Sports Finance Report: NFL Owners Discuss Goodell Ouster, More ESPN Layoffs

by 1 year ago

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NFL Owners Discuss Terminating Goodell Extension, Jerry Jones Spearheading Movement

17 NFL owners participated in a conference call to “discuss the possibility of halting commissioner Roger Goodell’s pending contract extension”, with Cowboys owner Jerry Jones said to be spearheading the movement. Jones is among a subset of league owners (Kraft, Blank) who feel the commissioner should take the fall for “the Los Angeles situation”, “the Ray Rice situation”, declining television ratings and player protests that have plagued this season. As one owner said, “you don’t get to have this many messes over the years.” Despite Jones’ pleas, it is expected that the commissioner’s 5-year extension, through the ’24 season, will be approved as planned. Goodell’s current contract is scheduled to expire at the end of the 2018 season.

Howie Long-Short: Goodell has grown revenues by over 300% (to $15 billion) since taking over in 2006. Yet, he remains grossly overpaid. Between 2006-2015, Goodell made $212 million; more than every athlete, besides A-Rod and Kobe Bryant, during that time. Goodell made $34 million in 2015, the last year that the league maintained a tax-exempt status that required his salary be made public. Only 16 Fortune 500 CEOs earned that much in 2016 compensation! At a minimum, those opposing Goodell’s extension should push for his compensation to be rolled-back.

Fan Marino: It’s not a coincidence that the owners who want Goodell out, are those who perceive their teams have been slighted by the league office. Jones is upset about the 6-game suspension imposed on RB Ezekiel Elliott. He can argue punishment from the league office has been inconsistent, but a yearlong investigation found that Elliot physically assaulted his former girlfriend on 3 occasions. Here’s to hoping the other 31 NFL owners can convince Jones that going to bat for a man who hits women, isn’t the hill he wants to die on.

ESPN Expected to Announce Another 40-60 Layoffs, SportsCenter Likely to be Affected

Rumors are circling that ESPN employees are preparing for another round of layoffs in late November or early December. 40-60 employees are expected to lose their jobs, including some of the network’s high-priced on-air talent. SportsCenter, the network’s flagship show, is said to be likely affected by this round of layoffs. ESPN has declined comment on the reports.

Howie Long-Short: ESPN laid off 300 employees back in October ’15 and another 100 employees this past April, so things are clearly not going well at Walt Disney Co. (DIS) subsidiary. The company panicked after losing SNF and the World Cup. They committed $1.9 billion/year to obtain the rights to MNF and another $1.4 billion/year for rights to the NBA; arguing if they hadn’t someone else would have paid for as much or more for them. That’s debatable, but at least on the NBA front they should have found out. Instead they’ll pay 3x the amount of their previous deal for the rights to the same content.

Fan Marino:  If ESPN is going to cut costs, on-air talent is the place to start. The audience is tuning in for the game, the highlights or the debate topic; not the broadcasters, anchors or hot take artists. Skip Bayless drew a high of 663K viewers while on ESPN’s First Take. He currently draws an average of 150K viewers on FS1, while the current iteration of First Take draws 461K. FS1 is paying Bayless $25 million over 4 years. That’s not a good investment. The network is the draw, not the talent.

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MLB Sets Record for Sponsorship Revenue Generated in a Season

MLB has set a league record for sponsorship revenue generated in a season, taking in $892 million in 2017; a 7.9% increase YOY and up 26% from just 5 years ago ($663 million). Newly signed deals with Coke (KO), Nathan’s Famous (NATH), Old Dominion Freight Line (ODFL) and 5-Hour Energy along with the addition of presenting sponsorships for the playoffs and World Series, are credited driving the growth. New Era, StubHub (EBAY), Budweiser (BUD), Majestic Athletic and State Farm were the league’s 5 most active sponsors. The data was compiled by ESP Properties, a sports & entertainment research and consulting firm owned by WPP (WPPGY).

Howie Long-Short: MLB finished a distant 2nd among the 4 major U.S. professional sports leagues in sponsorship revenues generated. The NFL brought in $1.2 billion during the ’16 season, the NBA did $880 million and the NHL generated a league record $505 million in ’16-’17 (5.9% increase YOY). With the addition of the Adidas (ADDYY) contract, the NHL is expected to set another record this season.

Fan Marino: While on the topic of baseball, Astros OF George Springer hit a HR in the 7th inning of Game 5 of the World Series, that appeared to explode upon landing. While logic points to perfect placement and immaculate timing by the Astros pyrotechnic staff, conspiracy theorists will claim the balls are juiced…with TNT. I suppose it’s possible. The teams have combined for a World Series record 22 home runs through 5 games.

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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.

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