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Tyco Case Ruled Mistrial; Senators Outperform Everyone Else In Stock Market

Aired April 4, 2004 - 15:00   ET


Announcer: From New York City America's financial capitol. This is IN THE MONEY.



Disorder in the court: It only took one juror to throw the Tyco trial into an uproar. We'll look at what, if anything, is wrong with the jury system, and how to fix it.

Plus, a stake in the diamond business: See what it takes to buy your own baseball team. (UNINTELLIGIBLE) the diamonds on the ball field. We checked the price tag, payback. Talking minor league teams here, it's a very hot business idea these days.

And how the Hill beats the Street regularly: A bunch of Senators put money on stocks and whipped Wall Street by a mile. The whipped corporate insiders by a mile. Let's see what's behind the senators' winning streak. Shall we?

Joining me today, a couple of the IN THE MONEY veterans around these parts, CNN correspondent, Christine Romans, "Fortune" magazine editor-at-large Andy Serwer. One of the great stories of the past week, had to be this sudden 180 done by the White House on whether or not they were going to allow national security adviser Condoleezza Rice to appear under oath and in public before the September 11 Commission.


CAFFERTY: What up with that?

ROMANS: This just got too big for the White House not to let it -- not to change course, because everyone was talking about this and watching Condoleezza Rice on every news network, giving her side of the story. Finally they had to capitulate.

ANDY SERWER, "FORTUNE" MAGAZINE: Well, I didn't understand that to begin with. I mean she can go on "60 Minutes," but can't testify? I mean, it seems like "60 Minutes" is kind of an open forum where you'd probably want to tell the truth because you can get caught in a lie. So, why not testify? The other thing, Jack, I think more broadly is, boy, the American people really want the light of day in this process as much as possible. I don't think it's a partisan thing, I just think people want everything out.

CAFFERTY: I agree to a point, but I think there was a little partisanship behind it.


CAFFERTY: I think John Kerry would have turned this thing into a campaign commercial in a heartbeat if they held firm to their position and refused to let her do it.

ROMANS: This whole 9/11 thing, though -- the 9/11 Commission thing -- you know, it's a lot of rewriting history. But, let's be honest. No one had the imagination for September 11th before it happened and that's why we are where we are right now, and all of this -- you know, hemming and hawing, who's going to give a speech about...

SERWER: That we could have prevented it, I think that's probably a stretch.

CAFFERTY: That maybe a stretch, but then somebody said once, you can't know anything about where you're going unless you understand where you've come back.

SERWER: That's right.

CAFFERTY: And so, maybe that's worth looking at this thing. That's not for us to decide.


CAFFERTY: Those a lot bigger issues than we're capable of.

The jury system is supposed to ensure that you will be judged fairly by your peers. And it works just fine, if you're under the assumption that your peers, a bunch of daytime TV watchers who don't get out too much and never check the news too closely. Disputes over jurors have shaken up two big trials recently, involving Martha Stewart and former Tyco CEO Dennis Kozlowski. And with that in mind, we wanted to take a look at the jury systems, see whether or not it might need an overhaul.

Joining us from Washington, D.C., Paul Rosenzweig of the Heritage Foundation, a senior research fellow at the Center for Legal and Judicial Studies.

Nice to have you with us. Thanks for joining us.


CAFFERTY: Is it broken?

ROSENZWIEG: Well, I don't know if it's broken, but it's certainly in an odd position. I mean, you're absolutely right, that the only way to get on a jury right now is to be retired or a government worker who can take leave from the job, or somebody who doesn't read the newspapers at all and has no knowledge about what's happening in the world. It's a long change.

CAFFERTY: With all due respect, they didn't have any trouble dragging me down and putting me on a jury. I served less than a year ago over there in Newark, New Jersey.

I don't know, at least in some states, I think, haven't they changed the law now where you can no longer get exemptions and they can pretty much take a cross-section of everybody? I mean, lawyers, doctors, firemen, everybody -- people that used to be able to be exempt from jury duty no longer can duck out on it?

ROSENZWIEG: That's right, there's no legal exemption, but what really happens, of course, is that the lawyers, like me, are intent upon trying to find the most malleable jurors that they can. They'll exclude you...

CAFFERTY: That's you, Jack!

ROSENZWIEG: And -- well, they'll exclude you, if they can, and also people like you probably have learned a lot of the tricks on how to avoid service, if you want to. Just say you know a lawyer, have strong opinions about the law and they'll get rid of you in a heartbeat.

SERWER: Well I know where you're coming from, but isn't it true in the overwhelming majority of cases, there are no problems at all. We only hear about these jury problems when you get a very a high- profile case, with a lot of expensive lawyers looking for any way to weasel out of a verdict that they can?

