Welcome to the Capitalist Wing of Antifa!

I know we should talk about the amazing summit Our Favorite President just had with the wise and very good-looking—right out of central casting, many people are saying—Chairman Xi.

But sometimes I need to do one for myself. And that’s what today is.

We’re going to talk about how, yes, capitalism is good. Lifted hundreds of millions out of poverty, higher standards of living, blah blah blah.

Also: It can kind of suck?

Today I want to tell you three stories about the rotten fruits of capitalism and one story about a plucky, independent media company that has grown up because of space the free market created.

Who’s ready to embrace some contradictions!

1. Youth Hockey

At the youth level, every sport is idiosyncratic. Soccer is the global sport because it requires no inputs, or organization, beyond a ball. You can play it anywhere—a street, a field, a patch of concrete. You can play it with any number of people. You can play it as a game, or merely kick a ball around as an activity, a pastime.

Football is a distinctly American sport because it requires massive inputs. You need a ball, pads, helmets, tremendous amounts of space, and large numbers of players. Football can’t really be played outside of an organized context. Which is why it is the perfect expression of American values.¹

Before this week I did not know much about the idiosyncrasies of youth hockey, which include the fact that it is uniquely susceptible to the corporate enshittification that is the hallmark of modern free markets.

Would you like to know more? 🫠

Here’s a USA Today investigation of a firm called Black Bear which is bringing corporate greed to youth hockey:

As a hockey dad, Murry Gunty saw how money and access can determine which kids make it to the sport’s highest levels.

As an investor, he built a business around it. . . .

Gunty, founder of Blackstreet Capital Holdings, used his private investment firm’s youth sports arm, Black Bear Sports Group, to rapidly buy up ice rinks and teams across the Northeast and Midwest and then leveraged that control to steer families into its own costly ecosystem of leagues, tournaments and fees.

The result: higher prices, fewer choices and growing concern from legal experts that one company is consolidating power over a sport long rooted in local nonprofits, turning youth hockey into a pay-to-play pipeline where families must spend hundreds more each year or risk being shut out.

Really, you must read the whole thing. You will be shocked to learn that Gunty went to Harvard Business School and has spent his career in private equity. Some highlights from USA Today:

• Black Bear is the largest owner-operator of ice rinks in the United States.

• It also owns hundreds of for-profit youth teams.

• It also owns the leagues, tournaments, and showcases these teams compete in.

• It also owns the streaming software parents use to watch the games.

USA Today describes how, once Black Bear owns the ice, it uses access to extort the customers it doesn’t own. For instance, at one rink in Michigan it threatened to raise rink rates for an independent youth team unless the team switched its uniform supplier to a vendor who gives kickbacks to Black Bear.

Yay capitalism!

Traditionally, youth hockey in America was run by community-based nonprofit groups. Black Bear’s business model is to buy the ice and then either purchase or kill the existing nonprofit teams and replace them with Black Bear-owned, for-profit contraptions. Here’s a case study:

Christine George, president of the nonprofit North Hills Amateur Hockey Association, knew little about Black Bear in May 2021 when it bought Pittsburgh Ice Arena, the home rink of the association’s youth teams. . . .

[I]n 2022, Black Bear approached the association’s parent-run board with a proposal to buy its teams for $1.

Branovan pitched the idea as a boon for players, who would benefit from Black Bear’s professional coaches and marketing support, multiple board members told USA TODAY.

Giving control of the region’s oldest youth hockey organization, founded in 1964, to a for-profit company was a nonstarter, said Amanda Rose, a board member. But as she and other parents learned, the proposal wasn’t so much an offer as a demand.

After the board refused to sell to Black Bear, Branovan in December 2022 told parents that the rink would no longer rent ice time to most of the association’s teams.

Its five elite Tier I teams—the top level of youth competition—could stay. But players on its lower-level teams, called the Pittsburgh Vipers, would have to either join Black Bear’s new in-house teams or find another rink.

“It was almost like a hostile takeover,” Rose said.

It’s a huge piece and kudos to USA Today for doing tremendous reporting work. Do not miss it.

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2. M&A

If you run a restaurant, you have two choices for supplies: Sysco or Restaurant Depot. In March, Sysco agreed to buy Restaurant Depot for $29 billion.

One restaurant trade group, the Food Away from Home Association, says this will be a good thing:

“It will increase the portfolio of products that are available at Restaurant Depot,” said Charlie McConnell, VP of industry insights, research and education at the trade group. “It might allow Sysco to introduce some of their private label into Restaurant Depot, which will be a cost-savings for independent restaurants. And it increases the negotiating power with Sysco’s suppliers so they can use that leverage to lower their costs of goods.”

I mean, anything is possible, but . . . c’mon bro. The point of reducing competition is never to make things better for consumers.

Capitalism tends toward monopoly the way systems tend toward entropy. That’s physics. It’s inevitable.

Which is why to be in love with capitalism you also have to be committed to robust government regulation. Unchecked capitalism always—always—leads to its own demise. The free market tends toward monopoly and then monopolists tend toward rent-seeking.

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