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 equities analyst 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.
FC BARCELONA OFFERING MESSI $100 MILLION TO SIGN HIS NAME
FC Barcelona is reportedly offering star Lionel Messi a record $100 million to sign a contract extension with the club, worth $650,000/week; as his current deal expires with the end of this season. Barcelona, having already lost Neymar to Paris Saint-Germain (following a record $263 million transfer) this year, could not afford to lose Messi too. Rumors had been circling that the Argentinian star was interested in leaving the club to play for Manchester City. Messi has yet to formally accept the extension, but Barcelona captain Andres Iniesta has indicated he will.
Howie Long-Short: FC Barcelona spends 84% of total revenues on player salaries. That is an astoundingly high figure. NBA, NHL and MLB players are guaranteed roughly 50% of total revenues and NFL players take home slightly less than that. The NFL generated $13 billion in revenue in 2016. A 35% difference would mean that NFL owners are splitting $4.55 billion, that is earmarked for players in Europe. I’m sure American athletes will love reading that.
Fan Marino: To put $100 million into perspective, only 26 players in NFL history have made that much in total on-field earnings. For Messi, that is just the signing bonus. Peyton Manning made more money than any other NFL player in history ($248.7 million) and his brother Eli Manning ($219.3 million) is the only other NFL player to have made $200 million in on-field earnings.
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LAS VEGAS GIVES 51’s CONSTRUCTION SUBSIDY UNDER CLOAK OF NAMING RIGHTS DEAL
The Las Vegas Convention and Visitor’s Authority (LVCA) has signed a 20-year, $80 million contract to be the naming sponsor for the 51’s new ballpark. The deal has upset Las Vegas residents, as both the sponsoring organization and the amount agreed upon are atypical. A review of more than 250 professional sporting venues failed to turn up another government agency that sponsors a building. Furthermore, there are at least a dozen MLB teams that bring in less than $4 million/year from their stadium sponsorship deals.
Howie Long-Short: Of course Las Vegas residents are upset. This is a sham of a deal, executed while the city recovers. No other minor-league team has a naming rights deal worth more than $1 million. For $4 million/year, the LVCA could have had their name on nearly all 15 Pacific Coast League (PCL) parks. Heck, HHC bought into the team in 2013 at a $20 million valuation. This is a construction subsidy dressed as a naming rights deal and it’s a tremendous waste of tax payer dollars.
Fan Marino: As it currently stands, the 51s are without MLB affiliation for the 2019 season when the ballpark is scheduled to open. Their current affiliation with the New York Mets expires at the end of the ‘18 season and the NY franchise recently purchased the Syracuse Chiefs (another Triple A team); meaning they won’t be renewing. It is possible the new affiliate will not be announced until as late as September 2018. The Brewers and Nationals have been mentioned as possible replacements.
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TWITTER CAN BEAT THE HOUSE
A study published by the Economic Enquiry, found that Twitter (TWTR) is a better predictor of sporting event results than odds makers. During the ’13-’14 English Premier League season, mathematicians at the University of East Anglia (U.K.) used software to analyze 13.8 million tweets (5.2/second). They compared the results with in-play betting on Betfair (PDYPY) and found that at any given second, a positive “combined tone” about one team indicated that team had a better chance of winning than the odds suggested. The software’s recommendations produced an average ROI of 2.28% on 900,000 bets; particularly astounding when you consider PDYPY gamblers lost an average of 5.41% on those same matches.
Howie Long-Short: The predictive power of social media works if you’re analyzing the right sections of the crowd. TWTR can beat the house. Unfortunately, the average gambler lacks the ability to analyze the tone or crowd worth following; and certainly, not in real time. The “wisdom of crowds” isn’t going to put casinos out of business.
Fan Marino: Speaking of gambling, casinos were illegal in Japan until parliament passed a controversial law last December allowing them to be part of larger resorts. Now American gaming companies are actively competing to gain foothold in a market that can be “bigger than Las Vegas”, according to Chairman of MGM Resorts International (MGM) James Murran. Both Las Vegas Sands (LVS) & MGM have repeatedly stated they would be willing to spend at least $10 billion in Japan, while Melco Resorts & Entertainment (MLCO) has expressed it would be willing to spend “whatever it takes” for the opportunity.
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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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