Sports Finance Report: A Streaming Service for the Sports Fan
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.
A Streaming Service for the Sports Fan
Sports fans that are considering cutting the cord may want to look at the channel lineup for FuboTV; a sports-centric, OTT, live TV streaming service that offers fans the “most sports for the least money”. Originally introduced as a skinny bundle for soccer fans, the service now carries a variety of sports on 37 (of 65) channels (both regional and national) including; FS1, FS2 and NBCSN. The $40/mo. niche bundle is looking to stand out in a crowded streaming TV market that includes; Hulu (TWX), YouTube TV (GOOGL), DirecTV Now (T), Playstation Vue (SNE) and Sling TV (DISH). Amazon (AMZN) and Verizon (VZ) will also be introducing streaming bundles soon.
Howie Long-Short: FuboTV has raised $75.6 million to date, with several publicly traded companies investing in the streaming provider. 21st Century Fox (FOXA), Sky (SKYAY) and Scripps Networks Interactive (SSP) all participated the $55 million Series C round that closed in June; so there are no shortage of ways to play the OTT streaming service.
Fan Marino: FuboTV has 100,000 soccer-loving subscribers, but is counting on their next 100,000 subscribers to be fans of traditional American sports. The carriage deals they’ve signed to date have given them some valuable programming (like the World Series), but you can’t convince the American sports fan to cut the cord without ESPN’s network of channels. ESPN holds the rights to the College Football Playoffs (and NBA) through 2025 and MNF through 2021. If your key differentiator as an OTT streaming service is your sports programming, you must carry those games. The success of the service, at least as it is currently marketed, depends on it.
Congress Proposes Bill That Would End the Sale of Municipal Bonds to Fund Stadiums
Congressional Republicans have drafted a bill that would put an end to the sale of municipal bonds; used to finance the development of professional sports stadiums and privately funded infrastructure projects (i.e. toll roads, airports). Should the legislation pass, the cost for teams to build new stadiums will increase, as municipal securities carry lower interest rates. The proposed bill, which also includes a provision that would eliminate tax breaks for cities and states that borrow money to build stadiums, is part of a larger tax overhaul plan that would increase government revenues by $39 billion over the next 10 years.
Howie Long-Short: There will be resistance to the bill as proposed, as President Trump’s $1 trillion public infrastructure plan, which certainly has its advocates, requires private investments. However, any changes to the legislation would be unlikely to benefit billionaire sports franchise owners. There is momentum on both sides of the political spectrum to end public subsidies for stadiums, with tax exempt financing on sports facilities costing the federal government $3.7 billion in revenue since 2000. The NFL argues that new stadium development is an economic driver in local communities, but 86% of economists say government subsidies are likely to cost the taxpayers more than any economic benefits realized from the finished facility. Here’s to hoping the we’ve seen the last of public spending on facilities for privately owned businesses.
Fan Marino: While professional sports franchise owners threaten to move their teams when they fail to receive public funding for a new stadium or arena, Amazon (AMZN) can get a “world-class sports and entertainment stadium” built, at no expense to them, just by showing up. Sterling Bay, the Chicago developer on the proposed Lincoln Yards site, has sweetened Chicago’s bid for HQ2 by offering to build the internet giant a stadium on campus. I’m not sure that’s going to seal the deal considering Jeff Bezos doesn’t own a professional sports franchise; but with an estimated net worth north of $93 billion, he could buy every NFL team and still have $13 billion in the bank.
The Company Powering the Biggest Names in Sports and the Content They Publish on Social Media
Corporate advertisers have found that content shared by athlete endorsers receive 6x the engagement that same content would receive, if shared on their own platform. However, brands struggle to get athletes to share their content as intended. Athletes want to build their personal brands and provide their fans with high quality content, but lack the bandwidth to create with so much of their focus on the field. opendorse has built the solution to both issues, a marketing platform that provides brand partners with direct access to an endorser’s personal social media channels; while giving athletes a way to access, approve and activate content from their brand partners in a single click.
Howie Long-Short: There is an ongoing shift occurring in the way sports rights holders distribute content, with an increase in broadcast related video being shared by professional athletes; as sports leagues look to increase distribution and grow their audience. That makes sense to me. Athletes have the reach and influence, while the leagues own the rights and can pre-package the content for distribution. Everyone seemingly benefits. It’s worth noting that the 2,400 athletes on the opendorse platform have a combined reach of 800 million followers, 4x ESPN’s reach when you combine all their social channels.
Fan Marino: opendorse was founded by former Nebraska Cornhusker football players Blake Lawrence and Adi Kunalic. The Lincoln (NE) based company has maintained its ties to the program, recently closing on a $3.5 million series A round with more than 1/3 of the capital coming from former Huskers; including Bears CB Prince Amukamara.
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.