Sports Finance Report: ESPN’s Busy Week, Depressed Golf Sales Impact Stars’ Pockets
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ESPN HIRES KATIE NOLAN; BARSTOOL SPORTS’ BIG CAT & PFT COMMENTER TO GET LATE NIGHT SHOW
ESPN has had an eventful week. The company finalized a distribution deal with Altice (ATUS); terms of which are particularly notable, as the deal represents the first of several renegotiations in a new round of carriage fee talks with pay-TV operators. On the content side of the business, the company announced a partnership with Cycle Media to create branded original programming and acquired the broadcast rights to Formula 1 racing (FWONA), beginning in 2018. As for talent, the company hired Katie Nolan, formally of “Garbage Time” on FS1 and confirmed reports of a new late-night show on ESPN2, hosted by Barstool Sports’ Big Cat & PFT Commenter.
Howie Long-Short: In the end, Altice caved. They agreed to pick up nearly every ESPN channel (including the SEC & ACC Networks), implement a rate increase for those channels and raise minimum household penetration thresholds. What choice did they really have? It’s not like they can afford to let subscribers walk. As for the FWONA deal, it’s noteworthy that the terms enable the racing organization to maintain OTT rights to their races.
Fan Marino: Nolan is a star that FS1 oddly wasn’t using. She’s got a great sense of humor, a sharp tongue and Sports Emmy to her name; a strong addition to the ESPN roster. For those not familiar with Big Cat & PFT Commenter, they are the hosts of Pardon my Take; a sports podcast that draws 2 million listeners/episode. You don’t have to be a fan of Barstool to like these guys. PFT is one of the funniest personalities in sports.
DEPRESSED GOLF SALES DIRECTLY IMPACTING STARS’ POCKETS
Depressed golf sales are beginning to have a direct financial impact on the PGA Tour’s biggest stars; as manufacturer volume dwindles, endorsement deals are decreasing in breath and value. With NKE and ADDYY out of the golf equipment space, it was expected that niche brands like Callaway (ELY), Titleist (GOLF) and Ping would sign “free-agent” players to all-encompassing endorsement contracts (hats/clothing/shoes/clubs/bags). That hasn’t been the case. The smaller players that remain have opted instead to sign players to less lucrative equipment-only contracts and in some cases, terminate relationships all-together. Sergio Garcia and TaylorMade announced they have mutually parted ways, effective immediately, ending Garcia’s 15-year endorsement of the company’s equipment. Rumors are circulating that he will sign a new, likely smaller deal with Callaway Golf (ELY).
Howie Long-Short: Tiger Woods couldn’t make golf equipment profitable for Nike, so from the manufacturer perspective, I have strong reservations as to the ROI on golf equipment endorsement deals. On the athlete side, the manufacturers that remain simply don’t have the same size marketing budgets. Instead of seeing massive all-encompassing deals, expect players to take an ala carte, sum of the parts approach to sponsorship dollars.
Fan Marino: Traditionally manufacturers have wanted tour players to maintain uniformity with their equipment and to wear the company logo on their hat; so that casual fans could identify the clubs a player is using. In what has become a fragmented marketplace, there are several companies still capable of offering all-encompassing endorsement deals; Acushnet (GOLF) with Cobra/Puma (i.e. Rickie Fowler) and Titleist/Footjoy and ELY are among them.
STOX PREDICTION PLATFORM ACQUIRES POTENTIALLY VITAL GAMING LICENSES
STOX, an Ethereum-based platform that enables users to predict the outcome of a variety of events, has acquired CommoLogic for their valuable gambling licenses; becoming the first regulated ICO prediction marketplace. As the focal point of the acquisition, STOX will take possession of CommoLogic’s U.K. software gaming license, U.K. operating gaming license and a Class 4 B2B license for Malta. The STOX team believes that the licenses will be needed to legally operate “in the near future” and by having them now, the company can focus on developing its platform as opposed to the licensing process. Financial terms of the deal were not released.
Howie Long-Short: STOX now maintains a meaningful differentiator from its 2 main competitors, Augur and Gnosis. However, despite the licenses, the company is worth far less than its rivals. STOX has a market cap of just $21 million, while Augur and Gnosis are worth $195 million and $114 million respectively.
Fan Marino: STOX acquired these licenses under the presumption that at some point cryptocurrency will be regulated. That sounds logical, as it would seem unlikely the ICO market could sustain itself long-term without regulation. I would place my coins on crypto regulation occurring sooner than later.
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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.
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