Sports Finance Report: Comcast Spectacor to Renovate, Not Rebuild Wells Fargo Center

by 2 years ago

PHILADELPHIA, PA - NOVEMBER 09: A general view of the exterior of the Wells Fargo Center before the game between the Edmonton Oilers and the Philadelphia Flyers on November 9, 2013 in Philadelphia, Pennsylvania. (Photo by Elsa/Getty Images)

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Comcast Spectacor to Renovate, Not Rebuild “America’s Busiest Arena”

Comcast Spectacor has decided to invest $250 million into a full-scale renovation of Wells Fargo Center (22 years old), as opposed to building a new venue. The addition of new court and rink-side suites, 2 lounges, widened concourses and revamped player locker rooms are among the planned upgrades. The construction will take place over the next 3 summers (to be completed in ’21), so not to interfere with the Philadelphia Flyers’ or 76ers’ (anchor tenants) home schedules. Estimates on a tear-down and build-new plan (on the same site) were projected to be in the $750 million range.

Howie Long-Short: In addition to the Wells Fargo Center, Comcast Spectacor owns the Philadelphia Flyers, the Maine Mariners (ECHL), the Philadelphia Wings (NLL) and the Philadelphia Fusion (OWL). The Comcast Corporation (CMCSA) subsidiary paid off the balance remaining on the initial constructions loans back in 2016, freeing up cash flow needed for the renovations. For FY17, CMCSA reported adjusted EBITDA increased 6.2% to $28.1 billion; but, Corporate, Other and Eliminations, the sector of the business that contains Spectacor and Xfinity mobile, weren’t responsible for that increase. In fact, the sector experienced a $1.4 billion loss in ’17 (compared to a $919 million loss in ’16).

Fan Marino: No NHL team had a better record than the Flyers (18-5-2) over the first 2 months of 2018. The catalyst for the success was early December decision by coach Dave Hakstol to assign stars Claude Giroux and Jakub Voracek to 2 different lines. Since then, Giroux is tied for 2nd in the league in points (46), Voracek is tied for 12th (39) and the team has gone from out of the playoff picture to just two points behind Washington for first place in the Metropolitan Division. It must be noted the team has lost its first 3 games in March, though one was a shoot-out loss.

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No Decision in Sports Betting Case, NBA/MLB Lobbying Against WV Sports Betting Law

The Supreme Court of the United States issued 2 opinions on Monday, but neither were on Murphy vs. NCAA (formerly Christie vs. NCAA); the case that would repeal PAPSA (federal prohibition on sports gambling) and legalize sports betting within the state of New Jersey. While the challenge is focused on the NJ’s ability to offer wagering on sporting events, the case has far reaching implications; any decision related to federalism (grants States independent power & responsibilities) and/or commandeering (illegal for the federal government to force states to adopt policy), could shape future legal arguments on gun control, marijuana and immigration. The SCOTUS will next issue opinions on April 2nd.

Howie Long-Short: The NBA and MLB are doing their best to prevent West Virginia’s sports betting law from being enacted (because it lacks the “integrity fee” they are seeking); but, their reasoning has to do with precedent, not profits. Should the State of West Virginia pass the law, they would become the 5th state (NJ, NY, PA + NV) with sports betting legislation on the books; none of which have agreed to cut the NCAA or any professional league in on the profits. As that number continues to grow, the leagues lose any leverage they may have in negotiations; and with upwards of 25 other states interested in exploring/passing sports betting legislation, the financial stakes are high. Don’t expect to see the state of West Virginia caving to the demand of the wealthy pro sports owners though, no pro sports team calls the state home; the leagues hold little leverage here.

Fan Marino: March is gambling awareness month, but nothing prevents me from betting the house on a “sure thing” like watching a bad beat. On Saturday afternoon, Purdue led Penn State 78-64 with 15 seconds remaining. Shep Garner (PSU) hit a 3, stole the ball as Purdue tried to dribble out the clock and then hit another 3; bringing the team within 8 points at the final buzzer. The point spread? You guessed it, 8.5 points.

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Outdoor, Utility-Focused Brands Surging in Popularity

“Practical fashion” has become popular with millennials, benefiting outdoor, utility-focused brands like Patagonia, The North Face (VFC) and Fjällräven. The latest shift in fashion trends have consumers seeking out durable clothing that serves a purpose, even if it carries a higher price tag; as opposed to cheap products, made by fast-fashion retailers, only designed for a single season of wear. The sustainable fashion trend is being attributed an age group of consumers that struggled through the most recent recession, becoming more conscious of their spending in the process.

Howie Long-Short: While VF Corp. (VFC) reported Q4 ’17 sales grew 20% YOY (to $3.6 billion), the company reported a quarterly net loss of $90.3 million ($.23/share) after a one-time charge related to new tax legislation. Excluding one-time items, the company earned $1.01/share. As for 2018, the company intends on becoming more direct-to-consumer and digitally focused; projecting 85% of their overall sales growth to come from those initiatives. VFC shares are up 39% over the last 12 months. For information purposes, Fjällräven is a subsidiary of Fenix Outdoor International AG, which trades on the Stockholm Stock Exchange under the symbol STO: FOI-B. Patagonia is a privately-held enterprise.

Fan Marino: The North Face is “fashion” again, with apparently “everyone wearing North Face jackets at (New York) fashion week”. At least one publication (Fashionista), is crediting Kanye West with bringing the label back into the public consciousness. West was photographed wearing a North Face puffer jacket following the birth of his 3rd child, back in January.

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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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TAGSComcast Spectacorsports finance reportsports gamblingThe North Facewells fargo center