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CNN IN THE MONEY

Has College Ranking Become Over-Rated?; Video Game Creation Comes With Risks; A Play By Play Analysis of Fantasy Football; Survey of The Nation's Housing Market; A Look at New Orleans' Economy Post Hurricane Katrina; Dick Grasso Discusses His Rise to The Top And Subsequent Fall

Aired August 26, 2006 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CHRISTINE ROMANS, CNN ANCHOR: Welcome to IN THE MONEY, I'm Christine Romans sitting in for Jack Cafferty. Coming up on today's program, the new, New Orleans. It's been one year since hurricane Katrina devastated the gulf coast. We'll get an economic snapshot of the region today. Plus, how to wipe that smile off a real estate broker's face. Home sales numbers hit a 2 1/2 year low this week. Find out if the heat's finally going out of this market.
And dream teams. Fantasy football is turning out to be a touchdown for corporations. See why there's big money in teams that don't even exist. Joining me today, Jennifer Westhoven and Allen Wastler. Welcome to the program guys. Another great week to talk about the big breakup, a summer breakup, Tom, Sumner, Paramount. Is it a big business story that has implications for Hollywood or is it just kind of something sexy to talk about?

ALLEN WASTLER, CNN ANCHOR: I think it's a business story that has some trend value to it. You saw what happened with Tom Cruise, what they -- just with Mel Gibson earlier, his production company suffered a setback because of his out of line comments. There was a public thrashing of Lindsay Lohan -- I think studios are getting tough. They're saying hey, you want $20 million a movie, we'd better see some good workaholic behavior here.

JENNIFER WESTHOVEN, CNN ANCHOR: But there's often this sort of amorphous moral clause in people's contracts.

ROMANS: You're right.

WESTHOVEN: This is a time when Sumner Redstone just came out and apparently according to some reports didn't bother to tell Tom Cruise first. He really just unloaded, you know telling "The Wall Street Journal" that his behavior was completely unacceptable. What a public rebuke.

ROMANS: Well Sumner Redstone owns the company that owns Paramount. So some people are saying it's so interesting that it came from the parent company and not from Paramount itself. Others are saying that Tom Cruise's production company actually was stepping away from the negotiating table first. So it's up for grabs I guess who fired who here.

WASTLER: Yeah it's sort of like a divorce of well, I'm breaking up with you, no, no, no, I'm breaking up with you for bragging rights. And all this about Tom Cruise's behavior though, I just want to point out I think he's a fairly decent actor. If you look at some of the stuff he did, "A Few Good Men," "The Last Samurai", "Jerry McGuire." I mean he's had some dreadful, dreadful "Eyes Wide Shut," ugh.

WESTHOVEN: He's made some money for Paramount too.

WASTLER: He's made some money and he's not a bad actor.

ROMANS: It goes back to, I'm tailing Jack Cafferty here, he'd say, you know who cares what Hollywood guys think about current events anyway. So, that's what Jack would say. All right, great. One year ago this weekend, hurricane Katrina was churning in the Gulf of Mexico. We all know what happened next. Lives lost, families uprooted, homes, businesses, destroyed. Local economies beaten down. We thought we'd see just how much has changed since then and if any real progress has been made in rebuilding this region. George Penick is director of Rand Gulf State's Policy Institute, he joins us now from Jackson, Mississippi. Welcome to the program.

GEORGE PENICK, RAND GULF STATES POLICY INSTITUTE: I'm glad to be here, thank you.

ROMANS: A year ago and what progress has been made, if we talk about the economy of this area? I know just this week, you know a remarkable story about how the murder rate is actually higher today in New Orleans than it was even a year ago, crime problems, all sorts of issues, still challenging this area. Are we seeing signs of life and improvement though?

PENICK: There are signs of improvement. What people need to understand is that this is a very long-term situation. Probably longer term for New Orleans than it is for the gulf coast. And these, you know, rebuilding the infrastructure, bringing the people back, you know, putting the human services back together is going to take an awful long time. And this is not something that we can take a one- year snapshot on and judge the total success by it.

ROMANS: One of the things that you say that Mississippi did right was something that when I first read it, seemed heartless. You know, people's homes were ruined. They were suffering. But you say the state of Mississippi went out and rebuilt the casinos first and that that was great because it meant a lot of jobs and it meant a lot of taxes, meaning money for the state to do rebuilding. Can you tell us about that and some of the real benefits that really did end up coming because of this decision that it does sound a little heartless at first.