ROSENZWIEG: Oh, I agree completely. I mean, by and large, jurors are the salt of earth and they really understand what's happening. In fact, I kind of take it the other way. I think the right answer is we take the first 12 people that we get who don't know...

SERWER: Just walk in the door.

ROSENZWIEG: Yeah, well, who don't know -- randomly selected, so they don't know the victim -- you know, the defendant, or something particular about the case. But, we need to get past this whole idea of -- you know, trying to sift people and mold juries and -- you know, the whole business of jury consultants is just really disturbing.

ROMANS: Let's talk about juror No. 4, I mean she is really an amazing piece of work. Lands herself on the front page of newspapers, she did or did not give the OK sign to the defense, she's got a legal background. What about juror No. 4? I mean, somebody who's got a background in the law, and maybe is a very, very outspoken person -- should she have been on that jury in the first place?

ROSENZWIEG: Well, in my view, yes. I mean, I know most people don't agree, but lawyers are people, too, you know? Yeah, seriously we're -- the jury system should be a cross- section of the entire community. Not a selected group that is whittled down to find the least common denominator or exclude anybody who might have an independent thought. It's not just lawyers, it's anybody who has opinions, strong opinions, they're part of the community as well, and they ought to be on the jury, if they don't know the case itself and if they say that they can put aside their opinions and hear case on the facts.

CAFFERTY: What's caused this sudden explosion in -- in fussing around over the fine details of getting a jury seated? I'm thinking of Mark Geragos out there in California on the Scott Peterson thing. I mean, he's going to try every state in the union to get this seated, and keep moving and for a change ever venue. The fact of the matter is, we live in an age of mass media, a high-profile a case like the Peterson case gets a lot of coverage in the news and you're not probably going to ever be able to find 12 people who aren't locked away in some institution who haven't heard of the Scott Peterson case. How come we can't overlook or at least accept that fact and go ahead and make allowance for it and put people in a jury and get these things under way?

ROSENZWIEG: Oh, I agree with you completely and the answer is that the jury selection system is operating under an old set of rules that come from a time where there was no mass media. That come from a time where you could anticipate finding people who hadn't been exposed to the facts of the case and so we had a rule that exposure was kind of a disqualification. But now, in the post-O.J. -- you know, post- Scott Peterson timeframe, everybody is exposed to the news in increasingly rapid cycles and it's just not realistic, plus, it's not really important. I mean, everybody knows about the Scott Peterson case, because they've heard it from you, but nobody really know what's to think about the case. We all hear a bunch of talking heads talking about it.


ROSENZWIEG: The real case is in the courts.

CAFFERTY: There you go. Paul, we got to leave it there. Paul Rosenzwieg, of the Heritage Foundation, thanks for being on the program, and I appreciate the tips on how to get out of jury service.

ROSENZWIEG: You bet, yeah.

CAFFERTY: Thanks a lot.

ROSENZWIEG: Thanks for having me.

CAFFERTY: Coming up next on IN THE MONEY as we continue:

A team of your own: We'll tell you what it takes to put your money in play on the baseball field.

And later, they sure can pick 'em: Find out about a study that says, surprise, surprise. Senators do better on Wall Street than ordinary investors.

Plus, a virtual education: Get the word on a college where playing video games is not a problem, it's an actual course. Go figure.


ANNOUNCER: Competitors across the globe wish they could fill the shoes of Nike. This year the industry leader in the apparel category. The company sells its products throughout the U.S. and in about 200 other countries. And even though Nike ranks as the world's number one shoemaker these days, variety is the name of the game. The company now sells everything from yoga apparel to hockey gear to golf equipment. However, Nike has been slow to break into the world of non-team sports, such as skateboarding, where consumers are typically anti-swoosh. Nevertheless, Wall Street seems impressed by Nike's efforts. The stock has nearly doubled in the past year.



SERWER: You need major league money to buy a major league baseball team, and that probably rules out those that haven't made our first billion yet. But, even mere mortals can pick up a ball club as long as we think a little smaller and with spring training coming to a close, we're going to find out how it's done. Russell Pearlman has the skinny on that. He's the senior writer at "SmartMoney" magazine.

Welcome Russell.


SERWER: So, we're taking about minor league teams, here. Is it really true that a wealthy person, you got to be pretty well off, can get together with a bunch of people and buy one ever these teams?

Yeah. The going rate these days for a minor league baseball teams can be upwards of $10 million for a triple A team, and even those are hard to find because most of the major league teams own their triple A affiliates. But now, even double A's go for seven-and- a-half million dollars and single A teams go for $5 million.

SERWER: That's still a lot of money.

ROMANS: Well, there's three of us here, together we can put together, right guys? We could buy something out in the Midwest.

SERWER: With a big loan from Uncle Jack.

