdp. in france, it is 11%. it is less. we need to take into account all and not only look at who is paying for it. >> 50 billion euros will be reined back out of spending. where are those spending cuts going to come? he mentioned the health-care system yesterday. it cannot all come from health care. to assure them what would be the place of states in our life. we need to start with us. expensive without thinking about what could be the mission, the goals we need to reach.

definitely. >> is three years long enough? >> we have already started. in 2013.d this year, there will be -15 billion euros. it is not new. it is just a reaffirmation of the direction. the business world came out today and said that we like these points, we want 30 billion euros cut for labor charges. >> they never want to pay. -100 billion. i think he would rather explain the innovation, his view on the new businesses france could have and be the leader on. >> and the new jobs being unveiled, 50,000 new jobs for the youth in 2014, where are

they going to be? what industries? have on the technical side, engineers, lack of people taking these jobs. we need to put effort in that, i think. >> wonderful speaking to you. member of parliament and the socialist party. the vice president of the finance commission outlining that she feels that france is in the top tier of innovation and they are on a level playing field when it comes to labor charges. back to you. >> thank you so much. caroline hyde with the latest from paris. >> watching that story very carefully. more company news for you now. charter communications will start meetings with time warner cable shareholders to convince them of a $61 billion takeover bid. time warner rejected the officer , calling it inadequate. >> amazon technicians in the state of delaware vote on whether to become their first

u.s. union. it is just a handful of employees. the decision could mark a big change for a company that has battled union efforts for years. paschi's chief executive officer will remain at the bank. that is after a conflict over the biggest -- with the biggest shareholder over the timing of a rights officer -- offer. he wants to avert the risk of nationalization. >> coming up, one group says there is proof that cars are not the only way to get around motor city. details of that next. ♪

>> welcome back. time for hotshots. night at the ice climbing competition in colorado. they navigated a challenging route of ice and rock. it looks treacherous. >> the other show is not the only -- the auto show is not the only thing happening in detroit. a group of skiers have found another use for abandoned buildings. they have constructed their own ski jumps and ramps in defunct warehouses. on -- how hot are

the markets this morning? manus cranny will find out. >> you just sort of grapple with this. quantitative easing, we are in taper mode. you have growth coming off the ground according to the world bank. bestean equities of the buying opportunity and will give you the best bang for your buck over the next five years according to a former investment manager. he knows a thing or two in terms of return. thestoxx 600 is up for fourth straight day. it is all about the dollar. to fischer had to explain his audience what beer goggles were. the two people who advocate reducing quantitative easing but making the argument very clearly reduction in quantitative easing but keeping rates lower for much longer. strong thesee how federal reserve is. >> manus cranny on the markets.

>> up next, where airplane seats go to be reborn. we take you inside the company with a secret for saving tens of thousands of seats for the skies. ♪ .

>> welcome back to "the pulse" live from bloomberg's european headquarters here in london. i'm francine lacqua. here are bloomberg's top headlines. several former barclays traders are set to be facing libor nterviews. it is part of a global investigation into rate rigging. we also have the latest growth numbers from germany. the economy expanded less than forecast last year. economists forecast growth of .5%.

the world bank has raised its global growth forecast. it is predicting the world economy will grow 3.2% this year compared with a june prediction of 3%. but the upgrade comes with a warning. developing markets remain vulnerable to tapering in the u.s. manus cranny joins with us the latest. basically they are saying everything is fine as long as there is cheap money there. >> and as long as there is a nice smooth exit from quantitative easing and tapering goes in a lovely, lovely line. it has gone smoothly so far. all right? volatility. a little bit of an issue. look, to put this whole thing in context, we were going to grow at a basis almost at double what the world grew in 2012. put that into con test. easing austerity. -- context.

these are things that are contributing. the richest nation also grow. they are going to provide, you know, a real boost for that growth. that is the critical issue so long as tapering goes smooth accomplishment >> this is basically what is amazing when you look at the breakdown, europe is doing well. they are kind of like leading the pack but that is why they uped their forecast. >> when you look at the numbers. europe up 1.1%. frup just under 1%. it is the essence of what they spafmente germany will propel that recovery. spain and italy will do better. i love what they say about where europe is. europe is where the united states of america was a year and a half ago. a little bit hesitant. a little bit unsure. sounds like me on friday night.

a little bit hesitant and unsure. a push in the right direction, i'll be there. japan is not going to go more robustly than thought. neither is the united states of america. they questioned the momentum of the japanese story without the reform. i think when you look into it, hina is set to -- is it? >> a lot of people say for the next couple of years, it is going to be a little bit wobbley before they find their feet again. >> they are saying 7.7%. they downgrade. brazil is going to slow down. india and turkey. money, $64 billion was pulled out of emerging markets over the summer last year. >> that is the key. are they concerned because of q.e. unwinding it may repeat itself? >> that is the heightened sense of risk. there are those not in a defensive enough position.

