Sports Finance Report: 49ers President on Elevate Sports Ventures, Stadium Development and Colin Kaepernick

by 1 year ago

SANTA CLARA, CA - OCTOBER 06: A view of a San Francisco 49ers helmet during warms up prior to their NFL game against the Arizona Cardinals at Levi's Stadium on October 6, 2016 in Santa Clara, California. (Photo by Ezra Shaw/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 sports money 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.

49ers President on Elevate Sports Ventures, Stadium Development and Colin Kaepernick

The San Francisco 49ers, Harris Blitzer Sports & Entertainment (HBSE), and Creative Artists Agency (CAA) announced the launch of Elevate Sports Ventures. The new company will leverage extensive resources, relationships, and expertise to provide a robust suite of services in areas that include sponsorships, stadium project transformation and marketing. 49ers President, Al Guido, will serve as the company’s CEO. Al was in NYC last week and found the time to meet with JohnWallStreet to discuss how stadiums are going to be built without public funding, teams/leagues entering the venture capital space and Colin Kaepernick.

JWS: On the surface, it wouldn’t appear those 3 companies (CAA, 49ers, HBSE) would be aligned in their missions. Where do the synergies lie?

Al: You’re right, most outsiders wouldn’t view us as aligned; but innovation is in the DNA of all three companies. The synergy in the rolodex of our firms, is what brought us together. We have over 100 years of experience on our leadership team. We felt like that wealth of experience and the number of verticals (sponsorships, project transformation, analytics, ticket sales, marketing) we touch, could really offer something new to the marketplace. Then you add in the geography footprint; Silicon Valley, the NY base and the London offices that we have.

JWS: Public financing for stadium construction is tighter than it’s ever been and PSL’s have become a tough sale. What can Elevate Sports Ventures do to help to assist teams looking to build a new home?  

Al: I think what you bring up is an opportunity for Elevate Sports. Seat licenses will continue to exist, but if you’re caught up in only one business model to finance projects; you’re going to fail. You can’t just have 10 or 12 games, it doesn’t work. We (49ers) had no public financing for our building (cost: $1.3 billion), so we really had to think outside the box about how we were going to monetize it. We (49ers) partnered with Michael Mina (a Michelin star rated chef) to create our own restaurant concept, we have our own school in the building with 8 full-time teachers on staff, we have a convention center business where we do $15 million in gross revenue in the catered event space and we’ve gone from 31st in the league in revenue to a Top 3 club within 4 years. For us it’s all about helping these brands find ways to fill the gap, because the way we filled the gap before with personal seat licensing; that won’t work anymore.

JWS: Sports teams and leagues are more active in the venture space than they’ve ever been. Why do you think that is?

Al: Sports teams didn’t realize or recognize the power of their brand and what it meant. Our thesis on the venture with the 49ers (40 companies under venture arm) is that there is a lot of technology growing in the sports space. Some of it is in the sports health, safety & player performance space, some of it is in the business or fan experience space (i.e. streaming, mobile apps, ticketing) and some of it is in the operational efficiency space (i.e. security, gate entry). A lot of early stage companies don’t have the capital to write a 7-figure check for a sponsorship, but they can really help your brand; why not partner with those companies, why not take an equity stake and help them from a brand perspective.    

Howie Long-Short: You may not be familiar with the name Harris Blitzer Sports Entertainment, but you’ll recognize their properties; Philadelphia 76ers, New Jersey Devils, Prudential Center and Team Dignitas (esports) among others. The company is owned by Scott Harris and David Blitzer. CAA is also privately-held, but the original ownership group no longer controls the company; in 2014 TPG Capital (P.E. firm) acquired a majority stake (53%, they already had 35%) for $250 million.

Fan Marino: Colin Kaepernick spent 6 seasons in San Francisco, starting 58 games. I had to ask Al, what is the reason that Colin remained unsigned through the ’17 season?

Al: I can’t speak for the league, but we’ve supported him. Our owner put $1 million into the market for social change, we’ve partnered with our 3 local police commissioners; the 49ers won the NFL’s humanitarian team of the year (from ESPN), last year. What we all (teams/league) need to do, is continue to tell the stories of our players outside of on the field performance. Our guys are not just about the 16 games they play on Sunday, they are about the causes they care about.

