In this segment of the Motley Fool Money podcast, host Chris Hill, Million Dollar Portfolio's Jason Moser and Matt Argersinger, and Total Income's Ron Gross weigh in on the battle among North American cities to win Amazon.com's (NASDAQ:AMZN) massive HQ2. As it has been widely reported, the e-commerce giant has trimmed the list of contenders from 238 to 20: Atlanta; Austin; Boston; Chicago; Columbus, Ohio; Dallas; Denver; Indianapolis; Los Angeles; Miami; Montgomery County, Maryland; Nashville; Newark, New Jersey.; New York City; Northern Virginia; Philadelphia; Pittsburgh; Raleigh; Toronto; and Washington, D.C.
But to paraphrase George Orwell, some cities are more equal than others, and the UK's bookies have already started laying odds and naming favorites from the new short list. They consider the pros and the cons for whatever locale lands those 50,000 jobs -- and one of the Fools in particular has some skin in the game. But the buzz about the headquarters hunt has drowned out the conversation about another interesting announcement from the company about its Amazon Prime pricing.
A full transcript follows the video.
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This video was recorded on Jan. 19, 2018.
Chris Hill: We're going to begin with the corporate version of The Bachelor -- the list of cities vying to be home to Amazon's second headquarters has been pared down to 20. According to oddsmakers in the UK, here are the favorites. Boston, 3:1 odds. Atlanta and Austin, Texas, both 7:2. Pittsburgh and something I like to refer to as Ron Gross country, Montgomery County, Maryland, both 8:1. Ron, how're you feeling about that?
Ron Gross: Oh, no, Chris, the proposed site to Maryland is 1.9 miles from my home.
Hill: Get comfortable.
Gross: Oh, there are pros and cons here. Obviously, Amazon says they're going to spend $5 billion in the area, they're going to employ 50,000 folks, it should be great for the economy, the local economy, wherever they relocate. Certainly, taxes will be generated for that municipality. But oh, oh, oh, the negatives, in terms of traffic, prolonged construction, and, how are you going to put the people to school, the kids -- it's not his 50,000 people, it's 100,000, 150,000, 200,000 people, once you take into account entire families. I think you'd better be careful what you wish for. This could be a big problem.
Matt Argersinger: This is the most stressed I've ever seen Ron Gross. [laughs]
Gross: 1.9 miles -- did I mention that?
Argersinger: The value of your house might double, though. That's one thing to think about.
Gross: Yeah. Now, Seattle home prices have gone up 17% from a year ago, if that's any indication, and they've been around there for a while. So that's the plus side. I'm not one to look a gift horse in the mouth. But this is shaky.
Hill: These cities and regions, they're spread all across the country. But if you're betting, Jason, aren't you betting on probably, at least, the eastern half of the United States? They have Seattle. I don't know. Maybe I'm just thinking about this too simply, but it seems to me like it has to be somewhere in the east.
Jason Moser: I tend to agree. I think if you look at something like L.A., I think that was the only West Coast city to be on the list, and I think maybe that was just to kind of humor them. I can't fathom why they would actually pick L.A. I'm not taking the homer point of view here, but it's kind of hard to fathom why they wouldn't choose one of those three -- Montgomery County, D.C., or Northern Virginia. The other one that I think probably comes into play here is Atlanta. Very affordable living down there, and it's obviously growing very quickly. But there are plenty of places to live outside of the beltway there. Big airport. The one thing Atlanta really lacks is any credible form of public transportation, but that could probably be something that they attempt to solve as well.
Argersinger: I'll be a little bit of a homer. I think Boston. I'm not surprised it has the best odds, just because of the university, the technology infrastructure there, its --
Moser: Isn't it too crowded, though?
Argersinger: It depends. Boston proper is very, very crowded. The infrastructure is good. The Big Dig was a nightmare, as Chris and I know, for 20 years. But it fixed the city in terms of getting in and out of the city. The local airport is a nightmare. But I do agree; I think it's the East Coast. I think Boston or the D.C. area or Atlanta is probably what it comes down to.
Gross: Yeah, because the Atlanta airport is a piece of cake, no problems there.
Hill: This news overshadowed, and probably rightly so, the other news out of Amazon this week, which was, somewhat quietly, Ron, Amazon raised the price of Amazon Prime. Not the annual membership, but the monthly membership.
Gross: Yeah, 18%, now equal to $156 per year versus the $99 if you subscribe annually, which is not going up, they're keeping that. One has to wonder, is this just an acknowledgement that free shipping is expensive, and they needed to raise these prices to make this viable? Or are they disincentivizing monthly and trying to drive people toward the annual? I'll leave it to whether you're a cynic or not, depending on which. Student pricing, which is actually cheaper on a monthly basis, is also going up 18%, interestingly. This is good for Amazon, I think, because it will either raise revenue to a certain extent or it will drive more annual Prime members, which I think is the ultimate goal.
Argersinger: Yeah, I think that's exactly it. It's really about enticing people to become annual subscribers. And look, it might sound like Jeff Bezos is paying me to say this, but I think we would all agree, you're being irresponsible if you're not already a Prime member, just given everything you get for that $99, which is the annual subscription amount. It's incredible.
Hill: Wait, is he actually paying you? Is that something we could get in on, too?
Argersinger: I wish he was.
