Sports Finance Report: Amazon’s Plans to Disrupt Ticketing Business Shelved
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Amazon’s Plans to Disrupt Ticketing Business Shelved
Amazon’s (AMZN) plans to disrupt the U.S. ticketing business have been shelved. U.S. promoters (i.e. Ticketmaster) pay lofty up-front fees for exclusive distribution rights; negating AMZN’s ability to use their size to crack the market. Ticketmaster (LYV) expressed interest in working with AMZN to unload distressed inventory, but AMZN was looking for the ability to provide Prime members with access to the best shows. Amazon Tickets is still operational in the U.K., as the country uses an open model that enables various platforms and companies to sell seats.
Howie Long-Short: Live Nation Entertainment, which owns Ticketmaster, reported its best Q3 of all-time; with concerts, advertising and ticketing segments all reporting their strongest quarterly adjusted operating income ever. LYV grew Q3 revenue 12% YOY (to $3.6 billion) and 19% over the first 9 months of 2017. The company also announced the introduction of the first open source digital ticketing platform in sports (for the NFL) and scaled its Verified Fan product (expects to save fans $100 million in ’17) during the most recent quarter. If AMZN can’t compete with them, nobody can; that won’t hurt Songkick’s pending anti-competition lawsuit against the company.
Fan Marino: Disappointing news for those who regularly attend games and concerts. Amazon intended on cutting the service and processing fees for Prime members; a change that would have resulted in a savings of +/- $15 for every $100 ticket purchased.
6-Second In-Game Ads Found Effective
You may have noticed short ad spots during the Vikings-Lions in-game broadcast (i.e. not commercial timeouts) on Thanksgiving. The ads, which relegate the game being watched to a secondary box on the screen, are meant to be less disruptive than traditional commercial breaks and are designed to help reduce the duration of the broadcast. Fox (FOXA) first ran the 6-second micro spots during the 2017 World Series, with Metrix Data reporting increased recall and likability metrics for advertisers. T-Mobile’s EVP of marketing and experience said his company found the ads to be “hugely effective” (Metrix Data said 2x), particularly for delivery of a call to action.
Howie Long-Short: FOXA is pricing the 6-second ads at the same rate as their 15 second spots, so one could assume the company will increase the number of ads while still reducing the duration of the overall broadcast. That would help linear broadcasters, should ad revenue eventually drop off, as they continue to lose subscribers (and ratings); but that hasn’t been the case thus far. October ’17 ad revenue (generated during game broadcasts) was up 3% (to $738 million) across all networks that carry league games. Just another reason why linear television rights will continue to grow well into the next decade.
Fan Marino: Have you ever wondered why the Lions and Cowboys always play on Thanksgiving? Fun Fact: The Lions (named Spartans at the time) played their first Thanksgiving game in 1934 as a marketing ploy. Though the team lost (to the Bears), they sold out their 26,000-seat stadium; making the event a success. The team has been playing on the holiday since. When the NFL wanted to add a second Thanksgiving game, in 1966, the Cowboys volunteered to host (most teams did not want to interrupt Thanksgiving dinner); the team was still relatively new and GM Tex Schramm thought it could use the exposure. The Cowboys beat the Browns that year and today’s Thanksgiving tradition was formed. Final Note: The Cowboys did not play on Thanksgiving in 1975 or 1977. The St. Louis Cardinals hosted the second Thanksgiving game in those seasons.
MLB Grows Gross Revenue for 15th Straight Season, Hits $10 Billion For 1st Time
Major League Baseball increased gross revenue for the 15th straight season in 2017, topping $10 billion for the first time (up from +/- $9.5 billion in ‘15). The growth can be attributed to an increase in sponsorship revenues (+12%), sale of league’s majority stake in BAMTech (to DIS for $2.58 billion) and growing revenues from TV and digital media. Despite the positive financial report, the league reported that total attendance declined for the fifth time in six seasons, dropping below 73 million for the first time since 2002.
Howie Long-Short: The Atlanta Braves are one of two teams (Toronto Blue Jays is the other) that are publicly traded. The Braves Group (BATRA) includes the team, five MiLB teams, SunTrust stadium and other real estate assets (including MiLB ballparks and mixed-use real estate adjacent to SunTrust park). The wholly-owned subsidiary Liberty Media reported Q3 ’17 revenue grew 70% YOY (to $185 million), with ticket sales, concessions, corporate sales, suites and premium seat fees all increasing in the first year at the new ballpark. Owners want new buildings, because new buildings drive bottom line revenue.
Fan Marino: You can invest in the Miami Marlins; if you have $150 million (and can stomach some short-term losses). The team sent out a “teaser” soliciting high net-worth individuals, highlighting the investment opportunity and group’s plans to turn a profit. The deck references stadium naming rights, the organization’s plans to fill open dates on the stadium calendar (with concerts etc.) and an upcoming lucrative new RSN contract (currently the least valuable in baseball, expires after 2020 season) as viable new revenue streams. Bruce Sherman’s group bought the team back in September for $1.2 billion; considered a premium based on the team’s existing financial situation (expected to lose $60 million this season).
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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.