Sports Finance Report: No, This Isn’t The End Of The NFL

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.

No, This Isn’t the End of the NFL

Will Leitch (of Deadspin fame) wrote an article that appears in the November 27th issue of New York Magazine entitled “Is This the End of the NFL?”. The piece claims “so many people just aren’t watching (the league) at all”; supporting the argument with just a single fact, TV ratings are down 5.7% YOY. Leitch believes that concerns regarding player brain injuries, anthem protests, the quality of play and even league implemented rules (i.e. targeting) designed to make the game safer are turning fans away. Exacerbating the demise is the ascension of the NBA; a league that he sees as “vibrant, organic and alive” because it embraces the personalities and opinions of its athletes.

Howie Long-Short: I saw this click-bait and felt the need to provide some context. TV ratings are down as Leitch stated, but the league is still averaging 15.1 million viewers/game; the ’17 NBA playoffs (1st round through conference finals), on ESPN/ABC, only averaged 4.26 million. Television ad revenue is up 3% YOY (to $738 million) across the league’s broadcast networks and fan attendance is up (from 68,914 in ’16 to 69,264) this season. Those metrics simply don’t show present the picture of a business nearing its end.

Fan Marino: 3 million DISH subscribers “weren’t watching” the Chargers-Cowboys game on Thanksgiving, due to a blackout of CBS Corp channels. The 2 companies have since managed to agree on a transmission agreement for satellite subscribers; though Sling TV subscribers (DISH’s digital service) remain in the dark. Wells Fargo analyst Marci Ryvicker said it was DISH who caved, giving in to consumer demand on a “popular NFL-heavy holiday weekend.”

Media Sector Consolidation Continues as Meredith Corp. Buys Sports Illustrated (and TIME Inc.)

The Meredith Corporation (MDP) acquired Sports Illustrated and Golf Magazine (and the balance of TIME) for $2.8 billion ($18.50/share); after failing to acquire the company earlier this year (and an initial attempt back in 2013). The acquisition gives the Better Homes and Gardens publisher 200 million consumers across all platforms. There is speculation that with the addition of TIME’s publishing assets, MDP could spin off its broadcasting assets (including the newly-launched SI TV). Koch Equity Development is backing the Meredith bid with $650 million in financing.

Howie Long-Short: At $18.50/share, MDP paid a 9.5% premium on the price ($16.90) at Friday afternoon’s close and a whopping 46% premium over the closing price on November 15th. Earlier this month, TIME reported that Q3 revenue declined 9.5% (to $679 million); the 6th straight quarter the company missed Wall Street expectations. Magazine revenue, which still accounts for roughly two-thirds of all company revenue, was down 17% (to $1.3 billion) over the first 9 months of the year.

Fan Marino: Meredith clearly foresees a future for the magazine industry, but it’s Sports Illustrated that received recent acclaim for its fortune-telling prowess. Back in 2014, when the Astros were among the worst teams in baseball, SI published an issue predicting the team would win the World Series in 2017; with George Springer on the cover. Fast-forward 3 years, the Astros are WS Champions and George Springer was the World Series MVP.  

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Internet-Of-Things Baseballs Hit Market

Smart baseballs (or robo-balls), designed to help pitchers develop their curve ball and increase pitch speeds as the ball approaches the plate, are now available in Japan. Technical Pitch, created by Chinese mobile software developer Acrodea, Inc., looks and feels like any other baseball, but has sensors that capture pitch speed, the tilt of ball’s rotation and rotations per minute; with results sent to a smartphone. The company says that the data’s accuracy matches that of sophisticated MLB in-park radar systems (though TrackMan disputes that notion). Acrodea says that several MLB teams have expressed interest in the product.

Howie Long-Short: There are several ways to play smart baseballs. You can invest directly in Acrodea on the Tokyo Stock Exchange (TYO: 3823) or Alps Electric Co. (OTC: APELY), the Apple (AAPL) supplier that developed the technology Technical Pitch draws on. You can also play Mizuno Corporation (OTC: MIZUF) or Aichi Steel Corporation (a TM company), who are collaborating on a similar product (called MAQ); to be released in the spring.

Fan Marino: It seems likely that robo-balls will be used for scouting purposes. Scouts travel to far distant lands in search of the next Clayton Kershew, often lacking the resources to obtain/track reliable data related to ball movement. Now all it takes is a $180 (retail price) ball, the prospect and a catcher. Several Japanese League teams have already begun using the product. It is important to note that these baseballs are not designed to be hit!

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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 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.