banks have been under pressure. >> thanks. guy over to you now. >> thank you very much. let's head into the skies. the battle for the sky ps. - skies. air bus is talks for a space merger. this company that was the a.d.s. is airbus. i think these are not big parts of his business. airbus is the bulk of the business. he is talking about maybe scaling those up. >> rebranding of the company, airbus, the commercial aviation business at the forefront of the company. there was a sense among some people, are they taking a step back from the noncommercial side of the business? listening to him yesterday, that

is not the sense at all. yes, the government is stepping back from these big budgets on defense, but he still wants to be competitive. the buzz word is scale. perhaps you achieve it by consolidation. he was also talking about taking full control of the mbda missile business which it holds a minority holding. > no, it is -- he and b.a. systems have an equal stake. he is talking about maybe -- there is definitely talk about them holding out. >> whether he buys them out remains to be seen. what you got from yesterday, this is a man not stepping away from the combined space and defense business, in fact, stepping towards him and saying to be competitive, we need scale. >> if you look at it, there is a

business that at least has a -- given the current hot conflicts they have around the world, maybe scaling back from those, you are filing missiles on a daily basis. you are using your standoff capability. you're dropping bombs on a daily basis. that is what these guys do. a demand portion within the military capabilities line up. it is hard to narg the last 15-20 years, it has guaranteed cash income every year. you know it is going throb. somewhere in the united states where they try to protect the defense budget. things have changed where they have to start thinking more about competitiveness. that's what's happening now. you see that represented by shedding 8,500 jobs. you're doing that because you want to be more competitive. it is about trying to be upscale

and be competitive. not by stepping away and saying we don't want anything to do with this anymore. >> it will be nice to see europe in the defense business. >> jon, thanks very much. let's stay with aviation. on the outskirts of silicon valley, there is a warehouse with literally tens of thousands of old airplane seats stacked to roof. bloomberg's "businessweek" ashley stumbles across interface aviation, the alarmingest commercial aircraft distributor in the world. he got inside to look at the surprising business behind the airlines' cheap seats. > i ran in this place in california. one of the world's largest airplane seat repair and refurbishment centers. never in my wildest dreams would

i think of it as a place that has tens of thousands of airplane seats stact to the roof. it is one of those unique businesses you stumble across. >> we're a relatively small company. we have 12 people on payroll. most of these guys have been here 15 years or more. they know the seats are pretty good. >> what are kind over the basicors this business? >> it is tremendously less expensive to refurbish an existing seat. new seats today are five or six times more expensive. we often modify seats to newer standards. >> do you compete with american companies? >> there are twobal five or six seat refurbishment people in the u.s. these seats are going to ireland. these are going to china. airline also reconfigure their seats based on the routes that they are doing. >> tell me how that works. >> there is a tendency now for

people to go with a high density seating configuration, which is another word for the sardine where they just pack people in. you sit there like this for an hour. when you get out, hopefully you can still stand up. > how much would three seats cost? >> probably $6,000. you can easily spend a lot more than that. >> so you to restore the seat. it has tock able to survive 16 gmp's of force? >> yeah. the new generation of seating is all 16 gmp. >> your body would be giving up long before the seat. >> it is overkill but it is there for a reason. we're buying interiors from south america for a while. we noticed that the seats had been drilled in places. >> in case you wanted to stash

something. you see things like that from time to time. t is the nature of what we do. >> i think it is fair to say that some of those seats are probably in that warehouse because of my children bouncing up and down. >> i remember, guy, many years ago i went to a flat in paris and they had some of of these seats everywhere. it was a bizarre flat and very cool in a quirky way. up next, no home court advantage brooklyn. we're looking into the business of taking a sports club global next. ♪

>> we're excited to be here. our team has been here in london for the last seven years. in many respects we look at the market as being our home away from home. we love london. we have been pretty successful here and we hope to have some success tomorrow. that was the chief executive of the brooklyn nets. his team takes on the atlanta hawks here in london thursday. it is part of the nba's effort to promote basketball to a british audience and gain fans around the world. is it going to work? >> i don't know. i have my doubts. >> would you do go?

>> i would go but i don't think i'll be converted to being a basketball fan any time soon. strategy s of the top sports clubs. the managing director to have sports agency synergy. good morning, dominic. sports is interesting. is a way of communicating around the world across languages and so many different time zones and geographical locations. yet making money from it has always been an interesting sort of equation. some people get into it because they love the sport and some because they want to make money. how those two interact has always been difficult. >> sport as a money making venture, how does it progress from here? >> everybody gets into it because they love sport, first and foremost. you can never go too far to try and make money out of sport and exploit it because you don't want to alienate the fans and

players that you're trying the engage with. you have to be careful to that balancing act. sport niths the last 50 years and certainly in the last 10 years, has exploded in terms of the commerblet and how it is used in finance at the moment. >> dominic, when you say you try not to alienate the fans, there is so much money floating around, football, where it feels a little bit removed from the fans and yet people love it just as much. this is commercial gold. >> it absolutely is commercial gold. jumping in the back of cabs all around the world and being able to talk to people about sport. to have this common passion together. to get that right is commercial gold. no club wants to push that too far. fans convert their own way by turning away and not coming to the stadiums. as soon as you get to that

