Editor’s Note: Welcome to a daily column we run here at BroBible breaking down the day’s biggest stories in sports business with commentary from the sports money and sports fanatic perspectives. It comes to us via our friends at JohnWallStreet. You can sign up here for their daily email newsletter.
Juventus Shares in Free Fall with Ronaldo Under Investigation
Italian football club Juventus has decided to publicly defend Cristiano Ronaldo despite allegations (and some damning evidence) that the Portuguese star raped a woman in 2009. The allegations, filed as part of a civil suit, have since prompted Las Vegas authorities (site of the allegations) to re-open a criminal investigation. Ronaldo has dismissed the accusations as “fake news”, but has yet to explain the $375,000 settlement the American woman received (in exchange for signing an NDA) or the document detailing the night where he admitted “she said no and stop several times.”
Howie Long-Short: When Juventus (JVTSF) landed Ronaldo shares rose +42% (to $1.40). By mid-September the stock was up +135% (to $1.95) on the Ronaldo effect (see: kit sales, club increased ticket prices by 30%), so I’m not surprised to see the share price in free-fall with news of allegations that could end his career. Shares are down -20% since the allegations first surfaced on September 29th, dropping -10% on Friday (to $1.33).
It’s easy to understand why Juventus has been so vocal in their support of Ronaldo, they need him if they’re going to win the Champions League for the first time since ’96 and there’s a fortune riding on his availability. Aside from the broadcast revenue Juventus could claim by going deep in Champions League competition and the increased interest from sponsors, Serie A broadcast rights (both domestic and international) expire at the end of the ’20-’21 season and it’s been estimated that they are upwards of 30% more valuable ($500 million, $25 million/club) with Ronaldo playing for Juventus. It’s worth noting that a $25 million boost to the bottom line would increase the club’s revenue by +5% ($442 million in ’17).
Fan Marino: Ronaldo continues to play for the Juventus as the allegations and corresponding investigation hang over his head. On Saturday, he scored his 4th goal of the season leading the club to a 2-0 win over Udinese. While his club team continues to run him out on the pitch, his country is not; Ronaldo has been left off the Portugal national team for 2 upcoming matches and Head Coach Fernando Santos said the player would not return for a series of international matches in November.
MSG to Spin-Off Sports Franchises
Madison Square Garden Co. has filed with the SEC to spin-off its professional sports franchises into a new publicly traded company, with its live entertainment remaining under the MSG ticker. The division of assets (expected to be completed in H1 ’19) will “enable investors to more clearly evaluate each company’s assets and future potential, while providing both companies with increased strategic flexibility.” The filing reiterated the company does not intend on selling either of its marquee sports franchises (see: Knicks, Rangers), though it plans on unloading the WNBA’s New York Liberty.
Howie Long-Short: We’ve been waiting for this shoe to drop since the rumors first started flying in June. Upon the deal closing, MSG will consist of Madison Square Garden Arena, the Hulu Theatre at Madison Square Garden, Radio City Music Hall, Beacon Theatre, the Chicago Theatre, the Wang Theatre, the L.A. Forum, the Radio City Rockettes and the Christmas Spectacular, MSG’s booking business (think: college basketball, boxing), their majority stakes in Tao Group (62.5%) and Boston Calling (a festival/concert promoter), the company’s JVs (Azoff-MSG Entertainment and Tribeca Enterprises) and the planned Sphere projects in Las Vegas and London. “New” MSG will own 1/3 of the shares in the newly formed sports company and will retain $1 billion in cash. Legacy shareholders will control 2/3 of MSG Sports. Shares declined -3% on the news, closing at $300.62 on Friday 10.5.18.
In August, the company reported the percentage of revenue generated by its sports teams had dropped from 60% (last 3 years) to 50% in fiscal ’18, indicating Dolan’s diversification plan is working. MSG shares are up +42.5% YTD.
Fan Marino: The newly traded public company will be comprised of the New York Knicks (and their G-League affiliate the Westchester Knicks), the New York Rangers (and their AHL affiliate the Hartford Wolf Pack), their majority stake in Counter Logic Gaming, Knicks Gaming and a training facility in Greenburgh, NY. Dolan intends on running both companies, so fans shouldn’t expect many (if any) changes to team operations.
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 (GOLF, ELY, 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.