PENICK: Well, what the state did was it made it possible for the casinos to come back and rebuild. The state did not rebuild the casinos of course. But it knew that the long-term recovery in Mississippi and it's the same in New Orleans and southern Louisiana, is going to be driven by the private sector. If the jobs don't come back, then the people aren't going to come back either. And so the casinos had been a big boost during the '90s and the last -- and this part of the 21st century for jobs, for recreation, for tourism. And if they did not come back quickly, if they decided, for example, to go to other parts of the country instead of reinvesting immediately in Mississippi, that -- that the coast was going to have a much harder time. And so basically what the state did was it said the casinos, instead of having to be on barges offshore on floating water could build on shore. And that was the assurance that the casinos needed to rebuild. So it is one of the bright spots on the gulf coast that where you go down there and you see so much destruction, but there is life. And there are people working in those casinos, which would not have been the case otherwise.

WASTLER: George, what's the housing picture like down there. I've heard that land prices are generally rising. But that there might be a squeeze on for middle income, lower income people?

PENICK: The issue of affordable housing is huge. Throughout the entire area, Mississippi and Louisiana. Because you know, there were a lot of middle and lower middle and low income people who lived in these areas and they may have had -- they may have had sufficient housing before. It might have been rental, it might have been a modest house that they owned, but that is gone. And in order to replace that, it's going to need -- Rand believes from our studies that this kind of housing doesn't come back on its own. In South Florida, after hurricane Andrew, affordable housing is still not up to the levels that it was in 1992. So we know that the market-driven housing will not bring back affordable housing as quickly as is needed. And so you know, and if people have to -- if they can't get affordable housing near their jobs, if they have to live a long way away in a trailer park for a long period of time or they have to now drive whereas before they could walk to their jobs, they may not come back.

ROMANS: And quickly George, jobs, that's the important thing. You can have all the housing you want and all the affordable housing you want, assuming you could even pull that off, but you have to have jobs for people. And there's great concerns that a lot of the mom and pop, the small businesses, there just aren't the customers right now to sustain them. For a lot of the big businesses, tourism and the like, you know they're still trying to get on their feet. What about the job picture?

PENICK: The job picture is mixed, as you can imagine. Unemployment is higher. Both in Mississippi and in New Orleans than it was before the storm. There are some success stories. We've talked about the casinos, the port in New Orleans which is a big employer is back in business. Oil and gas is pretty much back to where it was. But there are huge parts of the population that not only, they're a small business or the company they worked for has not gotten back on its feet but then they were financially ruined.

ROMANS: Bottom line, there's still a lot of work to be done on the gulf coast. George Penick, thank you so much for joining us today, he's director of the Rand Gulf States Policy Institute. Thank you so much sir.

PENICK: Thank you. ROMANS: When we come back, it's a home, not a money machine. Somewhere along the way, we all started expecting to make a windfall out of our houses. See what the latest numbers say about the state of your investment. Plus, making the grade. College ratings can tell you more about the system than the school. Find out if the stats are any way to pick an education. And big game hunters. Corporate America found out that you can make real money on fantasy football we'll tell you who's cashing in.

(COMMERCIAL BREAK)

WESTHOVEN: Some dark clouds showed up in the housing market this week. Home resales last month fell to the slowest pace in 2 1/2 years, and the number of "for sale" signs hit a record, and that's for homes already lived in. New home sales even worse, down more than 21 percent from last July. Nicolas Retsinas is here to talk about the cooling real estate market and maybe what it means for the price of your home. He's the director of Harvard University's Joint Center for Housing Studies. Welcome to the program. For so long, economists have been forecasting a gradual cooling off in the housing market. Now a lot more of them are saying this could be a rocky, bumpy, some are saying fasten your seat belts. How fast is the air coming out of the housing market.

NICHOLAS RETSINAS, HARVARD UNIV. CTR. FOR HOUSING STUDIES: Well pretty quickly. Particularly in the new home market. We saw yesterday the report on the drop in sales. There's clearly an inventory correction going on. Some markets are more vulnerable to others. On the existing home market, what you're seeing are slowing sales. People reluctant to lower prices. So no question, the party's over in the housing market. The question is how long will it be over before the lights come back on.

WESTHOVEN: Say I'm somebody who needs to sell my house that I bought just a few years ago and I thought -- well I thought that prices were just going to go up forever. I've got an adjustable rate mortgage, I've got higher gas prices, I'm trying to send a kid to college. This is a little bit of a squeeze for families who have recently bought in this market, isn't it?