ROMANS: You know, absolutely. You know, refurbish a little town maybe something along the river, but you've got to watch every single penny -- don't you? Because, a lot of people who do this end up losing a lot of money? PEARLMAN: Yeah, this is certainly not a business to put down the money and then decide to sit in the bleachers the next summer and not worry about things. To make money in minor league baseball you really have to hustle. You have to be able to sell advertising, you've got to sell luxury boxes, if you have them, or just put fannies in seats. It's a really difficult, pretty low-margin business. One of the owners equates it to the grocery business, which is only about one to two percent margins. That's not far off from the norm.

CAFFERTY: Is there anything lower than single A?

PEARLMAN: There's rookie league, but...

CAFFERTY: How scruffy is the baseball when you get down around that single A situation?

PEARLMAN: It's a little bit better than if I suited up, but, you know...

CAFFERTY: Let's hope.

PEARLMAN: People just go for the entertainment value. They go just to see America's pastime and just enjoy a couple hours in the sunshine.

CAFFERTY: Well, you know, we were kidding around here, but there's something very pleasant about watching a minor league baseball game, as opposed to fighting your way through the traffic in the south Bronx, or out in Queens to get to either Yankee Stadium or Shea Stadium.

I saw an average breakdown for four tickets to a regular season Yankee game, if you get a couple of hot dogs and a Coors, it's like $200 or some ridiculous amount of money. They got the Newark Bears out there in Newark, New Jersey, go there on a summer evening, no problem getting a good seat, the hot dogs taste as good, and you can do the whole thing for a heck of a lot less money. But, is it a kind of business, if I'm looking to get into a --you know, business for myself, is this the kind of business I ought to look into getting into?

PEARLMAN: Well, as one of the owners told us, it's not the place to put your money. There's less risky higher-return businesses to go in. But, it's certainly something if you have the money and you want to be willing to work at it and you love baseball. Sure, it's a great place to go get some investors together and ultimately -- you know, you can, after all the hot dogs are sold -- you know, you can watch and look at your park and say -- hey, you know what? This is mine. I'm making people very happy sitting and watching a game.

SERWER: Hey Russell, the mayor of Corpus Christi, Texas, came up to visit me the other day and was complaining to me about minor league baseball teams. He was saying they came to town and basically, sort of, left with some bills that they didn't pay? Now, they're getting a new team in, Nolan Ryan's kid's bringing in a new team in, they hope this is going to be very successful. It looks like a better operation. But, don't a lot of these times -- a lot of times these teams actually kind of mess up some of the town's finances?

PEARLMAN: Yeah. Unfortunately if you're not a particularly good owner you can lose a lot money and there's about 175 teams affiliated with minor league baseball, umbrella organization, and usually about 20 to 30 a year move and unfortunately, there's some owners who decide not to pay their bills.


PEARLMAN: You know, just like any business, unfortunately.

ROMANS: You know, Russell, somebody's out there has to be making money. I mean, the Iowa Cubs, for example. There are some teams that -- you know, always pack 'em in and seem to be doing well. Right?

PEARLMAN: Yeah. I mean, we asked a couple of owners to give us their income statements and the owner of the San Angelo Colts, which is an independent team in lovely west Texas showed us their income statement and they clear about a million dollars -- I'm sorry, they have about a million dollars in income each year, and they clear about $76,000 of that. So, you know...

ROMANS: You've got to love this to do it.

PEARLMAN: Yeah, I mean, yeah. It's an eight percent return. It's not great. I mean, certainly the stock market has an average of about eight percent return over the last 50 years, and certainly a lot risky and a lot less work. But, you know what? You don't go in for the return. You go in because you love the game, like being outside. You like being close to your fans and close to your customers. I mean, the people that we trailed for this story, one worked at Leo Burnett advertising Agency for a long time and the other in magazine publishing. So, they certainly have an affinity for customers.

ROMANS: All right, Russell Pearlman, "SmartMoney" magazine. Thanks for joining us.

PEARLMAN: Thanks for having me.

ROMANS: Time for us to go feed the cash cow.

Coming up right after the break, a pickle for Heinz: See how the company is handling a tricking political connection.

Also ahead, street savvy: Find out why some senators played Wall Street better than the pros.

And the neighborhood playground: Find out what a new study says about having a casino within easy driving distance.


ROMANS: Let's look at the week's top stories in our "Money Minute." OPEC agreed to cut production even as crude oil prices hover near 13-year highs. But, there are questions about the impact of the cut since OPEC is thought to be pumping out considerably more crude than its quotas call for already. And gas prices in the U.S. did ease off a bit this week after setting several records the week before.

Eli Lilly steps it up it campaign to stop the sale of Canadian drugs in the U.S. The drug maker is requiring Canadian internet pharmacies to prove they're ordering drugs for the Canadian market only.

And, things may be getting too real for reality show star, Donald Trump. The Donald's hotel and casino resort business is dealing with a mountain of debt and stiff competition from other gaming companies in Atlantic City. Now Trump may need a financial bailout or concessions from bond holders to save the company from bankruptcy.