exploitation area -- >> you look at what happened with sports in north america and here in europe. you feel with football on both sides of the atlantic an other sports as well, we must be reaching the limits of the commercialization of sport now. the amount of money that i have to pay, whoever it is to sign up. the amount of money i have to pay for a season ticket. numbers are eye watering. we have to be reaching the limits of this shing. >> you probably do reach the limits of it domesticically. a lot of sports clubs, whether it is football or any other sport there is looking at expanding its borders. manchester united doesn't stop in manchester. it goes around the world. that is where they are starting to look for their commercial models. >> only some sports will be able to do that and only some teams will be able to do that. we must be looking at a world

therefore where the spread between the top and the bottom is going to get bigger because the top can expand around the world and generate more revenue and spend more on players and the nature of the sport changes but at the bottom, you don't have that opportunity. >> you have to remember, that those are the top, it is utterly in their best interest to keep the bottom of the pyramid growing and coming up. otherwise you lose the competitive nature with sport itself. >> there are four teams that have dominated that sport. that is making it dull. >> you have five world champions in formula one. that is an unusual position to be in. it is really in the club's interest to make sure that the grassroots of the sport and the community of the sport where we started kicking balls around when we are 5 years old, you don't get the fans coming

through and the potential talent coming flum >> big money means big personalities. they are guys that invest. they want to be paid. they want to be millionaires. in terms of when you look at sport, what is the one that is going to be most lucrative or where it is easier to find these big stars? >> i think you probably have to look at football in term t'wolves actual sport and the big -- in term t'wolves actual sport and the sports out there. you talk about guys who are winners. guys who have won repeatedly on the field over the years. david beckham, we would never have heard of if he couldn't play football brilliantly. that is the fundamental thing that most of them ault always dealt with. >> if i'm coca-cola or unilever or one of these big global brands and i look at sport do, i go for premier league teams?

the manchester united or do i look at sports more domestic? if i want to get into india, do i back cricket? or is sport actually that global? >> you probably looked a a balance approach. if you're a big global brand, then you're going look at a balanced approach. would you look at one big sport, coca-cola, and the olympics, which is very global as well. at the same time, back, local and regional teams and community level. you have to get into certain sports. in australia, shouldn't you go for aussie rules or aussie league? >> thank you. the managing director at synergy. >> later on we'll talk football d fwns the chief financial officer at arsenal, tom fox. >> he'll explain how he is

working to from moat the club to an international fan base and take a look at how car racing has gone global. >> the principle of a very successful formula one club at the moment. he will be joining us later nonthis frahm. >> coming up, how reducing emissions is creating $15 billion in value. that interview is coming up next. ♪

>> in today's new energy, the pressure is on for companies to cut carbon emissions. a new report shows that carbon reduction isn't just good for the environment, it also could generate a 33% return on investment. paul, so talk to me a little bit about the report. were you surprised by how much they could save? >> we are surprised but we expected a good savings. what we have seen is the thousand products they are a using to reduce emissions. that is better than the average firm-wide return. making investments in emissions reduction makes financial sense. >> if you look at the number of investors that back this, it has risen by 100%. it is impressive. are it is impressive.

companies say we expect you to be good performers on climate change. they want to reduce risk in their portfolios. investors have to act to protect their assets. >> what does it show us about climate change performance? >> where the bulk of the emissions are, they have been continuing to rise which is a great concern, but we are seeing the companies increasingly invest additional capital expenditure in emissions reductions. it needs to be 3 or 4 more in utilities but it is moving in the right direction. we just need to accelerate the change. >> that is the target. >> we have to hit the target. the scientists and -- >> this it would be 10-20 yorse? >> it is going to take some time. but we don't have time. every year we delay, we're pushing costs back. that may be convenient in the short-term but in the medium

term, it doesn't make sense. there has been such a -- in the last 12 months. is it more awareness? is it because economies are recovering or people are ready to look at these issues more? >> it is a combination. last year we saw new reports on climate change. the science the strongest it has ever been. we have a clear carbon budget. we have already emitted half of that. the extreme weather continues to happen and that keeps it on the agenda and forces the government to say what more can we do? >> why are certain companies behind it? if you look at the report, the benefits and you know, all the increased basically -- the money that you can save from it, why are certain companies not following behind it? >> there is a number of things to change still. political and regulatory uncertainty still exists.

governments are indicating what they are going do but not yet delivering on that. they are holding back a bit. we would like to invest more. business is still stuck in this short-term cycle. as the economy is improving, that can change a little bit. help us to be more medium to long-term. the short-term pressure, everybody is just thinking about the next quarter, next year. >> thank you so much for all of that. paul simpson. guy, over to you. >> thanks. bloomberg "the first word" is up next. for our viewers, the second hour of "the pulse". what have we got for you? the business of sport. formula one and football. we have a whole new car coming out in 2014. they are testing it at the moment. what is the 2014 season going to look like? plus we're going to be talking to arsenal's chief commercial

officer, tom box, who has come down from the emirates to talk to us about how you make money in football. how you keep balance. arsenal is very good at that. see you in a moment. ♪