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Intersection Streaming Olympic Coverage on “Thousands of Digital Screens” in NYC, CHI & PHI

NBC Olympics, a division of the NBC Sports Group (CMCSA), has announced a partnership with Intersection that will bring exclusive content from the PyeongChang Games to “spaces where the American audience now consumes media”; throughout New York, Chicago and Philadelphia. Beginning tomorrow February 9th (and running through February 25th), NBC Olympics will produce custom content to keep urban residents up-to-date on the Winter Games. Intersection, operating at the forefront of the smart city revolution with products like LinkNYC (information/advertising kiosks that offer free wi-fi), will air morning highlights, medal counts and real-time alerts on “thousands of digital screens across our cities and transit hubs.”

Howie Long-Short: Intersection was founded in 2015, when Sidewalk Labs (GOOGL) acquired Control Group and Titan Outdoors and merged the companies. In November, Intersection closed on a $150 million venture round for the global expansion of its advertising supported Wi-Fi network (NYC and London were their first 2 cities). Graham Holdings Company (GHC, former owner of the Washington Post) led the round; Sidewalk Labs did not participate. On November 1st, GHC reported Q3 profits declined .4% YOY; despite a 6% increase in revenue. Struggles within their education (i.e. Kaplan, -3% to $376.8 million) and television segments (-10% to $101.3 million) offset the growth in their other businesses (+46% to $179.1 million).

Fan Marino: If you can catch a last-minute flight to PyeongChang, you can still get seats to the opening ceremony (unheard of, ALWAYS sells out). Of course, there are several reasons why; it’s outdoors, the temperature is projected to be in the 20s and tickets start at +/- $400.

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Discovery Communications to Launch “Netflix for Sports” For ’18 Winter Games

Discovery Communications (DISCA) controls the exclusive rights to broadcast the 2018 Winter Olympics (+ the ’20, ’22 and ’24 Games in Paris) across Europe (excluding Russia) and will use the Pyeongchang Games to introduce a new interactive streaming platform that has been described as Europe’s “Netflix for sports”. Eurosport Player will offer fans of the Olympics the ability to watch “every minute, every athlete and every sport, live and on-demand”; enabling the company to aggregate a wide variety of viewing data (across all platforms, both live and catch-up), as it works towards the launch of a DTC subscription service for “superfans” of niche sports. DISCA will air the ’18 Games on linear television, across the continent (50 countries), on its Eurosport (think ESPN) channel.

Howie Long-Short: In 2015, DISCA paid $1.6 billion for the next 4 Olympic Games (including $180 million for the ’18 Games), but company CFO Gunnar Wiedenfels says the games won’t impact full-year profits; lucrative content licensing agreements (i.e. BBC, Amazon in select countries) have already helped the company recoup much of its commitment. Of course, DISCA is on the hook for just a fraction of the $7.65 billion NBC agreed to pay for U.S. TV and online rights through ’32.

Fan Marino: Alibaba (BABA) has launched its first “major branding effort” with the Olympic games (part of a 10-year partnership), a 3-ad story-telling campaign meant to showcase the company globally. While one ad focuses on the company’s values and history championing small businesses, the other 2 convey true Olympic tales; one of a rower who stopped in the middle of a race to let ducks pass and another of a Kenyan Ice Hockey team that had previously never experienced ice. Get your tissue boxes ready.

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What is JohnWallStreet?

JohnWallStreet, located at the intersection of sports and finance, is 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 business news, in easily digestible bites, with commentary from both the sports money and sports fanatic perspectives.

We’ll cover publicly traded professional teams & stadiums (MSG, RCI, BATRA, MANU), television networks (DIS, FOXA, CMCSA, CBS, TWX, MSGN), apparel & footwear companies (NKE, UAA, ADDYY, FL, LULU), equipment companies (GOLFELY, FIT), ticketing companies (EBAY, LYV) content and facilities providers (CHDN, DVD, ISCA,TRK, LMCA).  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.

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TAGS2018 Winter OlympicsElevate Sports VenturesEurosportSan Francisco 49erssports finance report