Sports Finance Report: Gun Stocks Up, NFL In London By 2022, Dolan Unhappy With FS1

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The deadliest mass shooting in modern U.S. history had an immediate effect on the stock market, with MGM Resorts International (MGM) losing over $900 million in market cap (to $17.8 billion); with shares down nearly 6% (to $30.87) at the close of trading on Tuesday. The Mandalay Bay Casino, operated by MGM, is the site where shooter Stephen Paddock opened fire. With 13 properties (accounting for 57% of revenue) on the Las Vegas strip, MGM is the most exposed Sin City casino operator should tourists decide to stay away from Vegas in the wake of the tragedy. MGM shares were up 19% over the last 12 months prior to Sunday night’s massacre.

Howie Long-Short: The horrific news out of Las Vegas drove down MGM share prices, but MGM China Holdings’ announcement that the company is delaying the opening of its new hotel in Macau, from late ’17 to early ’18, certainly didn’t help. Damage from Typhoon Hato in August has been cited as the cause for the delay. Casino shares typically see a bump around a new opening and with the company banking on Asia for future growth, short-term investors were likely dismayed by the news.

Fan Marino: Shares of American Outdoor Brands (AOBC), formerly Smith & Wesson, and Sturm Ruger (RGR) are up 5.7% and 5.6%, respectively (at the close on Tuesday, from the close on Friday 9/29). Gun stocks typically rise following a mass shooting, as investors expect sales to spike amid discussion of gun restrictions. It’s disturbing to consider that there have been enough mass shootings in recent U.S. history to formulate predictive trends. JWS isn’t a political forum, but we should all be able to agree that there is no reason for a civilian to own a weapon capable of firing 400 bullets/minute.  

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There are indications that the NFL is looking to establish a franchise in London by 2022 with NFL Executive VP of International and Events saying “the next 4-5 years should be very doable”. The international metropolis has proven to be filled with fans (selling out all but one game since 2007), is a lucrative TV market (with more people than Los Angeles) and has the stadium infrastructure (Wembley, Twickenham, Tottenham) in place to house a team. The league believes a London franchise is “viable”; but concerns remain about the team’s ability to compete for a Super Bowl. Player willingness to live abroad, higher U.K. income tax rates and the strenuous travel schedule are among the issues the league still needs to work through.

Howie Long-Short: Speaking of Tottenham (who is building a new stadium the NFL is contracted to play 2 games/year at for 10 years), they are among 6 Premier League clubs (Manchester United (MANU), Manchester City, Chelsea, Arsenal, and Liverpool) looking for an increased shared of the $1.34 billion/year the league earns in overseas broadcast rights. The 6 clubs argue their popularity drives international revenues and therefore should be entitled to a larger share. The 20 clubs, which currently split the fees equally, are scheduled to meet today with revenue sharing on the discussion agenda. It’s worth noting that even the small Premier League clubs are still being paid large sums of cash. The 20th place team that was relegated last season, still made more in broadcast revenues than Juventus (OTC: JVTSF) and Bayern Munich, which won their respective leagues.

Fan Marino: As I wrote last week, it’s only a matter of time until the Jacksonville franchise relocates to London. The league isn’t going to expand, as 8 4-team divisions work, so moving a small market team seems most likely. A move from Jacksonville to London would increase the value of the Jaguars franchise by at least $1 billion. There are 2 other franchises to keep your eye on. If Buffalo and San Diego (I’m not convinced the Chargers remain in LA) fail to get their stadium situations settled, I would expect both franchises to explore London as a relocation option.

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Fox Sports 1 introduced an ad campaign within the NYC subway system targeting the NY Knicks; calling the franchise hopeless and insisting MSG Executive Chairman James Dolan is the root of the team’s failures. FS1 does not have rights to broadcast NBA games, so it’s believed the “pick a side” ads are meant to promote the network’s daily debate shows (one side of the train says “hopeless”, the other says “hopeful”). Dolan apparently was not amused, calling 21st Century Fox (FOXA) Executive Chairman, Rupert Murdoch, directly to complain about the messaging. It has since been reported that at FS1’s request, the ad wrap will be removed.

Howie Long-Short: Both the Islanders and NYCFC are looking to build new venues at Belmont Park. The Islanders have already submitted their proposal “to create a world class sports and entertainment destination”. NYCFC has until Thursday at 2p to submit their plans for a 26,000 seat facility. What does that have to do with Jim Dolan and MSG? Joining the Islanders in their proposal is the Oak View Group; an advisory, development and investment company focused on the sports and live entertainment industries. The company happens to be backed by Dolan’s Madison Square Garden Co. (MSG).

Fan Marino: Knicks fans seem unlikely to argue with the campaign’s messaging, “nothing will change until Dolan sells the team”. It’s odd though that the campaign takes target at Phil Jackson and Carmelo Anthony, considering neither are still with the franchise. I also question putting Tim Hardaway Jr.’s face next to the word “hopeless”. The Knicks signed him to a terrible contract; but he’s 25 years old, can play both shooting guard and small forward and averaged just shy of 17 PPG over his last 45 starts in Atlanta. Expect that number to increase as the Knicks will be looking to replace Carmelo’s 22.5 PPG.

What is JohnWallStreet?

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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