>> the big names in sport come to bloomberg. we'll talk to the people leading red bull and arsenal to commercial and sporting success. >> verizon's victory. a u.s. court paves the way to charge extra fees for service. that could provide netflix with a huge bill. >> shares in the u.k.'s largest its y good makers surge as digital presentation delivers. good morning to our viewers in europe. good evening to those in asia and a warm welcome to those just

wake up in the united states. i'm guy johnson. >> i'm francine lacqua. this is "the pulse" live from our european headquarters here in london. >> let's take a look at what we have coming up in this hour of "the pulse." we're talking about global sport. two of the top attendees will be joining us this hour. >> one is the principle for the bulls formula one team. christian horner. >> red bull has dominated the circuit over the last two, three years. but with changes to the rules, how is horner adjusting his strategy it is going to be amazing to see how the new cars fare in australia. we're also talking with tom fox with arsenal football club. >> he will explain how he is working to work the club to an international fan base. >> it is not just football.

it is basketball as well. the brooklyn nets and the atlanta hawks both have an away game here in lond london tomorrow. ryan, just how are sports teams such as these going to make money abroad? >> they start by building a global franchise. most would agree that the new jersey nets has done more than most nba teams on that front. they start by trying to be an international team. e new jersey nets has an international owner, a russian owner. one from booze nia. they have been to china. they go to russia. they are now making their third trip in almost as many years to london. >> we're obviously excited to be here. our team has been here three of the last seven years. in many respects, we look at the market as our home away from home. we love london.

we have been pretty successful here and we hope to have some success tomorrow night. >> and he should be hopeful about that game because of course they have not had the most success this year despite the fact that the owner spent $100 million on the players on the court back home. 15 wins, 22 losses. you have to pay attention to rule s of the nba when you they can't how you monetize basketball. merchandise and all the money getting made from that stuff gets pooled with all the teams in the nba league. the way to make money is together with your sponsors. one way to do it in a global sense to grow yourself globally and go to your sponsors and say look at the larger audience we're meeting. if you take a look at the nets, you can have a sponsor name your stadium. in that case in the case of the nets, it is barclays. 3 it is the barclays center in

brooklyn. by coming here to london where barclays is based out of obviously, it sort of validates that relationship. that is the idea, to try and make yourself as global as possible so then you go to your advertisers, leverage that. and say look, we're going to reach more eyeballs if you associate yourself with our brand. >> the last time they were in town, they sold the stadium but it was largely by americans. they were just in china >> they were just in china. 300 million people play basketball in china. it is the single biggest market for the nba outside the united states. just massive. some of that is because of chinese players playing in the nba. but that is not the sbhire reason. -- entire reason. the other thing that is interesting about the nets last trip is how they got there. one of their key players, kevin garnett, actually has a sponsorship with a chinese issue manufacturer.

so their star player, his own deal, goes china to share the limelight with the shoe manufacturer that gives him shoes and lo a lot of money, they piggy back on the back of that and market the brand. they get people excite about the nets in china and go back to their advertisers and say look, we're even reaching people in china. the second largest economy in world. biggest for luxury. that is helpful. >> thank you. ryan chilcote covering the basketball angle of our sports coverage. >> the chief executive officer and rsenal will be with us the man bernie eccleston calls his successor. up ristian horner will be here to talk to you.

>> let's welcome bloomberg news reporter matt kendall with the latest. what does it mean for google and netflix and other content providers? they can charge more. >> basically, the principle of governing the internet has been in the u.s. and europe, bits or bits. any content you want has to be delivered at the same speed and when carriers like verizon have actually been caught throttling back certain kind s of content, they have goten in trouble for that. verizon challenged this principle. what is possible now is for verizon to turn around and say to netflix, which at peak hours accounts for 1/3 1/3 of all the internet traffic in the united states. if you want people to be able to see that content without any problems and see it smoothly, you're going to have to pay us and eventually they can turn around to consumers and say if

you want to consume netflix, you're going to have to pay us too. this is about making sure that the providers of the content pay and also that the users pafmente >> if i'm netflix, i've been taking the cream on the distribution story that is the internet and that is the media industry. it completely sort of revalues whole chunks of the internet space. are this is something that phone companies have talked about for a long time feeling like they make the investments in those are bust, high-speed networks. it is others who are benefiting from the speed, whether that is youtube, netflix, hul nunch the united states. -- hulu in the united states. the whole evaluation model could shift, however there is going to be some skevbtism. no one knows really how far

these rules will be allowed to bend by the u.s. government. also there hasn't been a change in europe where traditionally the european union has been somewhat less flexible about the principle of neutrality. we need to see exactly how it plays out. but this could have significant consequences for the telecommunications industry. >> but they are welcoming this, right? some carriers would benefit from this. >> for now they are. they have to be careful not to push their luck too much. the regulators could come back at them if there is a consumer backlash. in europe there was a concerted effort a couple of years ago led by france telecom, telecom italia and a couple of others to gang up on the likes of google and say we want you to pay for all of these content you're pushing over our networks rather than us having to pay for all the base stations and fiber. in the u.s., they can't take advantage of it.