SERWER: All right. Thank you, Christine.

Some of the most vigorous campaigning right now isn't going on in the presidential race. It's going on in the boardroom at H.J. Heinz. That's because the ketchup and pickle giant wants to distance itself from any possible connection to John Kerry's run for president. Some conservative groups have been trying to launch a boycott against Heinz products because Theresa Heinz in an heiress to part of the Heinz family fortune and John Kerry's wife, as well. Now, the company has sent out letters to radio and TV talk show across the country announcing that Heinz is not sending money to John Kerry, who's the democratic presidential nominee, of course.

But, that's about as controversial as it gets for Heinz, which over the last year has been a relatively rock-solid performance, steady market performer, as well. H.J. Heinz is our stock of the week.

You know, I'm going to a big public service for this Pittsburgh company, they have nothing to do with John Kerry. I mean, they really don't have anything to do -- it's just ketchup, it's red, you put it on hamburgers and french fries.

ROMANS: And it's also green and purple. That was the biggest (UNINTELLIGIBLE).

SERWER: That flopped. And that flopped.

CAFFERTY: And she, despite being an heiress to the Heinz fortune has nothing to do with running the company. She's not on the board, she doesn't have a job there, she doesn't work in the warehouse, she doesn't do any of that stuff.

ROMANS: And she's actually more Kerry than Heinz these days, isn't she now? Isn't she Theresa Heinz-Kerry, before that she was just Theresa Heinz?

SERWER: That's right, I mean she is connected to the foundation and there is that one connection, that was about, I thing, four percent of the foundation plus her holdings. But, again, nothing to do with the company. This company was run by Tony O'Reilly, the great Irishman for many, many years now turned it over to a guy named William Johnson, who by the way, is the son of Tiger Johnson, the coach of the Cincinnati Bengal's. Is that American enough for you? I mean that's pretty American. Right? I mean, red, white and blue -- you know, I mean, it's not a liberal democratic conspiracy.

CAFFERTY: He probably got the contract to put the ketchup on the hot dogs out there where the Bangles play.

SERWER: Well, except the Steelers in the home town, it's all a big mess.

CAFFERTY: So do you buy the stock? This is one of those stocks that is pretty, like you said, rock-solid, it performs year in and year out, unless the American consumer quits eating ketchup, they're probably going to be around?

SERWER: Yeah, I mean, this stock has been mediocre one over the years, Jack. And food stocks get hot every once in a while. Yeah, it hasn't done that well. But I mean, it's just like you're suggesting, over time, I guess it's probably a good thing to own. Why not? Right?

ROMANS: All right, a little ketchup on the bun, I guess.

CAFFERTY: There you go.

SERWER: All right, we're going to take a break, but coming up:

U.S. senators get a nice Capitol Hill office and a six-year term and the may also be getting a leg up on the stock market. We'll check the results in an interesting study.

And, betting on black may leave a lot of people in the red. We'll look at the possible connection between casinos and personal bankruptcy. Stay tuned.





CAFFERTY: That's not insignificant. Why does that happen?



SERWER: Jack is shocked.

CAFFERTY: Shocking.



CAFFERTY: I doubt that.
















SERWER: You are just a taxpayer, right?

ZIOBROWSKI: That's right.




Alan Ziobrowski, thank you so much for joining us today.

ZIOBROWSKI: Thank you.


Do more casinos mean more bankruptcies?


We'll explain just ahead.









Welcome, Alexandria.


SERWER: Explain to us your story.







CAFFERTY: What are they going to do about this?


MARKS: The Internet now.





Is there a solution? I don't know.


MARKS: How familiar are you?
















SERWER: Wow. "Grand Theft Auto" is amazing.




ROMANS: Does Electronic Arts have trouble finding good programmers?

Is that why they are doing it.


ROMANS: Not as frivolous as it looks.

SERWER: EA is very successful company too.


SERWER: Kind of like this show, Jack, unpredictability.






CAFFERTY: This is hilarious.


WASTLER: So close it's kind of scary.

CAFFERTY: It is scary.

SERWER: Holy smoke look at those.



















CAFFERTY: You know what the worst part of all is?



SERWER: A reality show! With juror number four.



What do you think?

SERWER: Retry it definitely.


CAFFERTY: Thank you for joining us for this edition of IN THE MONEY. Thanks to our regular gang, CNN correspondent Christine Romans, "Fortune" magazine editor at large, Andy Serwer, managing editor, Allen Wastler.

Join us next week, Saturday 1:00 Easter, Sunday at 3:00. Or you can catch Andy and me all week long on "AMERICAN MORNING" starting at 7:00 Eastern tome. Until the next time we get together, thanks for joining us and enjoy the rest of your weekend.


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