Sports Finance Report: Sports World Donates To Harvey Relief, Durant Says Nobody Wants To Play In Under Armours
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Here’s what you need to know today…
BASS PRO SHOPS, UNDER ARMOUR AMONG CORPORATIONS DONATING TO HARVEY RELIEF
Bass Pro Shops and Under Armour (UAA) and are among the corporations known to have contributed to Hurricane Harvey relief efforts. The Bass Pro Cares Fund has donated supplies totaling $40,000 to disaster response organizations and an additional 80 tracker boats, that are being used by local police, fire and rescue teams on the ground in Houston and other Texas communities. Under Armour has pledged to match all donation’s to Team Rubicon, up to $500,000, for operation shallow draft. Athletes, owners and leagues have all pitched in as well, with Rockets owner Les Alexander making a $10 million pledge.
Howie Long-Short: While the hurricane has yet to come to an end, recovery costs could reach as high as $160 billion, or roughly the amount of destruction from Hurricanes Katrina and Sandy combined.
Fan Marino: Among athletes, no one has done more than J.J. Watt. The Texans star’s fund has raised over $10 million, after starting with a $200,000 goal.
DURANT SAYS NO ONE WANTS TO PLAY IN UNDER ARMOUR SHOES; UAA SHARE PRICE DROPS
NBA star Kevin Durant stated on The Ringer’s “Bill Simmons Podcast” that “nobody wants to play in Under Armours”, and UAA shares have dipped 3% since. Durant was answering a question related to why Maryland, a one-time power, has been unable to recruit elite basketball players over the last 20 years. In 2014, UAA aggressively pursued Durant to sign an endorsement deal, but the Warrior’s star chose to resign with Nike for an estimated $285 million over 10 years.
Howie Long-Short: Finish Line announced that it would be cutting its full year profits forecast amidst a highly promotional retail environment. The share price fell 18% thereafter. I’m attributing the 3% UAA drop to the statements released by FINL, not the off-hand comment from KD, who is from Maryland but chose to play at Texas.
Fan Marino: UCLA signed 4 5-star basketball recruits between 2016-2017; only Kentucky, Duke and Arizona had more. So perhaps it’s a Maryland issue, not an UAA issue.
FINISH LINE SCALES BACK FULL YEAR PROFITS ESTIMATES; ANNOUNCES POISON PILL TO PREVENT UNWANTED TAKEOVER ADVANCES
Finish Line (FINL) scaled back profits estimates after receiving disappointing preliminary sales figures (down 3.3% YOY for Q2), and the share price has since decreased by nearly 20%. Shareholders had anticipated low, single digit percentage gains, before expectations were reset. Same-store sales are now expected to fall 3-5% for the full year, with adjusted per-share profit estimates dropping to between $.50-$.60, from a forecast of $1.12-$1.23. The company also announced the adoption of a shareholder rights “poison pill” plan designed to prevent unwanted takeover advances, after U.K. based competitor Sports Direct International (LSE: SPD) raised its stake in the company from 9.2% to 19.9% in June.
Howie Long-Short: Not familiar with Sports Direct International? The company owns 468 stores in the UK and another 289 Internationally. Its portfolio of brands also includes sporting equipment companies Dunlop (in most markets) and Everlast. SPD is working to expand into the U.S. market, having purchased 50 Bob’s Stores and Eastern Mountain Sports outdoor adventure schools in June.
Fan Marino: The Finish Line relies heavily on Nike, generating 70% of its sales on NKE products. I find that remarkable. Everything NKE produces eventually hits clearance. The company will run 25% off of clearance, several times/year. I find no benefit to shopping and paying retail on athletic shoes.
NASCAR FACILITIES ADDING NON-TRADITIONAL EVENTS TO CALENDAR TO SUPPLEMENT DECLINING ATTENDANCE REVENUES
As NASCAR attendance declines, racetracks have been actively working to add non-traditional events to their calendar, to supplement admissions revenue losses. Tracks located in major markets are having the most success, with Las Vegas Motor Speedway (TRK) hosting more than 1,400/year. The concert industry has been drawn to the massive facilities as the vast parking lots, camping areas and other existing amenities suit the needs of a music festival, but smaller events from women’s professional bowling events to American Royal BBQ contests have also found success at the unorthodox location. It should be noted that while no specifics have been given, even with 1,400 non-traditional events/year at Las Vegas Motor Speedway, the revenue generated from those events makes up less than half of the track’s annual revenue.
Howie Long-Short: Annual speedway revenues peaked in 2007 at $814 million. Revenues dropped all the way down to $661 million in 2016. These massive facilities cost money to operate and generate nothing when not being used. Why not try to book as many dates as you can fill?
Fan Marino: I’ve never attended an event besides a race at a NASCAR facility, but after watching Tennessee/Virginia Tech play the ’16 Battle at Bristol (TRK) in front of 153,000 people, watching a football game at one has been added to the bucket list.
PHARELL WILLIAMS AND A$AP FERG TAKE CREATIVE ROLES WITH ADIDAS; KENDRICK LAMAR LEAVES REEBOK FOR NIKE
As discussed here on JWS, Finish Line (FINL) recently announced that it has signed platinum hip hop group Migos to roles as creative directors, tasked with picking product, styling it for shoots and directing the production set. Since that announcement, several other partnerships have been unveiled. Pharrell Williams teamed up with Adidas (ADDYY) Originals to create a super-cool, 70’s-inspired tennis themed clothing line for the 2017 U.S. Open. A$AP Ferg reunited with Adidas Skateboarding to release apparel and footwear that will bring hip hop and skate together, drawing inspiration from vintage ADDYY track suits and the gritty NYC skateboarding scene and Kendrick Lamar announced that he has made the decision to leave Reebok (ADDYY) for a creative role with Team Nike (NKE).
Howie Long-Short: Adidas called their partnership with Kanye West “the most significant ever created between an athletic brand and a nonathlete”, and it’s hard to argue against that. The Chicago rapper single-handedly changed the perception of the athletic retailer. Now the company plans on opening stores dedicated solely to the Yeezy line.
Fan Marino: BIG fan of the Pharrell/Adidas line. Interested in the A$AP FERG/Adidas line? It debuts TODAY; Friday, September 1st. Kendrick Lamar’s Nike collaboration is likely to focus around the Nike Cortez, which first debuted in 1972 and was re-released earlier this year.
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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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