comcast, which is a very large cable provider is bound through that neutrality through 2018. so they can't do this. but for at&t and verdson, this really changes how they can -- verizon, this really changes how they can approach their commercial offering. >> thanks. >> making the difference at burberry. their third quarter sales figures were released earlier this morning. manus cranny joins us now with details. >> guy, the reason why you focus on digital and i am going to talk about digital is because burberry does three times the amount most of the other luxury depeers on digital. 10% of the business. asia is over 30% of their revenue and it is tick, tick, tick, digital. in other words, when are you going to the shop? go online. engage, complete, exchange. you go on line, engage,

complete, transact. it is about spending online. the store experience. going online. you're buying leather products from them. bags. that is the key that angela and christopher have delivered. also, searching for engagement. they have launched the new beauty come opponent of their business. i say new. what i mean here is there is the imagery of their recent street store for burberry. what they are going to do is take their retail experience and transsend it down to the beauty xperience so it is a technologically delivered experience that takes you into the brand and they grow it. growth in asia. they had a strong performance in the united pping kingdom and france. italy, however, underperformed. they say foreign exchange is going to be the head winds for

burberry going forward in 2014. angela and christopher have delivered in a tough, tough market in the run-up to christmas. >> burberry is doing pretty well. they are beating stims again. however it is going to be a tough year for luxury overall. > it is. you had a conversation this morning with ccma. saying you are paying such a heavy premium to have that stock and that perhaps you want to think it is overvalued. goldman sachs have a note out this morning where they are saying anti- corruption is so going to be a big risk factor for the instructsry industry groups. you have the c.e.o. saying look, china is still a big issue on the downside for the next six months. add in that you have a falling yen. have you got the ability to from build in higher prices.

can you rise your prices? bloomberg industry is saying mono names like burberry, one name, one selection of products, you pick up those chinese tourists and that will be coming into china. it is going to be tough but you to have the right proposition and that right proposition is about having an expert digital proposition that captures the young, the youth. >> thanks very much. the latest from burberry, gains of 5.5%. >> the mass affluent. sounds like a conflict terms . >> that is how they make money. >> what else is on our radar this morning? the world bank raised its global forecast. demoubling growth compared with 2012. the washington-based lender is predicting the economy will grow 3.2% this year. > mary takes over as general

motors c.e.o. now g.m. made another big announcement. it is appointing chuck stevens as its new financial s of. >> voting on the tech giant's first u.n. a handful of employees. it could make a big change tr the company that battled hard against it for years. >> red bull racing's christian horner has been called the next bernie eccleston. he will show his strategies for leading a championship team next. ♪

>> welcome back to "the pulse" live from bloomberg's european headquarters here in london. >> what's happening? do we have some german? s out earlier on? this is the g.d.p. figure. .4. i think the conclusion you can take away is that we are seeing a slowing in that economy. that has indications obviously of a policy of a wired euro-zone level that we can increasingly watch it take its toll on the wider european economy. you're likely to see increasing talk of policy action by the e.c.b. reaction out of the united states. the difference of the policy approach this year, 2014.

e.c.b. versus fed is going to be really quite interesting to watch. euro/dollar trading 1.3624. >> the battle for the skies takes to space. says he is c.e.o. edging toward merger with space. > the big question, you have seen the resfrurring. the commercial aviation business at the forefront of its company. airbus group renamed to reflect that. what do you do with the space and defense business? do you take a step away or a step forward and say we have to scale up and be more competitive and the route to do that is by consolidation. that is one way to do it. >> he tried to scale up and ailed. this is small scale scaling up.

this isn't the mass consolidation that some are saying we now need to see in the defense sector here in europe. >> it is a direction you have to take notice of. the message from tom enders yesterday was we're buyers. >> jonathan ferro with the latest on airbus. >> red bull racing's christian horner has been called the next bernie eccleston. he is going to share his strategy for leading a championship team. that is coming up next here on "the pulse."

