Sports Finance Report: Fox to Pursue WWE TV Rights, Let UFC Walk If Successful

by 9 months ago

CHICAGO, IL - OCTOBER 16: The fantasy sports website FanDuel is shown on October 16, 2015 in Chicago, Illinois. FanDuel and its rival DraftKings have been under scrutiny after accusations surfaced of employees participating in the contests with insider information. An employee recently finished second in a contest on FanDuel, winning $350,000. Nevada recently banned the sites. (Photo illustration by Scott Olson/Getty Images)


Editor’s Note: Welcome to a daily column we run here at BroBible breaking down the day’s biggest stories in sports finance with commentary from the sports money and sports fanatic perspectives. It comes to us via our friends at JohnWallStreet, publisher of a free e-mail newsletter focused on sports related public equities and their subsidiaries. You can sign up here.

Fox to Pursue WWE TV Rights, Let UFC Walk If Successful

As we wrote in January, the UFC’s 7-year broadcast deal (worth $160 million in ’18) with 21st Century Fox, Inc. (FOXA) expires at the end of 2018 and the size of the extension the promotion is reportedly seeking ($450 million annually), has created the possibility (if not likeliness) the companies will be heading for a divorce (FOXA offered $200 million). It now appears as if FOXA will pursue WWE TV rights (expiring in September 2019), with the intention of passing on the UFC should they be successful. FOXA is selling the wrestling organization on the attractive opportunity to air their feature program, Monday Night Raw, on broadcast television (i.e. in 115 million homes); the show currently draws 3+ million viewers/week on USA Network. The WWE will announce their decision on a U.S. TV partner between May and September.

Howie Long-Short: NBCUniversal (CMCSA) currently pays $200 million/year for the rights to televise WWE Monday Night Raw and SmackDown. The WWE is reportedly seeking $400 million annually on their new deal, a figure FOXA is far more inclined to pay for their content than the UFC’s. That makes sense to me, the WWE can script their outcomes and ensure their stars’ staying power; a UFC champion is always one fight away from never competing again. WWE shares hit an all-time high earlier this week ($38.77), closing on Thursday at $37.91.

Fan Marino: Ronda Rousey spent her first 2 Monday Night Raw episodes engaged in a feud with Stephanie McMahon and Triple H, that will culminate in a tag-team match (Ronda will be paired with Raw General Manager Kurt Angle) at WrestleMania. One would think the curiosity surrounding Rousey would have TV ratings on an uptick, but that hasn’t been the case. In fact, ratings have declined in the hours Rousey has appeared on the show. The WWE must be disappointed in lack of pop the signing provided.

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Reverse Merger Could Take FanDuel Public

FanDuel, Inc. may be going public, but it won’t be through an IPO. The DFS company is in “advanced talks” with Platinum Eagle Acquisition Corp. (EAGLU) to partake in a reverse merger; an expedient and cost effective way for a private company to trade on a public exchange. No details have been released relating to the equity percentage EAGLU would acquire or the valuation FanDuel holds; though, the company calculated its fully diluted value to be $1.2 billion in 2017. One can speculate FanFuel will use the capital infusion to position itself to capitalize on legalized sports betting; the company owns an extensive database of DFS players that it could convert into mainstream sports gamblers.

Howie Long-Short: EAGLU is a special purpose acquisition company, formed by well-respected media execs Jeff Sagansky (Sony, CBS, Scripps Networks Board Member) and Harry Sloan (MGM, SBS Broadcasting, Lionsgate Board Member). The publicly traded company launched in January, having raised $325 million to acquire another business (or businesses). As for FanDuel, they’ve raised +/-$435 million to date; but, none since April ’16. A reverse merger is another way for the company to raise the capital it needs.

Fan Marino: FanDuel won’t be the only DFS company to enter the sports betting space. DraftKings announced last week that it had hired a “Head of Sportsbook”, and DRAFT, owned by Paddy Power Betfair (PDYPY), is also expected to chase a share of the U.S. sports gambling market. Of course, all 3 will have strong competition from established gaming operators like of William Hill (WIMHY), Caesars Entertainment (CZR), MGM Resorts International (MGM), Penn National (PENN), Boyd Gaming (BYD) etc. 

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Levy Restaurants Placing Robots in Stadium/Arena Kitchens

Levy Restaurants is working in collaboration with Miso Robotics to develop an industrial robotic arm capable of handling assistant cook responsibilities, within commercial kitchens at sporting venues. “Flippy”, “built as a 3rd hand for overworked chefs”, will be able to complete a variety of tasks ranging from flipping hamburgers (hence, the name) to changing out spatulas that touch raw food (per safety regulations). The robotic kitchen assistants will take over positions that require less skill, but the individuals currently occupying those jobs will not be let go; Levy Restaurants (and its venue partners) intend on moving those individuals into consumer facing, customer service roles. Though still in the initial pilot testing phase, the technology is expected to debut at Dodger Stadium this summer.

Howie Long-Short: Levy Restaurants built a 10-person robotics and AI team, invested $2 million into “Flippy” and then participated in Miso Robotics $10 million Series B round (the company has raised $13.1 million in total); so, expect the future of industrial kitchens to have robots handling the cooking and prep work. The Compass Group (OTC: CMPGF) subsidiary is the world’s largest food service company, serving over $5.5 billion meals year, so their investment in a technology that will ensure more consistent food quality and increase the speed of delivery, seems wise. CMPGF isn’t the only way to play Miso Robotics though, Acacia Research (ACTG), a publicly traded patent licensing company, led both company rounds.

Fan Marino: It was disappointing to learn that “Flippy’s” Dodger Stadium debut will be at a popular fried chicken stand and he/she won’t be handling the “flipping” of the team’s traditional “Dodger Dogs”. Of course, tradition doesn’t necessarily mean high quality; hot dog historian Bruce Kraig once described the L.A. ballpark staple by saying, “it won’t kill you.” Since their 1962 debt, Farmer John (producer) has sold more than 3 million Dodger Dogs per year.

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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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