RETSINAS: It very much is, particularly if you took out one of those new mortgage products, for example the so-called option arms where you don't have to make your full monthly payment. You could end up owing more than what you bought it for.

WESTHOVEN: You know, I just want to -- those, a lot of people now are saying in hindsight that those exotic mortgages were really a bad idea. If you're in one of those, do you need to think about getting out?

RETSINAS: Well, you do and a lot of people are. One of the interesting statistics we're monitoring is refinancing. One would have thought with interest rates trending up that refinancing would slow. It's staying high and we suspect part of the reason are people trying to find a way out of these exotic mortgages into products that have some kind of fixed rate at least over a limited period of time. WASTLER: Nick, other side of the coin from Christine's sell question. My wife and I are looking to buy, OK. Now, should we jump in now or should we wait and wait and wait? Will it become like a real buyers' market.

RETSINAS: Well it is now a buyer's market. So you certainly have more options. If you're trying to buy an existing home, people are reluctant to lower the price. If you're looking at a new home, builders are offering lots of concessions from TVs to cable to a whole series of things.

WASTLER: Oh, yes.

RETSINAS: And they're also starting to offer price reductions. The real question I think is if you can afford a price and you're paying a realistic price, but you're also really sure you're not going to have to sell for a couple years, you'll probably be okay. But I think this market's going to slow for a period of time to come.

WESTHOVEN: But this is the upside right, that now finally while people who didn't buy watched these prices skyrocket and get right out of their reach, now they finally have a chance to catch up, right? Their incomes can catch up.

RETSINAS: Well they do, their incomes are going to catch up. At the same time, however, rates over time, not over the last couple weeks, but rates over time are trending up. Some of them may be trapped in the middle while prices are slowing, they're not declining substantially, at least not yet at the same time as interest rates go up, it reduces their purchasing power.

ROMANS: Nicholas for the middle class there are a lot of folks who I guess would consider themselves house rich and cash poor at this point. And I'm wondering if it's going to be a few more years of declining prices, what are folks supposed to do if this market continues to cool? And I realize that it is, we should point out it is local, real estate is always local. These are local markets. The coasts are a lot different than say hot Florida and Las Vegas. But for the average middle class family that's found themselves maybe with a hot, you know 200, 300, $400 more a month on their mortgage payment, do they need to think about downsizing if they've just bitten off more than they can chew.

RETSINAS: Well they could or they could just stay put, if they can make the numbers work and make their mortgage payments. I think as you alluded to earlier on, I think we have to sort of reassess what a home is all about. You know it wasn't too long ago the notion was you make money so you can buy a home. Then all of a sudden it turned into you buy a home to make money. Fundamentally, you buy a home to live in. So if it works for you, it works for your family and you can make the payments, don't get desperate.

WATSLER: Nick, so far things have been fairly mellow. You know in terms of the letdown here. But if the Fed decides that there's and inflation monster out there and it has to jump back in again and ratchet rates maybe one, two more times, could it be a nasty bubble burst in prices?

RETSINAS: Well, the Fed is looking at this. The Fed is looking at the housing data and certainly the pause in the rates was good news for the housing sector, though they left open the option of raising rates again. This is an interest rate sensitive part of the economy. And if rates were to go up and continue to go up, it would make it a much more difficult time for the housing market already under strain.

WATSLER: OK, well I'm just looking forward to the buyers' market that you said would be coming, OK?

RETSINAS: It's coming.

WATSLER: All right. Nick Retsinas, he's with the Joint Center of Housing Studies at Harvard University, Nick thank you so much for joining us.

RETSINAS: My pleasure.

WATSLER: Just ahead after the break, ups and downs. Former NYSE boss Dick Grasso is an old hand at the Wall Street roller coaster. We'll have his first sit-down interview since he lost his job. Also, the campus beauty contest. College ratings are just one yardstick for judging a school. See what's not behind the numbers.

And feed the people. A federal fee has been ditched but the savings aren't being passed down to some DSL customers. We'll tell you why.

(COMMERCIAL BREAK)

WESTHOVEN: Dick Grasso spent a lot of time in the spotlight when he was chairman and CEO of the New York Stock Exchange. But he may have gotten even more attention when he quit amid a huge storm over his pay package, which critics contended was obscene. He's been mostly quiet for months, but as we get closer to the trial, he talked with our Susan Lisovicz.