>> let's turn to our big focus this hour. the big business of sports. berpy eccleston has called our next depest his ideal successor. >> the red bull racing team has dominated the circuit winning the last four constructors championships. with big changes on the horizon for 2015 season, formula one is going to have to adjust pretty radical. is it a good thing that formula one is going through such big changes? the new engine technology that is going to be required for 2014 is massively different. this is a 1.6 turbo charged engine. we haven't seen those in quite

sometime. how much of a difference is it going to make? >> it is a massive change. it is a fundamental difference to last year's going from a v-8 to a v-6. it is a game changer in many respects msm >> do you welcome the changes? one of the reasons that red bull has dominated for so long is some are saying the sport is not competitive enough. >> we would love for everything to be frozen but this regulation change was due for sometime. it brings the power units more in line with the automotive sector. the timing isn't great because financially it is a big burden for all of the teams, but it is part of the game. the regulations change and you have to adapt. >> an attempt to tie the sport to the commercial world of building motor cars. if you think about sport and how

sport functions, it is really across into the commercial landscape and usually comes through advertising. this is a different route that formula one is trying the take. is that good or bad for the sport? is it a sport or a commercial venture that is designed to are & d capability -- r capability? >> behind that is a huge amount of investment and of course the manufacturers are involved in formula one. they need to have a sister-in-lawer ji with their -- synergy with their product. >> the next few months will be intense for you. what stresses you out the most? >> of course, you know, the pressure of designing and build even building the car at the moment. working that out, january 28 is the first time the car will run and the first time we get to see

a glimpse of where we are. three weeks after that, we will be in in bahrain testing and get a better idea how the competition is lining up. there is a lot going on over the closed season. >> formula one is a global sport. football is a global sport. what's happening is at the top end of both of those sports is teams like red bull and manchester united are able to expand their global footprint. they can attract sponsors from around the world. if you're right at the bottom of the premier league, a very different story. does that mean that the sports sort of spread out? you talk about the expense the new engines? does that mean the guys at the back of the grid will see new rules making it 45rder to compete -- harder to compete compared to front of the grid? >> that very much sums it up. from the back of the grid,s the a huge challenge.

the costs that are going to be incurred in this power supply unit. the differences between the teams will be bigger. whenever there is a reset, the teamses that have the investment and the resources and facilities will turn up with a more advanced product. >> is that good for sport? >> ultimately no, no. that side where stability is so important. you to have stability. then it is all down details. the regulation wes have for this year are -- we have for this year are a game changer. >> do you insurance that they will continue to sponsor and will be in the game for the future? >> absolutely. the sport is governed by the concorde agreement, the commercial terms for the funds in the sport and red bull has made a commitment to the sport through 2020. that is a guaranteed participation by red bull racing, which you know is the

same as ferrari and as you know, any other serious team in the sport. >> how many cars are going to finish the first formula one race? >> that is a very good question. hopefully us. i think you could see a very high retirement rate. maybe even 50%. >> they could run out of petrol as well? >> it is a challenge this year. we're limited to 115 kyleos to start the grand p rinch x with. we only have five engines. >> how does it feel to be named as a possible successor to bernie eccleston? >> flattering but unrealistic. bernie will always come up with a different comments and stories. there is only one bernie eccleston. >> we'll see. thank you so much. christian horner, team principle of the red bull formula one team. >> we'll take a break and come

back and continue talking about sport. we'll sit down with the man responsible for making the numbers work at arsenal football club up the road at the emirates. we'll see you in a moment. ♪

>> welcome back to "the pulse." live from bloomberg's european headquarters in london. i'm francine lacqua. >> i'm guy johnson. these are the bloomberg top headlines. >> several former barclays traders are set to be facing libor interviews. the fronts office is said to have sent notices to people in the u.s. and the u.k. over the past six weeks as part of a global investigation into rate rigging. >> we have the latest numbers out from germany. the economy expanded less than forecast.

economists forecast growth around .5%. >> the world bag raised its global bank forecast. -- bank raise d its global bank forecast. market recess main vulnerable to tapering in the u.s. >> right. lou the european markets faring and how are we setting up for the u.s. session? >> a breezy morning session near europe. london is at an 11-week high. european stocks are up for a fourth day in a row. still some movement in emerging markets. the world bank warned that stepping back in quantitative easing better go smoothly. their growth targets are predicators on that overall outlook. have a look. burberry. these guys have delivered online. they have delivered

technologically. they have delivered on product. they have had moment where is it has been tough in terms of profitability. you can see you're touching levels again that you haven't seen since 2012. nice. this afternoon, it will be all about the beige book in the united states of america. came out with their comments last night. richard fisher had to tell his audience about beer goggles. how things look when you have had a beer. he said change it to a martini or a glass of wine to his audience. you have another day of fed speak today. we'll have a few comments coming through from mr. lockhart planned charles evans. they don't have a vote. u.s. futures indicating higher. p .8%.

essentially what they are saying is that q.e. , they would have to get a more aggressive tapering mode but lower rates for longer but that growth is a key thing. what does that do for the dollar? it is a debate. do you buy dollar because it is strong or go elsewhere in terms of pro risk assets. that is state of play. up and at it. 80.87. >> tao very much indeed, manus cranny on the markets. >> he invented the u.s. -- and lowest it all making the world's smallest phone. what drives an innovator? >> there was a time when israel's economy was more famous for oranges than agriculture. now it is more famous for its technology. this used to be a house growing mushrooms. this is r & d labs.

