Sports Finance Report: Madden ’18 Receiving Rave Reviews; Amazon’s Partnership With Ticketmaster Stalls

by 11 months ago

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MADDEN ’18 HITS SHELVES; “LONG SHOT” MODE RECEIVING RAVE REVIEWS

Electronic Arts (EA) has released the newest edition of their Madden franchise (Madden ’18) and the football simulation game is receiving tremendous reviews. The most recent iteration of the game includes a story mode known as “long shot”, which puts the player in the shoes of a rookie as he embarks on a journey to become an NFL star. EA hopes that focusing on the more personal side of football (sacrifices, stress, celebrity) will increase immersion for players of the game. Other notable changes from Madden ‘17 include an improved graphics engine, updated stats and rosters and new broadcast commentary.

Howie Long-Short: Take-Two Interactive (TTWO) has the dominant NBA game (2K), so how come they no longer make an NFL version? EA smartly signed an exclusive licensing deal with the NFL and the NFLPA back in 2004. Without player and team names, 2K simply can’t compete.

Fan Marino: It’s remarkable the game has maintained its cultural relevance for over 25 years, but you must remember that 1994-2016 was a period of astronomical growth for the NFL. I believe the popularity of the game is a direct byproduct of the league’s success. Should league interest continue to wane, so too will interest in the Madden franchise.

AMAZON YET TO CONQUER TICKETING MARKETPLACE; TALKS WITH TICKETMASTER STALL

Talks have stalled between Amazon (AMZN) and Ticketmaster, that would have made AMZN a ticket distributor for the Live Nation (LYV) subsidiary. AMZN found success selling tickets in Europe, but has been unable to crack the U.S. market with Ticketmaster (LYV) controlling 80% of all seats through a series of exclusive contracts. That dynamic has forced the retail behemoth to work with Ticketmaster, as opposed to competing against them. While Amazon’s reluctance to share consumer purchase data remains the biggest sticking point, fundamental differences remain. AMZN wants to drive Prime memberships by shopping tickets to the best shows, while Ticketmaster is looking for a partner to help unload the 40-50% of tickets that are typically unsold.

Howie Long-Short: There is simply no advantage for a venue/team to distribute tickets through a single channel. As existing contracts expire, look for an open, non-exclusive ticketing marketplace. That isn’t great news for LYV.

Fan Marino: A $200 face value ticket to Thursday’s U.S. Open has $33 in fees. In a non-exclusive ticketing marketplace, you could pay an additional $66 for the year, get all the benefits of being a Prime member and not pay another ticketing fee for 12 months. This needs to happen.

NIELSEN INTRODUCES ESPORTS VERTICAL TO QUANTIFY VALUE FOR COMPETITIVE GAMING INDUSTRY

Nielsen (NLSN) has announced the launch of a new vertical that will track esports analytics; providing growth and fan engagement insight. Nielsen esports will offer sponsorship valuation, industry specific research and consulting services to rights holders, media platforms and brands who currently lack the data necessary to understand the value they are providing, receiving or missing out on. The newly created division will track sponsorship exposure and ROI, both on and off air.

Howie Long-Short: Esports is rapidly growing with 1 in 3 fans having just started to follow competitive gaming in the last 12 months. It’s estimated that by 2021 the industry will be worth $1.1 billion. I don’t understand the appeal, but esports are here to stay.

Fan Marino: It is time to accept the fact that there will be a day when people are more interested in the Madden Championship game, than the Super Bowl.

DRIVE SHACK EARNINGS DOWN 50% YOY, OPENING 3 INTERACTIVE DRIVING RANGES IN 2018

Drive Shack Inc. (DS) delivered Q2 earnings and reported just $7 million in profit for the quarter (down from $14 million in Q2 ’16). The company however is in the process of opening 3 interactive driving ranges (think Topgolf) within the next 18 months. The first two locations scheduled to open are Orlando, FL (Q1 ’18 open) and Richmond, VA (Q3 ’18 open). Raleigh, NC (H2 ’18) will follow.

Howie Long-Short: Not interested in ELY? DS is another way to invest in the interactive driving range space. It is certainly worth noting that each Topgolf location earns +/-$20 million/year in revenue, roughly 50% coming from food/bar.

Fan Marino: Topgolf has 35+ locations in the U.S. but none in NY (there is one in Edison, NJ). Makes sense though, while the driving bays are heated, the range is open. December-March wouldn’t seem like an ideal time to spend a Saturday night outdoors.

GANASSI RACING SIGNS SPONSORSHIP DEAL WITH FIRST DATA; FIRST DATA PUTTING MARKETING DOLLARS IN TO NASCAR

Chip Ganassi Racing has announced a sponsorship deal with First Data (FDC) that will make the credit card processor the primary sponsor on Kyle Larson’s #42 car, for two races during this season’s Monster Energy NASCAR Cup Series. Ganassi has been working to find a permanent replacement for current sponsor Target (TGT), whose contract expires at the end of the season, and is hopeful the partnership with FDC will grow in 2018. First Data has been making a big push in to the NASCAR space, targeting small business decision makers that comprise part of the sports’ overall fan base. The company recently signed a deal with International Speedway Corporation’s (ISCA) Martinsville Speedway, to act as the title sponsor of the playoff race in October (First Data 500) and will serve as the credit card processor at 2 additional races this year (Phoenix & Miami).

Howie Long-Short: The firm’s Global Financial Solutions division (retail & credit processing) recently reported revenue is up 12% YOY. With Clover helping to drive merchant on boarding, the future looks bright for FDC.

Fan Marino: First Data has been active in the sports sponsorship space of late, signing a 10-year deal with the Mets and purchasing the naming rights to their spring training facility in Port St. Lucie (First Data Field).

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JohnWallStreet is not a person or location, but 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 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.

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 Security & 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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