(BEGIN VIDEOTAPE)

SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): Few people have risen higher or fallen faster than Dick Grasso. Which may be one reason why he finds Coney Island's famous stomach-churning cyclone no big deal.

DICK GRASSO, FORMER NYSE CHAIRMAN AND CEO: I had 35 1/2 great years of a career, one bad day.

LISOVICZ: Grasso's long climb began in this working class neighborhood in Jackson Heights, New York. Grasso dropped out of college and after starting out as an $81 a week clerk, became the first to work his way up to become chairman of the New York Stock Exchange.

GRASSO: This is the American dream. Someone in this community will someday do what I did. No doubt in my mind because when you start here, you work hard.

Welcome back to the greatest market on the face of the earth.

LISOVICZ: Dick Grasso led the exchange during the great bull market of the 1990s. He was a crusader, working with New York State Attorney General Eliot Spitzer to clean up Wall Street corruption. And hailed as a national hero for working around the clock to reopen the NYSE after 9/11. Grasso became such a celebrity, that he played himself in a cameo in "Sex in the City."

Turning the market's opening bell into a daily parade of VIPs, hoping for a piece of the action. Grasso himself made money, a lot of it. Paid $30 million in one year alone and accumulated about $200 million in deferred compensation. When word of all that money became public, the outrage led to an ugly firing. Adding insult to injury, his former ally, Eliot Spitzer, went to court to get money back for the New York Stock Exchange.

ELIOT SPITZER, NEW YORK STATE ATTORNEY GENERAL: It's simply too much. It's not reasonable. It's not right. It violates is the law.

LISOVICZ: It isn't just the $200 million. A lawyer knowledgeable with the case gave CNN a copy of Grasso's last contract, which measured his life expectancy as 50 percent male, and 50 percent female. Since women live longer, that meant even more money in his pension. Now to some, Dick Grasso is among those on the list of executives under the general heading of wretched excess.

(on camera): In some circles, you are lumped in with Dennis Kozlowski, Bernie Ebbers, Jeffrey Skilling. What do you say to that?

GRASSO: Just flat wrong to do that. Those are people who committed crimes according to the courts and according to their own admissions. That's not me. If you can say to me, Dick, the crime you committed was cashing the check, then let's stop the whole American capitalist system. Because when the smartest most admired most successful people in the world who, are your bosses, say, we think you're worth X, then you have to take that as fact.

LISOVICZ: Some of the people on the stock exchange board who signed off on Grasso's pay included Hank Paulson before he became Treasury secretary and former secretary of state Madeleine Albright. You're going to court. The judge has asked you to settle.

GRASSO: Settle means I've done something wrong. And I've done nothing wrong.

LISOVICZ: Grasso says he's confident of vindication. Could you see your life as a metaphor with the roller coaster? Big highs, some lows.

GRASSO: And more mountains to climb.

LISOVICZ: Dick Grasso knows firsthand how long the climb to the top can be. And he's painfully familiar with the speed of the descent. (END OF VIDEOTAPE)

LISOVICZ: Dick Grasso had been virtually silent for three years, but the public will start to see a lot more of him in the near future. His trial is set to begin October 16th and Grasso says that he plans to go back to work afterwards regardless of the verdict. Jennifer?

WESTHOVEN: Thanks, Susan. And there's a lot more to come here on IN THE MONEY. Up next, college incorporated. The ranking system can make picking a school feel like buying a vacuum cleaner. See why commerce and education maybe don't mix.

And playing for keeps. Activision has been cranking out computer games since the '80s. Find out how its CEO keeps the company sharp and where winners are made not born. Fantasy football is turning out to be a money maker. We'll tell you how some big corporations are getting in on it.

(COMMERCIAL BREAK)

(WEATHER REPORT)

ROMANS: Every August, parents begin shipping their kids off to colleges across the country. An increasing number of them, along with students and administrators are simply mesmerized by what other people think about those institutions. Our next guest argues that college rankings are undermining the country's education system. Joining us now is Lloyd Thacker, author of "College Unranked, Ending the College Admission Frenzy." And it is a frenzy. You've got kids who are taking classes to prepare, multiple standardized tests, they're applying to the top 15 colleges in whatever magazine they happen to pick up that ranks them and it is turning into some sort of commodity, you say, not an educational process but colleges are becoming commodities.

