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Hey,

Yes, I know, I know. It’s Wednesday and the chitthi is supposed to land in your inbox on Tuesdays. I couldn’t come up with a good enough excuse, so I am going to be honest with you - I messed up. There was just too much going on, and I couldn’t finish writing it on time. But, I guarantee it will be worth the wait.

We are answering some pressing questions today:

- Is LeBron James a basket ball player or a business-man?
- Is Sachin a cricketer or an actor?
- What happened to Blackberry?

LeBron James is a genius both on and off the court.

Sure, LeBron James is one of the best basketball players of this generation, but what very few know is that he also has a very sharp business mind.

He is the top earning player in the NBA currently, but most of that money has been made outside the basketball court. All of these riches were made possible because he consistently made good business decisions.

Let’s start with his ownership stake in Liverpool FC

Lebron James is a superstar. Being a superstar means sponsorship deals and advertising money, lots of it. In 2011, instead of taking a paycheck for one of these deals, he traded it for a 2% stake in Liverpool Football Club.

He allowed Fenway Sports Group to use his name in their list of clients, and allowed them a commission on the business deals they brought to him. In return, he acquired a 2% stake in Liverpool Football Club, which is owned by Fenway Sports Group.

In 2011, Liverpool was struggling and still searching for its old glory days as a successful team. Now in 2021, the club has restored its pride and has won major trophies in the last few years.

As a result, the club's value has risen dramatically, and LeBron James' $6 million dollar investment is now worth more than $60 million dollars.

This was just one story, there are many more.

When he was 18, he turned down a tempting $10M cheque from Reebok, and just a few months later, signed with Nike for $90M.

To put the story in perspective, at the time he was paying a rent of $17 per month and was presented with a giant $10M cheque which would take care of his rent for the rest of his life and then some.

In an interview he revealed that he basically started thinking that if Reebok was willing to give him $10M at that moment, what if Adidas or Nike would be willing to give him $20M or $30M.

There’s another great business decision hidden here.

Eventually Reebok offered him $115M, whereas the Nike offer was $90M, but he chose the less lucrative deal because he felt Nike was a better brand.

Today, he has a lifelong deal with Nike, worth a billion dollars.

Whereas, Reebok today, has zero deals with NBA players.

Another pivotal moment was when he was approached to endorse ‘Beats by Dre’.

Instead of a traditional deal where he would have been asked to wear the headphones in public, he asked for an ownership stake. Yes, exactly what he did with Liverpool.

Beats grew in popularity during the 2008 Beijing Olympics, despite not being an official sponsor. The American basket-ball team was the most popular group of athletes at that event, and LeBron James gifted each of his teammates a pair of Beats headphones.

Now every time they moved around the Olympic Village with the camera on them, they had the headphones around their neck or on their heads, giving the brand really good visibility and making it famous overnight.

Beats has now been bought by Apple, giving him a sweet $30M from the deal. Had he simply endorsed the brand, he would have probably just made a couple million dollars.

But that’s not all - remember Scott’s Tots from The Office?

In the TV show, Michael Scott agrees to bear the college fees of a group of children at a local school, but backed away when the time came. LeBron James is fulfilling that promise in reality.

He has built a school in his hometown of Akron, Ohio, and will sponsor the college education of all children who graduate from the school.

GOAT for a reason..

Who’s the blank?

In honour of ____________, Australian Broadcasting Corporation’s GPO box number is 9994.

Such was the reach of the man that in 1986, when former Australian Prime Minister Malcolm Fraser met Nelson Mandela, who was in the 22nd year of his 27-year confinement at Cape Town’s Pollsmoor Prison, the legendary South African revolutionary asked his visitor:

“Tell me, Mr Fraser, is ____________ still alive?”

What happened to Blackberry?

Imagine it’s 2008.

MTV is the coolest thing on TV, Sachin still plays for India, and everybody is asking for your BBM Pin,

Blackberry was dominating the global smartphone market, but all of a sudden it went from having a 20% global market share to almost 0 in just a few years.

So what happened to Blackberry? Hear all about it in the latest episode of Let's Do Shots.

