LAS VEGAS, NV - APRIL 01: Papa Johns Pizza Founder John Schnatter arrives at the 47th Annual Academy Of Country Music Awards held at the MGM Grand Garden Arena on April 1, 2012 in Las Vegas, Nevada. (Photo by Jason Merritt/Getty Images)
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 sports money 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.
Papa John’s Out as NFL’s Official Pizza Sponsor
The NFL and Papa John’s (PZZA) have agreed to mutually terminate a partnership that made PZZA the league’s Official Pizza Sponsor. Papa John’s CEO Steve Ritchie (replaced founder John Schnatter on Jan. 1) said the company will reallocate marketing dollars towards the league’s star players and its 22 partner teams. The announcement comes less than 6 months after former PZZA CEO John Schnatter criticized the NFL’s handling of player protests; blaming the company’s poor 3rd quarter on the failure of NFL leadership to resolve the controversy. The league expects to have a new Official Pizza Sponsor before the ’18 season kicks off.
Howie Long-Short: The announcement comes along with Papa John’s release of Q4 ’17 financials. Earnings declined 12.5% YOY (to $28.5 million) as North American same-store sales dropped 3.9% YOY; with negative consumer sentiment to blame. The company is projecting 2018 North American comparable sales to be flat to -3%. Following the less than stellar news, PZZA shares declined 7.59% in after-hours trading on Tuesday. The stock is down more than 17% (to $56.36) since Schnatter made his initial comments critical of the league.
Fan Marino: Many believe Jerry Jones, who owns stake in more than 100 Papa John’s stores, was behind Schnatter’s comments critical of Commissioner Goodell. It’s certainly no secret that like Schnatter, Jones believes players should stand for the national anthem. While Jones won’t be pleased about PZZA’s Q4 ‘17 performance, he’s likely far more annoyed with the $2 million the league wants reimbursed for legal expenses; related to his challenges of the proposed contract extension for Commissioner Goodell and the 6-game suspension issued to Ezekiel Elliot. He’s has already requested a meeting with the Commissioner to appeal the penalty.
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MLB Implements a Unified Communications System, Will Reduce Sign Stealing
Major League Baseball has announced a partnership with Mitel (MITL) to bring a unified communications system to all 30 MLB parks. The private, secure connections will be implemented within dugouts, bullpens, video review rooms and press boxes across the league, in time for Opening Day ’18. The new system will help MLB ensure its teams remain in compliance with all league rules and regulations (see Fan below). The multi-year agreement also makes MITL the league’s presenting sponsor of instant-replay reviews and the Official Business, Technology and Communications Partner of MLB.
Howie Long-Short: Mitel Networks Corp. (MITL), a Canadian telecom company, released Q4 ’17 earnings late last week. The company reported Q4 ‘17 revenue increased 37% YOY (to $355.9 million), with CEO Rich McBee crediting “ongoing customer adoption of Mitel cloud solutions (revenue +158% YOY) combined with continued solid revenue from our on-site business” for driving the strong performance. On February 12th, the company surpassed 1 million users for its service provider cloud solutions; becoming the 2nd largest (defined by market share) Unified Communications as a Service (UCaaS) company worldwide in the process.
Fan Marino: The league required a unified system with recording and monitoring functionality, because teams (see: Red Sox) were using technology to steal signs (against the rules). No longer will a team member watching video in the replay room, be able to phone in signals they’ve stolen. They’ll now be forced to jog to the dugout, convey the stolen signals to a runner on 2nd base; who will then relay them back to the hitter. While certainly not a fool proof solution, the new technology does make cheating more difficult.
Fun Fact: Every MLB team will play on Opening Day (March 29th) for the first time since 1968.
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Amazon Interested in Premier League “Super Pack”
Amazon is reportedly interested in acquiring a “super pack” of English Premier League (EPL) broadcast rights; a package that would give them 40 live matches/season, near live rights to all 380 games/season and the ability to show highlights. The rights would span 3 seasons (’18-’19 through ’21-’22) and in theory, help the e-commerce juggernaut bring new subscribers to their Prime service. The EPL, looking to offset the loss of value (-14% from last round of negotiations) from the first 5 packages that were awarded, has additional incentive to work out a deal with AMZN; the organization is considering launching its own OTT service and wants to use the next 3 seasons to gauge the potential for streaming success.
Howie Long-Short: Of the 5 rights packages awarded thus far, Sky Sports (subsidiary of Sky PLC, SKYAY) won 4 of them; for $1.655 billion/season. On Tuesday, Comcast Corp. (CMCSA) made a $31 billion offer for the European pay TV provider, driving SKYAY share prices up 21% (to $74.58). While that’s good news for SKYAY shareholders, the offer likely has DIS execs fretting. SKYAY was the “crown jewel” of DIS’ $52.4 billion offer for FOXA assets. DIS now must decide if it will proceed with the FOXA deal without SKYAY or look to outbid CMCSA for an asset it desires.
Fan Marino: The term “near live rights” refers to a networks ability to re-broadcast games shortly after their conclusion. That must be a European phenomenon. I find second screen devices (and platforms like Twitter) critical to the sports viewing experience. If the game isn’t live, you’re eliminating the use of those devices for the purposes of social interaction, game updates etc. Of course, you also must manage to avoid the score of the game while it’s being played; good luck with that!
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What is JohnWallStreet?
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.
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