LLOYD THACKER, FOUNDER EDUCATION CONSERVANCY: Yes, it's nice to be with you. Certainly the commercialization of college admissions led by the ranksters has created a crisis by undermining educational values, such as, in the process has reduced education to product, students to consumers, and transformed something that was once an educational experience or transition into a problematic commercial exercise.

WASTLER: Well, Lloyd, how did it get this way? I mean what all of a sudden punished colleges to all of a sudden get into the rankings game?

THACKER: Well, in times of student scarcity and diminishing federal funding for colleges, they became fearful. And they developed marketing techniques and managed their resources according to the ranksters and promoted and promoted and promoted.

WESTHOVEN: I love that you're calling them the ranksters. That's cute. OK, in this big collection, you have a lot of different voices of people who in many essays are arguing about how it's not just a matter of us trying to fix the system. We need to throw the whole box out. And you say this isn't just teachers and faculty and administrators, it's also students who are applying for school and parents who are involved in the whole process. What should people be doing to try and fix it?

THACKER: Well, I think everybody has a role to play. And everybody has potential for educational gain. I think colleges have to begin to act more like educational institutions. And there are a few things that they might do. And that is, one, they can refuse to cooperate with the ranksters, they can refuse to use the rankings to promote themselves and they can help educate students and parents about what really is important in education. And finally, they can develop more reliable measures of educational quality.

ROMANS: Go ahead.

WESTHOVEN: But what about students and parents? What should they do?

THACKER: Students and parents, they need to think about education. That's a very important thing. What makes education important? What makes education valuable and what role does the student play in making education happen. Sit down at the dinner table, talk about these things.

WASTLER: All right. I'm going to be a little bit contrarian here and I'm sorry. But I get resumes, people applying for jobs for me and I get the resumes. And when I see an ivy league school versus a community college I know I shouldn't, but you know, subliminally I do, and I know a lot of other executives, we're ranking ourselves. The world is about ranking. Why shouldn't it start at college? I mean that's what you're going to go into and that's what employer's are going to base you on.

THACKER: Well, yes. Competition in ranking is part of our life. But the current system of ranking colleges implies a false sense of precision and authority which are just not supported by data. If I was to hire somebody, I might look at where they went to college, but more importantly, I would consider, what did they do with what was available to them.

WASTLER: So you're looking at the extracurricular activities, you're looking at the supplements to the resume?

THACKER: Yeah, I would look at their student qualities, what I call student hood. How did they display imagination, curiosity, industry, intellectual integrity, creativity, honesty, things like that. That's what's going to make a difference for me and my employee.

WESTHOVEN: That is really good. What I'm starting to wonder about though is why colleges chase these rankings so hard. How much money can you really get or what does it really mean to a school to just go up and down a few notches?

THACKER: It can impact the popularity of a school, the number of applications that it gets, even the amount of funding or support that it gets from alumni. But the bottom line is, is that many colleges are losing their integrity and their financial stability by chasing the ranksters. I mean, colleges are in danger of losing their soul when they begin to manage their image, according to externally defined criteria, those by the ranksters.

ROMANS: Just one quick question. Is it true that some colleges accept more applications knowing they're going to reject them just so they can move up on the list?

THACKER: Oh, absolutely. You can buy popularity these days. You can buy applications. And it's a complete waste of resources, and those resources are coming from another other more educationally viable purposes in being transferred.

ROMANS: And all those broken hearts and broken dreams of kids getting that rejection letter in the mail and all they were was something to manipulate the rankings. Lloyd Thacker, author of "College Unranked, Ending the College Admission Frenzy." Thank you so much for joining us.

THACKER: My pleasure.

ROMANS: There's lots more to come here on IN THE MONEY. Up next, new school tricks for an old school company. See how Bobby Kotick got Activision's head out of the space invaders era. Plus, the moment our associate producer Adam has been losing sleep over. We're giving his fantasy football team some air time. Find out if there's real money in a fake game.

(COMMERCIAL BREAK)

WASTLER: Video games have matured since the days of Intellivision, Atari, Kolekovision(ph). And so has the audience that plays them. It's now an $11 billion business and a risky one at that. Launching a video game can cost upwards of $25 million. But as Allan Chernoff reports, it's a risk industry execs like Activision CEO Bobby Kotick like to take.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT: Video games have come a long way since the days of Pong and space invaders and so has Activision, one of the few game makers from the 1980s that has managed to survive. CEO Bobby Kotick didn't start Activision but has been key to its turn around. Back in 1990, Kotick saw the company heading toward bankruptcy and thought he could revive it. Kotick got rid of poorly selling games and promoted the most promising brands. Most notably, Activision signed skateboarder Tony Hawk to headline a series of games that have been key to the company's revival.