Tap to play

Sachin is not a cricketer, he’s an actor.

I am not saying this, Sachin is.

There’s a section (80RR) in the Income Tax Act, which allows tax exemption if you are an author, artist, musician, actor or athlete and earn income from foreign sources while practising your profession. Back in the day, this law was made to basically promote Indian art and culture internationally.

So when Sachin endorsed international brands like PepsiCo, VISA and ESPN Star Sports, he claimed a deduction under this law. But here’s the issue.

Sachin did not earn this income while playing cricket, which was his profession. He earned money for appearing in ads, which wasn’t his profession. So the tax folks are like : Hey, you are a cricketer, not an actor, so can you please pay the tax?

Sachin was like : You know what, I am actually an actor. And he then showed his tax returns where his income from playing cricket was listed under “Income from Other Sources”.

The tax folks were bewildered. I mean, if Sachin isn’t a cricketer then who is!

In court they stated that - Sachin has not been “acting” in any of the commercials in the spirit of the term. He has only been appearing in these commercials. He is approached by brands not for his acting skills or his performance in front of the camera, but for his popularity as a cricketer. His payment is not based on how well he acts, but simply based on his appearance in the ad.

Thus, he should not be able to claim deductions as an actor.

However, the tribunal eventually ruled in favour of Tendulkar and stated :

While appearing in ads, Tendulkar has to face the lights and camera. As a model he brings to his work a degree of imagination, creativity and skill that would affect human senses and emotions. No doubt, being a successful cricketer has added to his brand value as a model. But the fact remains that he has to use his own skills, imagination and creativity. Every sportsman does not possess that degree of talent or skill or creativity to face the lights and camera. The income received by him from modeling and appearing in TV commercials and similar activities can be termed as income derived from the profession of an artist."

And so Sachin was allowed to retain his status as an actor and claim deductions based on Section 80RR.

There are many more interesting stories like this:

KitKat : In 1999, the tax on chocolate was 20%, whereas the tax on wafers was 10%. KitKat claimed that it was a wafer coated with chocolate, and hence should pay 10% tax, whereas the authorities argued that it was a chocolate with wafer inside, and hence should pay 20% tax.

The ruling was made in favour of KitKat, with the following statement : While all chocolate must necessarily contain cocoa, every cocoa product or preparation isn’t a chocolate.

Parachute Oil : Is Parachute a hair oil or edible oil? While most people use the brand as a hair oil (higher tax), the brand classifies itself as an edible oil (lower tax).

The authorities argued that based on their market survey, customers purchased Parachute for use as a hair oil, and hence it should be taxed as such.

However, the tribunal ruled in favour of Parachute and stated that while the brand can be used as a hair oil, it cannot be necessarily classified as such. The brand isn’t marketed as a hair oil, and the packaging doesn’t claim it either.

In fact, take a closer look at the packaging. It is marketed as a ‘coconut oil’, not as a hair oil. It contains nutritional information and also has the widely used green dot.

What else is happening in the world?

Kylie Jenner has launched a new swimwear line called Kylie Swim. Keeping up with her series of businesses donning her own name, this is the latest brand on the block after Kylie Cosmetics and Kylie Skin.

Swimwear seems to be the latest choice of business venture for celebrities, including Candice Swanepoel’s Tropic of C, Emily Ratajkowski’s Inamorata Swim, and Khloe Kardashian’s Good American.

Amitabh Bachchan is now Alexa. Amazon has announced that it is addling Amitabh Bachchan’s iconic voice to its Echo devices. Users can ask him questions about the weather, make him recite poetry and even wake the device up by saying ‘Amit Ji’.

The Tesla Bot is coming. Elon Musk revealed that his company is working on a humanoid robot, which will eliminate repetitive, dangerous and boring tasks.

Airbnb will be housing more than 20,000 refugees from Afghanistan, across the globe, free of charge.

Instagram is removing Swipe Up links, and replacing it with clickable link stickers leading to external websites - which means it will be made available to all users, instead of only those with more than 10,000 followers.

And finally…

- The quiz answer : Sir Donald Bradman

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See you next week,
Sid

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