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.
NASCAR Introduces New Rules Packages to Place Spotlight on Driver Ability
NASCAR has introduced 2 baseline rules packages for the 2019 Monster Energy NASCAR Cup season designed to “promote closer competition and increased opportunities for passing”, as the racing circuit looks to drive fan interest. The revised aerodynamic and engine configurations are expected to “foster tighter racing on the majority of the speedways measuring longer than 1 mile”, a measure intended to return the focus from “engineering and wind tunnels” to the sport’s drivers and “hard side-by-side racing roots.”
Fan Marino: Both television viewership and racetrack attendance are down in ’18, but the last 2 races at Charlotte and Dover experienced YoY growth in TV viewership (attendance figures have not been released). Last Sunday’s Monster Energy NASCAR Cup Series Round of 12 race at Dover, DE drew a larger television audience (+1%, 1.26 rating on NBCSN) than the same race at the Monster Mile in ’17 (1.25 rating on NBCSN), despite last year’s event holding greater stakes (it was the round of 16 cut-off race) and the Eagles playing head to head just 75 miles north; the week prior NASCAR’s Cup Series race at the ROVAL (road course/oval hybrid) posted a 1.95 rating (+6% YoY) on NBC. This Sunday the racing circuit heads to Talladega “The Biggest & The Fastest” NASCAR has to offer, expect the television audience to match; the 2017 race recorded the highest viewership rating of any ’17 playoff race (2.84 rating, 4.743 million viewers).
Last weekend, Dover International Speedway became the first NASCAR track (including Las Vegas Motor Speedway) to offer on-site sports betting. Fans in attendance could legally place bets on both the Xfinity and Cup Series races in addition to a full slate of college and NFL games. While it’s too early to determine the impact of the race on October’s handle (DDE reported $3.3 million wagered in September), in the 4 months since Delaware began taking sports bets NASCAR races have seen little to no action; just .02% ($60,000) of the $39.77 million wagered on sports had been gambled on circuit competition.
Howie Long-Short: Dover Downs Gaming & Entertainment (DDE) operates the sportsbook at Dover International Speedway. Shares of the company are +152% YTD. They rose +42% when SCOTUS struck down in late May, but the biggest gains this year (+56%) came following July’s announced merger with Twin River Worldwide Holdings (has a retail presence in MS, RI and CO); a union that “will help us grow our business, invest in our people and our facilities and compete more effectively given changes in gaming on the horizon.” Upon closing, Twin River will list shares of the company on the NYSE or NASDAQ.
DDE (reports earnings on 10.24) isn’t the only way to invest in Delaware sports betting; Scientific Games, the state’s primary sports betting contractor, is also publicly traded (SGMS). The company is entitled to 15.6% of the net take with the balance split between state, casinos and horse racing industry.
“LeBron James Effect” on Ticket and Merchandise Sales
LeBron James’ arrival in Los Angeles has already begun paying dividends for the Lakers; according to the team, merchandise sales are up 100% YoY through the team’s first 2 home preseason games. While the “LeBron James effect” (the NBA version of the Tiger Woods effect) has helped the Lakers to sell fan gear, it’s yet to impact primary market ticket or sponsorship sales; by the time James signed to play in Tinsel Town on July 9th, little sales work remained for the ’18-’19 season. James has made his mark on the secondary ticket market, the average price to see a Lakers home game this year is up +427 YoY (StubHub); the “LeBron James effect” has had the opposite impact on Cleveland, where his former franchise has seen season ticket sales plummet.
Howie Long-Short: James will certainly have an impact on ’19-’20 primary ticket sales, the club has already stated its intention of increasing ticket prices at Staples Center next year. The question is how much will the price rise? The team is said to be using StubHub to determine the intrinsic value of their tickets and claims demand is so great they could sell out a building with 31,000 seats, 10,000 more than Staples Center has.
One way to play the LeBron James effect is via the NBA’s exclusive licensing and manufacturing partner, Fanatics. e-Commerce has exploded from 1% of all licensed pro league merchandise sales to 20% within the last decade and according to NBA commissioner Adam Silver the company “owns the marketplace” (they are expected to do $2.3 billion in ’18 sales and founder Michael Rubin believes that figure could eventually reach $10 billion). Fanatics isn’t public, but Softbank (SFTBY) and Alibaba (BABA) are investors.
Fan Marino: The NBA season gets started next Tuesday night (October 16th) with 2 games (Philadelphia at Boston and Oklahoma City at Golden State), the Lakers open on the road (on 10.18) at Portland. According to StubHub, their home opener against Houston (on 10.20) has the highest average ticket price ($934) of any NBA game this season.
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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.