BOBBY KOTICK, CEO, ACTIVISION: When I set out 16 years ago to build the company, it was really with the idea that it was an institution. And not something that was about a single entrepreneur or my partner and I's vision for the business. And today, we're the clear number two. We did a billion and a half of revenues last year and we've built an institution that could live just beyond Bobby Kotik.

CHERNOFF: To keep the company going, Activision has to keep up with a constantly changing business, which is not easy. Especially this year. 2006 is what industry watchers call a transition year. The top game systems from Microsoft, Sony and Nintendo are all being upgraded. While gamers wait for the new improved systems, they tend to hold back on buying titles. That's hurting Activision. In fact, delays in the release of new systems from Sony and Nintendo pushed Activision revenues down 22 percent last quarter from the same period last year. But Kotick is looking long term, and sees the hardware upgrades as an opportunity.

KOTICK: We're about to begin what's probably the most exciting time in the history of the video game industry. Xbox 360 is the first really truly online enabled device. You're likely to see the real advent of multiplayer play, the ability to play against another person. If you look at the PlayStation 3, the graphics capability gives you a level of production value that rivals feature films. And then if you look at Nintendo We, the controller has a gyro. And you actually have the ability to interact with games in a way that we've never seen before.

CHERNOFF: In addition to Tony Hawk games, Activision features titles based on comic books like X-men and movies such as "Over the Hedge." The latest franchise, Guitar Hero combines gaming with playing an electric guitar. But to Kotick, the importance of the games are secondary to the people that make them a reality.

KOTICK: I would say the thing that's enabled me to be most successful is an ability to pick really talented people and I think that's something that's enabled us to break out of that pack of the 50 or 60 video game companies.

CHERNOFF: Allan Chernoff, CNN, New York.

(END OF VIDEOTAPE)

WASTLER: The video game business has found itself in the spotlight this summer and it's got nothing to do with a new game or new technology. All four of the big U.S. video game publishers, Activision, Electronic Arts, Take 2 Interactive and THQ, have drawn scrutiny for their stock options granting practices. The SEC sent Activision a formal letter of inquiry late last month. Activision says the company is cooperating with the investigation.

Speaking of games, this summer, millions of your co-workers are talking strategy on conference calls, e-mailing frantically, pouring over spreadsheet data. But those aren't the latest sales figures they're studying. Nope, it's fantasy football. And in this week's brainstorm, we look at the growing obsession that has literally millions of men and an increasing number of women, Christine and Jen, picking real NFL players to compete on their pretend teams, all in the name of fantasy glory and ultimate bragging rights. Now if you're not quite sure what all this is about, you're lucky. Our next guest will clue you in. Joining us now is Erik Barmack, co-author of "Why Fantasy Football Matters and Our Lives Do Not." Erik, welcome.

ERIK BARMACK, CO-AUTHOR, "WHY FANTASY FOOTBALL MATTERS": Thanks for having me.

WASTLER: All right now, there's a lot of people in my office who play this and everything. I've never done it myself and I'm kind of confused.

WESTHOVEN: Sure you haven't.

WASTLER: I have not. Just lay it out for the neo-fight. How does this work?

BARMACK: Fantasy football is kind of like dungeons and dragons for guys who used to beat up people who played dungeons and dragons. You call them nerds, I call them smart guys. But the basic idea is that you get together with your friends, you drink a lot of beer, you pick players that are participating in the NFL and then you get points based on how they do in real life games.

ROMANS: It's fake though, it's fake. This is what I don't understand. It's not a real team. You're picking pieces of teams and putting together your own team for something that's not real. It's making an incredible amount of money for somebody out there, right?

BARMACK: Yes, I mean, it's a billion dollar plus industry now. And it's a big deal for companies like the one that I work for, ESPN, because 20 million people are playing it. It leads to higher retention for the games themselves. And it's leading to about $200 million in lost productivity.

WESTHOVEN: First, beer that helps explain why my brother's like this so much. You were talking about companies getting in on it. But what about companies who might be getting hurt by it? There's a statistic that says with 20 million people playing fantasy football, they are losing $37 million a day in productivity. That's how much companies end up losing as their workers tend to their stats.