i've come here to this farming co-on north of tel aviv to see what he is working on now. he is not flashy, but his best invisions are. >> we are very excited. a huge capacity. one megabyte. this is back in 1993. we went public for there are 2.7 million. i'm the inventor of it. this is the first u.s.b. stick that was bought in the market. >> it was a global hit. his next bet wasn't. >> it was a great concept. >> even a chunky charging station couldn't save modu from

the iphone. it flopped. his latest is a lox that makes televisions smart. he also has consumer products u.s.b. stick.ke a >> dov says money doesn't motivate him. a position perhaps helped by the $100 million he bagged fri sale of m systems. -- from the sale of m systems. >> hopefully the americans i'm working with will -- make it etter. i'm ready to -- >> that seems unlikely. some companies might fail but don't bet against him picking another big winner.

>> you have to be an innovator, everyone h? the sky is the limit. >> yes. >> all right. now let's keep talking tech. google is spending more money u.s. ive of the biggest competitors combined. >> to buy next labs. that is the latest over the last year for the company. we have been looking at some of he best. ♪

>> that is just bizarre. the use of that robot. in case you want a rottweiler or two to look ath after your home and you don't want the real thing. >> 20 minutes until "surveillance" take to the airwaves. tom keene joins us from new york with a preview. what have we got? >> good morning, everyone. when you look at what we have got, it has got to be about the job economy. alan krueger is truly the nation's number one expert on the new, enraging and forever debate in america on the minimum wage. all of this coming off a deadlock. we have the right guy for bloomberg's "surveillance" this morning to talk about the american labor economy and some of the structural challenges, even within cyclical recovery.

you show the google nest video. we'll talk google nest in a little bit. how wired should the home be and other than that, bank of america has earnings. scoorltfu will break that down for you -- scarlet fu will break that down for you. >> i think you're going to be talking about the killer app. >> yeah. seven days until davos. i named it davos profound. they are looking at profound thoughts this year in davos. my guess is we'll keep it narrow and smart in talking to world leaders about what now for inequality. that seems to be the theme of the moment. all right, tom. thank you so much. tom keene with

"surveillance." >> coming up, we'll talk arsenal trying to win viewers in the united states. that is coming up here on "the pulse." ♪

>> welcome back. you're watching "the pulse". let's continue our big focus this hour. the business of sport is what we're talking about. earlier we spoke to red bull's racing team's leader about international appeal. formula one cemented its place

in the world and talking about football r for our american audience, we're talking about the round ball here. talking about opportunities for growing his brand is tom fox. also here with us, my colleague, ryan chilcote. good morning. look. football is one of the few sports globally that can deliver globally. if i'm coca-cola or if i'm emirates and i have got a big presence that i want to generate in the subcontinent. ricket, the sport there. sports are different around the world. why am i sponesoring a global football team like arsenal? >> they have a fairly broad portfolio that covers the international globe. the reason they choose football is it is truly the most global game. it is played everywhere in the world. there is a massive fan base just

about everywhere in the world. in market where is they see growth, they know football is a real passion point. gives them access to their consumer in those marketplaces and gives them visibility and things they can't generate on their own. >> from arsenal's perspective, how big a piece over the pie are the markets outside of the u.k.? try and quantify it for me. >> in terms of the revenue? >> yeah. >> it is significant for us. i think it is difficult because we have such a large percentage of our revenues that have been derived historically from our stadium which is very much local revenue. but the premier league broadcast is growing because over the popularity over the game globally and i think the clubs have a huge role to play in growing the game and then the partnership is a sponsorship business which is really about 1/3. so 1/3 broadcast, 1/3 stadium and 1/3 sponsorship. i think the international component drives the

sponsorship. >> does that favor the clubs at the top of the sport? >> the teams at the top of the table get the biggest piece to tv rights, right? >> the way the premier league splits the revenue is a bit of a formula. it does provide more money to lower level teams. the international revenue is split equally. if you're at the top, you are generating more revenue. if you're the at the top of the premier league, you have a bigger brand and are gin rating more rev nusme >> -- generating more revenue. >> maybe you have been vindicated for that in terms over the team standing. how much further can sport commercialize? >> ultimately it is about fans. and it is about people's interest in the sport. but the change we have seen inside a generation has beens

colossal. can that race of change continue? >> i think there is still huge growth in front of us as a sports property. everyone talks about the increase in television rights and that is true. we have done a good job of extracting value from partners but i think we can do a much better job. i think the way that we can do that is by realizing we have a global fan base who is passionate about our club and league in general. and find ways to connect with that fan base on behalf of our partners is something we haven't spent a great deal of time and effort doing. >> how do you monetize and is that the next big move in sort of monetizing a football club? is it just taking it to global audiences? >> well, i think -- that has been going on for a decade. >> football clubs typically sold assets that are camera facing and camera visible. the better job that we can do

