(Photo by Chris McGrath/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 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.
AXS Audience Growing for WWE Competitor, Beating MMA “On Some Nights”
AXS TV is investing heavily in its partnership with New Japan Pro Wrestling (NJPW); acquiring expensive broadcast rights to Wrestle Kingdom 12. AXS will air the top 3 Title matches from the event in primetime on Saturday January 6th, with the balance playing out over the next 6 Friday nights during their regularly scheduled weekly program. Language barriers prevent NJPW stars from connecting with the audience through gimmicks, so NJPW focuses on the action; targeting wrestling purists while distinguishing itself from the WWE. Chairman Mark Cuban said that weekly viewership numbers continue to increase and that NJPW beats MMA on some nights; predicting a future with “more NJPW and less MMA” on the network.
Howie Long-Short: NJPW is privately held, but you can play the wrestling outfit through AXS as CBS took stake in the company back in 2013. You can also invest in the TV Asahi Corporation, the distributor for NJPW and the company responsible for produce the English television broadcast of Wrestle Kingdom 12. TV Asahi Holdings Corp. trades on the Tokyo Stock Exchange under the symbol 9409. If NJPW is beating MMA on some nights, the UFC is unlikely to find the $450 million/year it’s seeking. Current rights holder FOXA has already low-balled them ($200 million), seeing the WWE as a viable replacement programming (rights expire in ’19). The WWE is the safer bet. Wrestling is scripted, with fans tuning in weekly for the story lines; MMA’s top fighters are showcased in PPV events, resulting in depressed ratings for weekly programming. There are simply too many variables (injuries, steroid use/testing, time off required between fights etc.) for MMA to consistently draw ratings.
Fan Marino: WWE fans will be excited to learn that Hall of Fame announcer and color commentator Jim Ross is the voice of NJPW. Ross’ finest work came during an Undertaker/Mankind match at 1998’s Hell in a Cell. Skip to the 1:46 mark to listen to the legendary call.
Under Armour Shares Spike as Analyst Increases Price Target 42%
Under Armour (UAA) shares jumped nearly 10% on Friday (to $15.17), as Stifel Nicolaus analyst Jim Duffy upgraded his rating on the company from “hold” (assigned in October ‘16) to “buy”; while increasing the target price from $12 to $17(41.66%). Duffy anticipates a more stable athletic apparel/footwear sales environment in ’18, as demand for the company’s products has improved and price competition is showing signs of abating. Duffy also predicts that UAA’s optimized operational approach would begin to benefit the company bottom line in ’18, after years of overly aggressive expansion. Shares of the company reached a 5 ½ year low on Nov. 3rd ($11.61), following the release of a disappointing Q3 earning report; down 78% from a record high ($53.78) in September 2015. Despite Friday’s price increase, share prices remain down 47.8% YTD.
Howie Long-Short: Duffy remains an outlier among Wall Street analysts, with just 6 of 36 (FactSet) maintaining a“buy” rating (19 neutral, 11 sell) on the company and an average price target 15% below the current share price ($12.88). It’s worth noting that at least 5 high-level executives have left the company since October, but that shouldn’t be a cause for alarm. The departures come following the Q3 arrival of President & COO Patrik Frisk (formerly CEO Aldo Group); indicating a change in leadership direction, not instability within the company.
Fan Marino: UAA had the attention of Bay Area sneakerheads late last week, releasing 2 new colorways of the Curry 4; “more dubs” and “more dimes”. In an elaborate marketing campaign, the company sent fans on a digital scavenger hunt; those that found hidden drop zones were rewarded with pairs of autographed sneakers, delivered by drone. Check out this video of one of the drops, cool stuff.
Enjoying the sports finance report? Sign-up for our free daily newsletter
DIS’ Acquisition of Star Sports Draws International Attention
Disney’s (DIS) acquisition of Twenty-First Century Fox (FOXA) assets received attention within the domestic sports world for the 22 regional sports networks included in the deal, but on a global scale, it was the purchase of Star Sports that generated the most noise. Star recently acquired the rights to the Indian Premier League (IPL) through ’22, for $2.55 billion; a rapidly growing league with a television audience that grew 22% YOY. The network also owns the rights to 76% of national team matches, ICC events and a host of other fast growing sports within the country (hockey, badminton, F1); giving DIS a significant share of India’s sports television market. Star’s digital/mobile platform Hotstar, owns the valuable streaming rights to the IPL.
Howie Long-Short: The massive draw of the IPL made Sony Max (the previous rights holder) the most watched television channel in India during the tournament; so expect the annual 2 month competition to be an advertising and sponsorship boon for both Star and Hotstar, and ultimately DIS’ bottom line. The rights aren’t coming cheap though; Star Sports will pay nearly 3x the amount Sony (SNE) paid, for half the term period.
Fan Marino: F1 held the Indian Grand Prix from 2011-2014, before Bernie Ecclestone halted the race due to issues with government taxation; despite the track holding a contract that assures them rights to 2 more races. It appears as if the race could be coming back though under Liberty Media (FWONK) management. New F1 CEO Chase Carey said in September, “there are places around the world that present us with great opportunities to grow the sport over time and certainly a country like India with the success and the growth it has had in recent years, makes it an exciting opportunity down the road.”
Still reading? Make sure to sign-up for our free daily newsletter
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.