Sports Finance Report: Bilas, Beasley Blame Amateurism Rules For NCAA Corruption

by 8 months ago

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BILAS, BEASLEY SAY AMATEURISM RULES TO BLAME FOR CORRUPTION IN NCAA BASKETBALL

The FBI investigation that lead to the arrest of 10 people for bribery and corruption within NCAA basketball, has lead Jay Bilas, Michael Beasley and others to argue that the issues at the root of the problem are the NCAA amateurism rules that prevent college athletes from being paid. Bilas points out that coaches are not bribed to accept jobs, because a free market ensures they’re paid what they’re worth. Beasley notes that while he helped to put Kansas State on the map, watching the school increase enrollment following his time in Manhattan; he isn’t compensated for driving that growth. Those that argue in favor of the current amateur system believe full scholarships that include; a free education, medical care and stipends constitute payment.

Howie Long-Short: There is certainly an argument for repurposing the fiscal resources dedicated to keeping up in the facilities arms race (“lazy river” at UCF, flat screen locker displays at Texas, imported foosball tables at Oregon) as compensation for revenue generating athletes; but I tend to believe that a $200,000 scholarship and the opportunity to graduate without carrying student loan debt, is fair compensation for all but a handful college athletes.

Fan Marino: Beasley makes the strongest case on behalf of college athletes. Those that sell jerseys and drive enrollment/endowment growth, should be monetarily compensated. Unfortunately, the thought process behind the balance of his comments is so flawed that it undermines the logical part of his argument. Beasley added that because the majority of college players fail to play professionally, they should be paid while in college. I fail to see how ones’ future earnings are relevant to the current exploitation they may be suffering from.

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U.K. BASED SPORTS DIRECT IN TALKS TO ACQUIRE FINISH LINE

Reports indicate that Sports Direct (OTC: SDISY), the U.K.’s largest sporting goods retailer, is in talks to buy Finish Line (FINL). SDISY currently owns 8% of FINL, but a recently added “poison pill” shareholder rights plan, designed to prevent the unwanted takeover of the company, caps their potential ownership at 12.5%. It now appears that FINL’s adoption of the “poison pill” was a negotiating tactic, as opposed to a move to prevent a merger. Talks are apparently far enough along that an announcement could be made within the next several weeks.

Howie Long-Short: Susquehanna Group Analyst Sam Poser estimates that should the sale go through, the buy-out price would be $13.30. Sports Direct would continue to operate as Finish Line in the U.S., but would create a “DSW of athletic shoes” that would sell its lower priced sneakers. Considering shares are down 37% YTD, that 70% of its business comes from NKE products and that NKE is putting less stock in its wholesale business, shareholders would seem lucky to receive this bailout.

Fan Marino: FINL reports that 70% of its customer traffic comes from mobile, so the company has been focused on getting its web pages to load faster, providing customers with the ability to return products directly on the website and adding in-store beacon and geofencing technology to connect the digital and physical shopping experience. It makes no difference to me. I’m a sneaker guy, there are no technology enhancements that can be made to get me to shop from the bargain shoe bin.

ALIBABA ACQUIRES MOBILE GAMING COMPANY, LAUNCHES DIVISION TO DEVELOP OWN TITLES

Alibaba (BABA) Digital Media and Entertainment Group has announced the acquisition of mobile gaming company Ejoy and its plans to launch a new games division; just 6 months after laying out plans for a $145 million venture into mobile gaming distribution. The new division will develop its own titles and leverage the resources of BABA sister platforms, like online videos and movies, to push its way in to the world’s largest gaming market. The Chinese online gaming industry was last estimated to be worth $11.8 billion and is expected to grow to $27.5 billion by the end 2017.

Howie Long-Short: While late to the game, Alibaba is not new to the gaming sector. In 2014, the company made a $120 million investment into mobile gaming co. Kabam, the developer behind Marvel: Contest of Champions and Kingdoms of Camelot. The expected growth within the industry certainly provides BABA the opportunity to carve out market share, but they have some ground to make up; competitors Tencent (OTC: TCEHY) and NetEase (NTES) currently bring in 70% (41.2% and 28.5% respectively) of all Chinese online gaming revenues collected. It is worth noting that online gaming revenues accounted for 47% of TCEHY’s 2016 total revenue.

Fan Marino: Retired gamers and nostalgia junkies spent last weekend on their couches, as Nintendo re-released its classic Super NES system on Friday September 29th. The console, originally released in November 1990, includes 21 games including classics; “Super Mario World” and “Yoshi’s Island”. The biggest complaint I’m hearing about the re-released version? The controller wires are still too short! The more things change, the more things stay the same.

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TAGSAlibabaFinish LineNCAA College BasketballSports Directsports finance report

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