where i see the growth in partnerships is in our ability to translate what arsenal represents as a brand in its own right and be able to sell access to that and other partners. they get the tremendous amount of visibility for their logo and an association with the club who has a unique approach to business who is a sustainable club who has had success in the premier league and qualified for the champions league 17 years in a row. all of those things make up the core of our brand. >> how different -- i'm fascinated about the -- there are very few pieces of real estate in world sports that can do what you're attempting to do. >> formula one. >> yeah. even teams. you look at the front and back to have grid. red bull. top of the premier league to the bottom of the premier league. there are so few of those pieceses of real estate out there. i'm just wondering how does

somebody else -- can other sports generate that kind of story going forward from here? cricket is huge. are we going to see similar teams emerging that are going to do similar things that arsenal has? or is it almost impossible now? >> i can't really speak to tore sports. ultimate think fan and the consumer dictates what happens in the market place. cricket is popular in a lot of parts of the world. i have never seen response for anything like i have seen for premier league football. we got off the plane in vietnam at 4:30 in the morning and there were thousands of people waiting for us. we were the first team to travel there. i just think that gives us a tremendous opportunity. from what i can see and what we see traveling internationally, it is unlike any other sport that is out there. >> you haven't won a trophy in eight years. how damaging is that to your -- how does that affect your

ability to capture that global audience? >> actually we -- first of all, it is important for our fans that we win. everything we do and every day we're trying to put ourselfs in a winning position. having said that, we just had two of our primary partnerships, the emirates partnership and our kit partnership. we sold both of those in a market that was obviously very challenge wrg we hasn't won in a while. arsenal is a football club and a brand and it resonates very, very well in the marketplace. they understand we're a club that has achieved success and e way we play football football is the what they want to be a part of. we're a football club. only the reason the business exists is to fund the success to have football club on the field. that is the biggest difference between sports leagues and teams in the united states. we exist for our fans. we exist to play and win football matches. and my role is to try to

generate as much revenue as possible to make that easy fer our manager and our board and our owner. they are fully aligned with that. >> well, yeah. the coach has a degree in economics. that is probably an easier sell for him. very nice to meet you. tom, thanks for stopping by. tom fox, the chief fble officer at arsenal football club. fran, back to you. >> let's get some company news. charter communication is planning meetings with time warner today. they are hoping to convert their $61 billion takeover bid. yesterday time warner rejected the offer calling it grossly nadequate. paschi will remain after the company refused his bid to resign.

and amazon technicians in delaware vet vote today on whether to become the tech giant's first u.s. union. the decision could mark a big change for a company that has battled against union efforts for years. up next, the biggest star of the detroit autoshow may not be on four wheels. mary barra got plenty of attention. he begins food at g.m. -- she begins today at g.m.. ♪

>> welcome back. you're watching "the pulse." let's take a look at the currency markets. the last few days, the dollar has taken a beating, making a comeback. we have seen some disappointing german g.d.p. numbers out today. .4 rather than .45 that the market was looking -- rather than .5 that the market was looking for. how does the e.c.b. look at this? there seems to be a sense that inflation numbers are coming down. growth is coming down. we'll hear from the fed a little bit later on. the beige book is going to be

out. what is its view of the u.s. economy? how does tapering work? differences in terms of the voting members to have fed. that is going to be interesting to watch in 2014. where are we? francine? back to you. >> a look at what you need to know for the rest of the trading day. jon, let's kick off with g.m.. >> mary barro officially begins taking over that top office at general motors. the ford f-150 there, the redesigned mustang. >> also watch out for some of the banks. >> yeah. we're getting a flurry of bank earnings. we get goldman sachs tomorrow. bank of america later today at 7:00 eastern time. of course that company trying to wrap up some of the cost-cutting efforts. another company to watch is amazon. the last thing for any company, the last thing they want to deal with is unions.

amazon may have to face that because 30 equipment and maintenance repair technicians in the u.s. will vote to become amazon's first u.s. union. potentially a problem for any company in the u.s. >> beige book? >> beige book as well later on. richard fisher starts voting this year. you saw him speaking yesterday. comparing q.e.. i'm not going to go there. i have tweeted out the whole speech. t is absolutely fascinating. he talks about the first rule of holes. when you're in a hole, stop digging. you're talking about q.e. end it fast. >> thank you so much.

>> i have no idea. >> you don't. that's it for "the pulse." keep it here on bloomberg tv. up next, "surveillance" with tom keene and his team. ♪

continue to report profits. wells fargo outperforms jpmorgan. bankamerica -- bank of america reports in one hour. the welcome wagon, it was a

corvette stingray as barra takes over general motors. a smart kitchen, a smart ice rink in the backyard. the internet for everything everywhere. good morning. this is bluebird "surveillance. -- this is bloomberg "surveillance." i'm tom. joining me, scarlet fu, and our chief economics correspondent, michael mckee, is with us today. for then joins us entire 7:00 hour. >> the question we start off with his, what have you done for me lately. germany's gdp slowed, coming in four/10%. the euro is marching on. as of today, the legal tender, they are not accepting latvian currency anymore. the world bank raised its