BARMACK: Yeah, but what would they be doing otherwise? I mean maybe they would be checking e-mail or surfing the web. But it's true, it's a distraction and it's a passion that people have and it's mostly taking place around the workplace.

WASTLER: Now, Erik, I was reading some excerpts from your book there and it's hilarious. Right now we have football season coming up. I'm excited. What's going on with these guys? What are they doing? What's the warm-up here?

BARMACK: This is when you're sending out e-mails to all your friends, certain people like myself are getting kicked out of our leagues for being inappropriate the previous year. Other guys are being brought into the fray.

WASTLER: How can you be inappropriate?

BARMACK: I had a very lawyerly commissioner kick me out of our league. ROMANS: It sounds like we've tapped into a very painful experience.

WASTLER: Scandals here on IN THE MONEY.

BARMACK: It's a sore spot. But yeah, so people are getting their drafts together, they're organizing their teams, they're going through cheat sheets and looking at who they want to take in which round. They're basically preparing for the football season.

ROMANS: I had no idea that so much money could be made on it. I can't follow one team. Usually every year I pick the Bears or I pick some team and I kind of keep track of them. But to keep track of all the players of all the teams and put your own fake team together, you have to watch so many games or at least study so many stats. And according to this "People" magazine, a billion dollars, fees, web sites, magazines, championship rings? You could get a championship ring for your fake team.

BARMACK: Scarves, t-shirts, sweatshirts. This is all part of the experience. And you have to imagine yourself that somebody like myself has always wanted to own a sports team and so all those complications that you're talking about are things that we get excited about. It's like being Mark Cuban without the bad haircut.

WASTLER: Real quick, if I'm excited by this part of IN THE MONEY and I want to go play fantasy football, how do you do it? Do I have to pay a fee, can I do it for free?

BARMACK: There's lots of places you can play for free on espn.com and there's other places that you can play for free. It's mostly about finding the 10 or 12 guys that you want to play with.

WESTHOVEN: Or girls.

BARMACK: Or girls. And that's a good point. 10 percent of the fantasy football managers right now are women. And that's a growing percentage.

ROMANS: I don't know any.

WESTHOVEN: Me neither.

ROMANS: I mean maybe they're out there but I really don't know any.

BARMACK: Well I need a new league so perhaps we can all join up.

ROMANS: There you go, we'll have to ask our bosses if we can use that $37 billion.

WASTLER: We'll have to start a league. Well Erik Barmack, author of "Why Fantasy Football Matters, And our Lives Don't", thank you so much for joining us.

BARMACK: Thanks for having me. WASTLER: All right, great. Coming up next on IN THE MONEY, out of the shadows. Funny how your cellphone bill winds up higher than what you agreed to pay. We'll have the lowdown on those hidden fees. And, it's time to hear from you as we read some of your e-mails from the past week. You can send us an e-mail right now too. We're at in the money@cnn.com.

(COMMERCIAL BREAK)

ROMANS: Ever wonder about all those fees that show up on your phone and Internet service bills every month? So did our Allen Wastler and what he found out made him pretty angry.

WASTLER: These telecoms. Somebody ought to regulate them, huh? Here's the latest thing, OK. Once upon a time, the federal government imposed this fee on the phone carriers called universal service fee, right. It basically was there because hey you want phone service to go to poor people and farmers, too. But the phone companies wouldn't build it all the way to Farmer Brown's place so they imposed a fee, everybody pays and that chips in to pay for this. So, generally a good idea. Well here comes you know Internet service, DSL and all that, and they're passing that fee on to DSL users, too. And then DSL users are like, hey, what does Farmer Brown have to do with DSL service. The government eventually after a few court cases, say you know what --

WESTHOVEN: A lot of lobbying --

WASTLER: Yeah, you're right, we'll get rid of the fee for DSL users. Great, OK. So that's 283 cents or which would be $2.83, all right, for your average bill for high speed Internet service, like I use, OK? That's gone. That's a savings to me, right? No, you know, because I use Verizon. And what did Verizon do, Verizon all of a sudden --

WESTHOVEN: I'm sorry, what company was it again?

WASTLER: It was Verizon and they have a supplier surcharge fee now that, what it's for high speed Internet, why it's $2.70. Oh, thank you for the 13 cent savings, Verizon. I really appreciate that. They just substituted one fee for the federal tax that went bye-bye. Bellsouth did the same thing.

WESTHOVEN: Breathe.

