MONZA, ITALY - SEPTEMBER 08: Ferrari Prancing Horse logo is seen during previews to the Italian Formula One Grand Prix at the Autodromo Nazionale di Monza on September 8, 2011 in Monza, Italy. (Photo by Mark Thompson/Getty Images)
Editor’s Note: Welcome to a daily column we run here at BroBible breaking down the day’s biggest stories in sports finance with commentary from the equities analyst and sports fanatic perspectives. It comes to us via our friends at JohnWallStreet, publisher of a free e-mail newsletter focused on sports related public equities and their subsidiaries. You can sign up here.
Ferrari CEO Again Threatens F1 Exit, Implies Start of Competing Series
At the company’s annual Christmas meeting, Ferrari (RACE) CEO Sergio Marchionne reiterated that the team will be leaving F1 (FWONK) if Liberty Media execs institute plans to standardize parts and revise power plant rules. Marchionne said, “we are not interested in cars being the same, with simple and cheap engines like NASCAR. If they decide to make us all the same, we will go in 3 seconds”. Should the team decide to leave the sport, Marchionne indicated Ferrari would look to form an “alternative championship from 2020/2021.”
Howie Long-Short: FWONK fell 4.7% on Wednesday following Marchionne’s statement. Shares are down 12.3% over the last 30 days, a loss of nearly $1 billion in value. As for RACE, the company posted strong Q3 results with net profit +24% YOY (to $166 million). Now there are rumors circulating the company may be looking to increase production 12% (from ’16 numbers) by 2019, which should excite investors.
Fan Marino: Standardizing engines take away one of Ferrari’s biggest advantages, as one of the series’ biggest spenders. Any leveling of the racing field will have a direct negative impact on the team’s bottom line, in a sport where the winner’s pool was already cut 13% this (down to $273 million); so, it’s understandable why the team is opposed. Former F1 CEO Bernie Ecclestone certainly doesn’t think F1 should cater to Ferrari’s demands, saying, “democracy has no place in Formula 1”, adding this type of behavior is nothing new from the sport’s most famous team “if they don’t win there is usually panic.”
NLL Commissioner Discusses Future Expansion, League’s Broadcast Strategy & Marquee Sponsors
The National Lacrosse League has kicked off its 32nd season. The 2016-2017 season was dramatically different from the first 30 though, with Commissioner Nick Sakiewicz forging a new path for the league. JWS had the chance to connect with the former MLS Executive of the Year in a wide-ranging interview. Part 2 (of 2) addresses league’s future expansion plans, its broadcast strategy and marquee sponsors.
Part 1: https://johnwallstreet.com/nll-commissioner-nick-sakiewicz-discusses-expansion/
Where can we expect the NLL to expand to next?
We love Ohio. Ohio is a dynamic lacrosse market. We’re looking at Columbus, Cleveland and Cincinnati. The New York market is very high on our list. We have several interested potential investors; in the Long-Island market particularly, for the newly renovated Nassau Coliseum. I wouldn’t be shocked if the New York market was in the next round of expansion.
You won’t find NLL games on linear television. Why did you guys decide to pursue the digital route?
For many years, the league was doing the same thing that we did in the early days of Major League Soccer; which was to acquire time on a network, spend a lot of money producing it (the games) and putting it (the broadcast) out there with very little promotion. We decided the best path for the NLL was to go all digital all the time. We know every user who watches us on TV, so we can create a one-on-one DTC relationship and engage with that fan on an ongoing basis; linear TV didn’t really give us that. We also control our own promotion. The OTT/DTC experience gives us the horsepower to unlock our product to a much wider universe. As we go forward, I think we’ll be looking at how we distribute NLL TV more widely.
Does that mean ESPN+ and Facebook Watch? Twitch?
All of the above. We are having conversations with everybody. It’s funny, 5 years ago when you did an RFP to offer your rights to the broadcast world; you might have had 5 or 6 companies on that bid list. Today there are 26 companies that want to steam live content to their audiences.
Who are the league’s biggest sponsors?
The league never really had a stable of sponsors that we could rely on. We’ve added 11 or 12 over the last 12 months. The biggest ones are Under Armour (UAA) and New Balance, our apparel and equipment sponsors.
Howie Long-Short: New Balance Chairman Jim Davis owns +/- 95% of the Boston-based company, that counts lacrosse brands Brine and Warriors Sports as subsidiaries. New Balance reported $3.8 billion in ’16 sales; making it Forbes’ 111th largest privately held company. Of course, Under Armour is public; with the company shares up nearly 10% (to $15.17) since Stifel Nicolaus upgrade its price target on the company from $12 to $17, last Friday.
Fan Marino: Nick mentioned the league’s digital approach gave it much wider audience. 12 months after the launch of NLL TV, the OTT service has 25,000 subscribers; 5x the amount the league drew on any linear network. Last season, the Twitter (TWTR) NLL Game of the Week averaged 344,000 fans (avg. view time of 39.7 minutes). Twitter will continue to stream games in 2018 and the league has added CBS Sports Digital as a distribution partner.
Enjoying the sports finance report? Sign-up for our free daily newsletter
Casino Consolidation Continues, Penn National Gaming and Boyd Gaming Scale Up
U.S. casino operator Penn National Gaming, Inc. (PENN) has agreed to acquire Pinnacle Entertainment, Inc. (PNK) for $2.8 billion, with the deal expected to close by the end of 2018. PENN will own 78% of the combined entity (41 properties, 53,500 slots, 1,300 tables and 8,300 hotel rooms), with PNK owning the balance. PENN and PNK were ostensibly already partners; in 2013, PENN spun off Gaming and Leisure Properties (GLPI), a REIT that owns much of the land PNK operates its casinos on. As an adjunct to the PENN/PNK deal, Boyd Gaming (BYD) agreed to buy 4 PNK properties, from PENN, for $575 million. In a separate transaction, Boyd Gaming announced it has acquired Valley Forge Casino Resort for $280.5 million; the company’s first asset in PA; the 2nd largest commercial gaming state in the nation.
Howie Long-Short: PNK shareholders will receive cash and PENN stock worth $32.47/share; or 48.5% premium to PNK shares at the close on October 4, the day prior to the first reports of merger talks. PENN shares hit a 52-week high on Wednesday, closing at $30.90. It’s been a busy year for local casino operator mergers. Earlier this year, Eldorado Resorts (ERI) bought Isles of Capri Casinos Inc. for $1.7 billion and GLPI bought the Bally’s Casino Tunica and Resorts Casino Tunica (properties in Mississippi) for $82.6 million.
Fan Marino: High rollers, like the guy who bet (and won) $880K on Mayweather to beat McGregor, will be pleased to learn that the revised tax code “largely preserves the ability for our customers who itemize to net their gambling income” – The American Gambling Association. Here’s a fun gambling story, some guy won $37,600 on a $47 10-team NFL parlay last Sunday.
Still reading? Make sure to sign-up for our free daily newsletter
What is JohnWallStreet?
JohnWallStreet is not a person or location, but a destination for the educated sports fan.
While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related finance news, in easily digestible bites, with commentary from both the equities analyst and sports fanatic perspectives.
We’ll cover publicly traded professional teams & stadiums, television networks, apparel & footwear companies, equipment companies, ticketing companies, content and facilities providers. If it trades on Wall Street, and has a sports angle, it’s in our wheel house.
Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Securities & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.