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ESPORTS UNDER CONSIDERATION FOR INCLUSION IN ’24 OLYMPIC GAMES
Esports are under consideration as medal sports for the 2024 Olympics. Paris is expected to be awarded the games, and the co-president of their bid committee, Tony Estanguet, plans on speaking to the IOC about the inclusion of competitive video gaming. The addition of Esports would help boost millennial viewership and in turn, increase the value of the games’ programming.
Howie Long-Short: Olympic programming generates big dollars ($1.2 billion in ad sales for 2016 games). Esports generates huge viewership numbers (43 million watched the League of Legends finals). This would be great news for Comcast (CMCSA) who has Olympic broadcast rights through 2036.
Fan Marino: What exactly does the anti-jock, video game nerd, do in the Olympic village?
DICK’S SPORTING GOODS MISSES QUARTERLY SALES ESTIMATES; SHARES DROP MORE THAN 13%
After falling short of analyst estimates on same store sales (2.4% growth vs. 3.5% estimated) and the announcement of a profit warning, Dick’s Sporting Goods (DKS) shares dropped more than 13% (22.71% YTD), for the company’s biggest one-day decline in 3 years. DKS attributed the loss to a “challenging retail environment”, yet announced it would be moving ahead with plans to open 43 more stores this year. The plan would seem counter-intuitive to the announced goals of cutting costs and streamlining operations. On a positive note, CEO Edward Stack said the company is pleased with the performance of its newly relaunched e-commerce site.
Howie Long-Short: You have to appreciate the aggressive poker strategy Stack is playing here. Doubling down and pushing all his chips to the middle of the table. Unfortunately for stock holders, he’s gambling with your money.
Fan Marino: NKE selling direct to consumer on Amazon is going to be the final nail in the coffin for a sporting goods industry that relies heavily on the wholesale revenue generated by NKE goods.
CAN OTT STREAMING OFFSET ESPN’S CABLE SUBSCRIPTION LOSSES?
Between 2013-2016, ESPN (DIS) has lost 9 million subscribers, dropping from 99 million subscribers to 90 million, and recent Nielsen figures indicate that the figure could now be as low as 87 million. At an estimated $7.50/subscriber, you can assess that DIS incurred a $1.08 billion deficit over that time frame, with the number still growing. DIS shareholders are hopeful that their recently announced OTT streaming service will offset the losses. It is difficult to project if that is going to be the case. The business model, price point and content to be included have yet to be announced.
Howie Long-Short: The question is not even whether this nebulous minor-league streaming service can offset cable subscriber losses, but how much further losses to come they can stem. Without any details, it sounds like not enough–and not soon enough.
Fan Marino: I don’t see 12 million people signing up at $7.50/mo., to watch games that aren’t good enough to be broadcast on the mothership.
LOI IN PLACE FOR THE SALE OF THE CAROLINA HURRICANES
An investment group lead by lawyer Chuck Greenberg has submitted a letter of intent to purchase the NHL’s Carolina Hurricanes. The group will keep the team in Raleigh. While the LOI is non-binding, negotiations are far enough along that attorneys for both sides are reviewing the terms. There is currently no timetable for the sale, but a deal could potentially be finalized prior to the October start of the season. Current owner Peter Karmanos has stated he believes he can sell the team for $450 to $500 million.
Howie Long-Short: As of November ’16, Forbes had the team’s enterprise value at $230 million. It is known that Greenberg’s group has struggled to raise money. I can’t see this deal closing anywhere near the $450 million Karmanos wants.
Fan Marino: Carolina is the least valuable NHL franchise. Uphill battle selling hockey in North Carolina, when UNC, Duke and N.C. State are playing hoops at the same time.
HOW MUCH ARE CORPORATE BRANDS PAYING TO PLACE LOGO ON NBA JERSEYS? WHAT IS THE ROI?
Beginning next season, NBA teams will have the option to sell advertising space on their uniform. At least 12 teams have announced 3-year jersey sponsorship deals, ranging in value from $4 million to $8 million per year. While previously difficult to measure branding ROI, companies like IdenTV now enable brands to track their sponsorship efforts using facial and object recognition technology within live video. Logos on NBA jerseys are expected receive at least 2 billion+ impressions, across various media platforms, over the course of a season.
Howie Long-Short: This is still a rounding error for corporate sponsors’ ad budgets, but as a fan, I wonder how many years until these turn into soccer jerseys?
Fan Marino: How do you slap a corporate logo on the Celtics or Lakers jersey? Is there no sanctity left in sports?!?
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