Sports Finance Report: NFL’s Demise Is The Most Significant Story In American Sports

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Costas: NFL’s Pending Demise is the “Most Significant Story in American Sports”

Speaking at the University of Maryland’s annual Shirley Povich symposium, Bob Costas created headlines on Tuesday night while pontificating on the pending demise of the NFL; calling it the “most significant story in American Sports”. Costas said that once “a cash machine”, barring technological developments in safety, the game of football is facing extinction. The NBC Football Night in America host believes as more research becomes available on the risks associated with CTE, families will come to the “common sense conclusion” that children should not play football until the age of 18; and once that happens “the whole thing could collapse like a house of cards.”

Howie Long-Short: To imply the league is anything but a cash cow right now is misleading. The NFL is going to bring in an estimated $14 billion this season; 40% more than MLB, the second biggest revenue generator in America sports. Despite the league’s declining ratings, TV advertising revenue is up 2% YOY. The NFL has its problems, but generating cash is not one of them.

Fan Marino: I don’t subscribe to the “football is facing extinction” narrative. Participation in youth football (ages 8-14) grew (1.9% for tackle and 8.7% for flag) between 2014-2015 and the states of Oklahoma, Florida and Arkansas have added a combined 150 high school teams over the last 5 years. The Boston University study that found 99% of former NFL players (who donated their brains for research) had CTE, also indicated that just 3 of the 14 former high school players tested showed signs of the disease. No CTE was found in the brains of the 2 players who ended their football careers prior to high school. I would not hesitate to let my child play youth football.

$100,000 For the Right to Book a Hotel Room

Texas A&M is holding a lottery for football season ticket holders later today. Those selected will win the right to purchase (cost: one-time $100K tax-deductible donation) a guaranteed room option (GRO), at a yet-to-be built hotel, across the street from Kyle Field. The GRO entitles the rights holder to book a specific room on any day for the next 10 years (they also get an engraved name plaque on the door); a luxury in a college town that lacks hotel rooms. The hotel, which will be ready for the start of the 2018 season, will have 250 total rooms (including 2 penthouses and 11 luxury suites) and a conference center; to which the school is looking to sell the naming rights to for north of $20 million.

Howie Long-Short: Texas A&M (and several others in the SEC) are abiding to the motto “if they come, we will build it”. They’re holding a lottery because more than 750 people expressed interest in the program. From a fiscal perspective, this doesn’t make sense for GRO rights holders. $100K does not include the nightly cost of the hotel room. Even if you were paying $500/night for a room regularly priced at $125/night, you would have to attend 267 games to break even. SEC teams are only going to play 70 home games (max) in a decade.

Fan Marino: The $28.5 million the A&M athletic department will bring in from GRO sales will come in particularly handy should the school decide to fire Head Coach Kevin Sumlin (which seems inevitable). Sumlin has a $10.4 million buyout on his contract; though that number shrinks by more than $400K/month. I wouldn’t fire Sumlin.  Jimbo already said he’s not coming. Leach & Kelly aren’t taking SEC jobs (too much media attention) and James Franklin has no reason to leave Penn State. Chad Morris and Matt Campbell are good coaches, but I don’t see them as improvements over Sumlin.

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MGM, Professional Sports Leagues Backing Esports Development Studio

Former WME-IMG executive Tobias Sherman, backed by seed funding from MGM Resorts International (MGM), has launched Foundry IV; a studio that intends on developing games with “esports prioritized at the earliest DNA.” That philosophy differs from industry norms, which tends to see publishers use competition as a method of marketing their games. Sherman, who previously lead the esports department at WME-IMG and helped to co-found the ELeague, will act as the company’s CEO. Foundry IV is raising a Series A round, with professional sports leagues said to be invested.

Howie Long-Short: Take-Two Interactive (TTWO) reported Q2 revenue figures that beat market estimates ($577 million to $511.3 million) and the company raised full-year adjusted revenue forecasts (from $1.65 billion to $1.93 billion), as sales have been strong for both NBA2K ’18 and Grand Theft Auto 5. TTWO also reported a 31% YOY increase (to $303 million) in digitally delivered net revenue and said that it expects to record net bookings in fiscal ‘19. Shares rose 10.58% following Wednesday’s news.

Fan Marino: Activision Blizzard’s (ATVI) Call of Duty: WWII generated $500M in sales over its first 3 days on the market; while setting a day 1 record for full-game downloads on PS4. The new game sold twice as many copies as last year’s Call of Duty: Infinite Warfare did during the first weekend; which would seem to indicate that gamers are not yet tired of the 15-year old franchise. That’s good news for esports franchise owners. I’ve had difficulty envisioning scenarios in which games could remain popular over an extended period. Perhaps my concerns are overblown.

Note: The summary for this story was co-written by our friends at The Water Coolest. Check out for the latest market news and professional advice.

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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.