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Editor’s Note: Welcome to a new daily column we’re running 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. You can sign up here.
COWBOYS ARE NFL’S MOST EXPENSIVE TICKET; PATRIOTS AND PACKERS ARE NUMBERS 2 & 3
The cost of attending an NFL game can range significantly from city to city, with resale market prices largely dependent on the quality of the teams playing. According to StubHub (EBAY), no team is more expensive to see live this season than the Cowboys. 5 of the 10 most coveted (i.e. expensive) games on the site include the Dallas football franchise, with Sunday Night’s game against the New York Giants listed as the single most expensive ticket of the season. The defending Super Bowl Champion New England Patriots and Green Bay Packers, with a national following, come in second and third on the list.
Howie Long-Short: The NFL’s exclusive ticketing partnership with Ticketmaster (LYV) expires in 2018. The league is convinced it can make more by retaining a cut of the sales profits than by selling partnership rights. One option moving forward, would be for the league to use an “open platform” that makes seats available through a variety of outside ticketing, e-commerce and social media platforms. SeatGeek has an “open platform” that several MLS teams have successfully used.
Fan Marino: You can find a ticket on StubHub to every NY Jets home game for $37 or less, except for the N.E. ($100) and Miami ($47) games. For 5 out of 8 home games, you’ll pay more to park your car ($35) than to attend the actual game. Then again, the tailgate is certain to be more exciting than the action on the field.
PADDY POWER BETFAIR BACKED DFS APP TO COMPETE WITH DRAFTKINGS, FANDUEL
Draft, the daily fantasy sports application purchased by Paddy Power Betfair (LON: PPB) back in May, is making its push to compete with DFS market leaders DraftKings and FanDuel, as the NFL season kicks off this weekend. Instead of burning through cash on TV and radio ads, Draft’s strategy is to reach sports fans on social media, through their favorite athletes. Shaquille O’Neil is hosting a Week 1 head-to-head contest for his 14.6 million Twitter (TWTR) followers, while Chad Johnson, Michael Vick, Richard Sherman and Antonio Brown are also endorsing the DFS app.
Howie Long-Short: FanDuel and DraftKings have a huge lead in the DFS race, but those companies have spent the last year in the courtroom. Draft now has a market leading gaming operator backing it and a user acquisition strategy that makes sense. Expect Draft to become a household name.
Fan Marino: Athlete endorsements are great, but the best way for Draft to acquire users quickly is to promise them an even playing field (i.e. no sharks). During the first half of the 2015 MLB season, 1.3% of players paid 40% of the entry fees while winning 91% of the profits, on DraftKings & FanDuel. The casual player needs to believe they can win.
ESPN ANNOUNCES PARTNERSHIP WITH TOP RANK; TO REPLACE HBO FOR THE PROMOTION’S PPV FIGHTS
ESPN (DIS) has reached an agreement with boxing promotor Top Rank, that gives the network exclusive rights to air the promotions’ fights on their TV networks, the ESPN app, their DTC streaming service and on PPV. The partnership likely means the end of the long-standing PPV relationship between Top Rank and HBO (TWX). ESPN will air 18 Top Rank main events in the first year of the deal, with the first coming on September 22nd, featuring Oscar Valdez and Gilberto Ramirez. Financial terms of the deal have not been released, but the agreement is expected to run for 4 years.
Howie Long-Short: While financial terms haven’t been released, you can use the existing UFC/Fox Sports (FOXA) deal as a frame of reference. Fox Sports currently pays the UFC $115 million/year for its broadcast rights. It has been rumored that when the UFC/Fox Sports contract expires in 2018, the UFC will be seeking upwards of $450 million/year under the terms of a new deal.
Fan Marino: 2017 has shown if you put high quality fights on network/cable television, people will tune in. July’s Pacquiao/Jeff Horn fight did 4.4 million viewers, the most for a fight on cable television since 1995; while the March ‘17 Keith Thurman/Danny Garcia bout peaked at 5.1 million viewers, the most for a fight on network TV since 1998.
PREMIERSHIP RUGBY IS EMBRACING THE SPORTS-TECH REVOLUTION
JWS published a story earlier this week discussing how the NFL has implemented the use of technology within the game of football. Premiership Rugby has also embraced the sports-tech revolution; with developments changing the way its coaches train players and analyze performance. Below are a few companies making an impact:
IMAX Corp. (IMAX) – Players utilize IMAX video booths to watch footage filmed from both “lamppost” cameras as well as drones. Video footage from training, matches and even individual player clips are available for viewing.
Catapult Group International Ltd. (ASX: CAT) – The OptimEye S5 GPS device is used by 10/12 Premiership rugby clubs. The handheld device is placed into a pouch on the back of each player’s shirt, processing thousands of performance related data points/second, including; distance, velocity and speed.
Vimeo (IAC) – Video application providing players secure access to private clips of training sessions.
Howie Long-Short: Vimeo is owned by InterActiveCorp (IAC), a media and internet company that owns 150+ brands including; Match Group (i.e. Tinder), HomeAdvisor and Dictionary.com. IAC recently posted Q2 earnings of $.74/share, easily beating estimates of $.50/share. The company posted revenues of $767.39 million in Q2 ’17, up 2.9% YOY.
Fan Marino: Rugby teams aren’t the only ones using the CAT OptimEye S5. Brazil’s 5x World Cup Championship International Soccer team, the defending NBA Champions (Golden State Warriors) and at least a dozen NFL teams, also use the GPS system to track player performance.
JORDAN BRAND STRUGGLES TO ADJUST AS FASHION TRENDS CHANGE
Nike’s (NKE) iconic Jordan Brand, which at one time instantly sold out weekly releases, has unexpectedly struggled over the last several quarters. As fashion has trended away from high-end basketball sneakers and towards low-tops that best fit with skinny jeans and joggers, the Jumpman Brand has struggled to adjust. Nike’s solution has been to increase the volume of Jordan sneaker releases; but with most pairs lacking high demand, many fail to sell out immediately, raising the possibility of long-term brand erosion.
Howie Long-Short: In January 2015, Jordan Brand made up 96% of the sneaker resale market. Adidas (ADDYY) had 1%. Adidas now has 45%. Considering the sneaker resale market is estimated to be valued at $1.2 billion, that’s a lot of Adidas shoes being bought (and resold) in place of Jordan’s.
Fan Marino: Morgan Stanley says that “Nike has lost its core sneaker enthusiast customer to Adidas.” As a sneaker head, I say that is a gross exaggeration. I recently bought a pair of Adidas EQT Support ADV. They are already on their way back to Adidas. They were a pain to put on, the wife hated the way they looked and I didn’t find them to be particularly comfortable.
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 Security & 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.
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