WASTLER: BellSouth's fee is called a regulatory recovery fee because they have to deal with so many regulations. They should deal with more as far as I'm thinking. Now I got a brief glimpse of hope from down south. A federal court down in Atlanta recently decided you know what, FCC you're wrong. States can regulate telecoms for all those little extra charges and the fine print and stuff. You know how you get that new cellphone plan and all of a sudden, wait a minute, you said it would be $30 a month, now it's $40 a month. Oh we've got all these roaming charges, fees and stuff.

WESTHOVEN: Some states can fight this. WASTLER: A court is saying that states can jump in there and just go ahead and fight it. Which would be a good thing in my mind. Now of course you'll see a lot of lobbying over this because the telecoms are going to go, oh we're going to have patchwork regulation, oh it's not going to work. If you guys weren't trying to stiff me out of money that belongs to me, you wouldn't have that problem now, would you. So there.

WESTHOVEN: Just hang up the phone.

WASTLER: I'm breathing.

WESTHOVEN: And send a letter. And with those contracts, you have so little negotiation room to fight them.

ROMANS: I'm so cynical because I know there's all these fees, I don't even know what they are, I don't know what they're for and I'm just used to it, you know. I mean --

WESTHOVEN: They're counting on you.

ROMANS: Exactly. If I did not argue and just write the check.

WASTLER: No Christine, fight the power.

ROMANS: All right, I'll see what I can do.

WESTHOVEN: All right, everybody. Now it's time for this week's "Life After Work," a little inspiration. Since 1993, retiree Tom Reid has spent about $10,000 on flying lessons and pilot licenses. Well now he wants to share his love for the sky by trying to teach kids about the joy of flight, Valerie Morris has that story.

(BEGIN VIDEOTAPE)

VALERIE MORRIS, CNN CORRESPONDENT: 68-year-old Tom Reid is flying high now that he's retired.

TOM REID, VOLUNTEER PILOT: Once that airplane takes off, that feeling that comes over you is hard to describe. There's no other experience like it. My name is Tom Reid, I'm with the "Right Flight."

MORRIS: As a volunteer pilot for the non-profit organization "Right Flight," Reid helps deserving kids experience that same rush.

UNIDENTIFIED FEMALE: It was fun.

MORRIS: The nine-week program is open to fifth through 12th graders who sign a contract promising not to do drugs, drink or smoke. They must also write an essay about what they've learned and must improve a report card grade by one level before flying.

REID: You cannot wipe the smile off of their face. I mean, it goes from ear to ear. I get choked up even when I talk about. I thought I was going to retire, maybe go out and play some golf, go down to the beach, walk around the beach and see some sunsets. But I haven't gone to the beach since I moved here. Because I've been so involved with everything else.

MORRIS: The former power company supervisor took an early retirement package and moved from New York to Myrtle Beach, South Carolina. Along with "Right Flight," Reid's also a civil air patrol wing commander volunteering with kids who want to join the Air Force.

REID: I still feel young inside and I still want to do all these things, and being involved with the young children keeps me going.

MORRIS: Valerie Morris, CNN.

(END OF VIDEOTAPE)

WESTHOVEN: We'll be right back with more IN THE MONEY.

(COMMERCIAL BREAK)

WESTHOVEN: All right now it's time to read your answers to our question about whether you care if the economy slows down, if that slowdown also means you'll get lower gas prices and lower interest rates. Well J.A. from New Jersey wrote, "Yes I care, because inflation for real Americans is still increasing and our national debt will increase in a slowdown." And Frank in New York City wrote, "Yes I care, because most of us still haven't reaped the benefits of the so-called economic recovery. Now with a slowdown, things will only get worse. In America, the middle class and the poor are always the last to taste the rewards and the first to feel the pain."

And Shirley from Idaho wrote, "I'm 65 and I'm glad to see the economy slow down a bit. But I have ulterior motives. I can finally afford a luxury car, but not the gas!" For next week's e-mail question of the week, "Would you be facing economic hardships if the real estate market saw a major slowdown or if it crashed?" Send your answers to us at inthemoney@cnn.com.

ROMANS: And you should also visit our show page, you can find us at cnn.com/inthemoney. Thanks for joining us for this edition of IN THE MONEY, thanks to "HEADLINE NEWS" correspondent Jennifer Westhoven and cnnmoney.com managing editor, Allen Wastler. I'm Christine Romans in for Jack Cafferty. We'll see you back here next week Saturday at 1:00, Sunday at 3:00, see you then.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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