The Return of an Iconic Golf Label


Dicks Sporting Goods (DKS), the largest golf retailer in the U.S., has announced the return of the iconic golf label Tommy Armour. Using innovative technology, not widely available in the country, to “promote forgiveness and distance”; DKS developed a line of game improvement woods and irons for mid-to-high handicap golfers. Designworks, a subsidiary of the BWM Group, designed the equipment; which DKS has priced lower than comparable products.

Howie Long-Short: Tiger Woods is back, but the decision to build an in-house golf brand has more to do with DKS’ “private label comp growth significantly outpacing the company average” and interest in increasing profit margins, than it does Sunday TV ratings. On the Q4 ’17 earnings call, CEO Ed Stack said that moving forward the company would be allocating more shelf space to private labels (i.e. Second Skin, Calia by Carrie), than they had received in years’ past. The decision to grow its private label business is a wise one. Its reliance on Nike (and other athletic apparel/sneaker companies that have chosen to pursue more DTC business) is among the leading reasons company share price is down 28% over the last 12 months.

Fan Marino: The Tommy Armour brand is named after the “Silver Scot”, Thomas Dickenson Armour, winner of 3 majors (’27 U.S. Open, ’30 PGA Championship, ’31 Open Championship). The label has been around since the 1970s, achieving peak success in the 80’s with their 845 irons (sold 600,000+ sets). Armour’s grandson Tommy III, a former PGA player with 2 tour wins (’90 Phoenix Open, ’03 Valero Texas Open), is currently active on the Champions Tour; he finished t-41st (-1) at the Toshiba Classic, the tour’s most recent event (March 9-11).

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H.S. Football to Implement Instant Replay


The New Jersey State Interscholastic Athletic Association has received permission from The National Federation of State High School Associations to experiment with instant replay and has announced that it will implement the use of video replay review during football games at “a handful of schools” this fall. State football officials will have access to Hudl Sideline, a mobile application that streams live game film across multiple devices, so they can review plays in question. Policies to govern the review process will be determined before the end of the month. New Jersey will become the 2nd state to use video replay during high school competition; Minnesota used it during 2017 state championship games. Georgia, Alabama and Arizona are all reportedly considering video replay implementation as well.

Howie Long-Short: Hudl, a sports video-editing company, has raised just shy of $109 million to date (over 5 funding rounds). Their $30 million series D round, which closed in July 2017, valued the company at $430 million; up from $270 million in 2015. The company is using the capital to add 300 employees. You can play the start-up through Nelnet Inc. (NNI), a publicly traded student loan servicer. Wondering where the connection lies between NNI and Hudl?  They’re both based in Lincoln, NE.

Fan Marino: The NFL’s competition committee is looking to simply the definition of a catch. The proposed rule (they’ll vote next week, it’s a lock to pass) would still require a receiver to control possession (there will be a defined time element) and establishes himself in bounds; but, would eliminate language pertaining to “going to the ground” to complete the catch. The league also intends to implement language that would prevent “slight ball movement” from altering calls and return the standard for overturning a call to “indisputable” visual evidence. NFL fans won’t be upset about the proposed changes, but you may find some upset parents in Northern New Jersey; those forced to sit through a 4-hour game, in 40-degree weather, because some high school official is determined to get a spot correct.

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Charlie Ebersol, Bill Polian, Jared Allen to Launch Football League


The Alliance of American Football, an 8-team (50 players per) single-entity professional football league, will debut on February 9, 2019. The league will have a 10-week regular season and a 4-team playoff, with the inaugural and Championship games scheduled to air on CBS. Cities and coaches will be named within the next 90 days, but there will not be a player draft; players “looking to begin or extend their football careers” will be allocated to teams based on geographic location (i.e. nearest to where they played NFL or college football). The league, formed by Charlie Ebersol, Bill Polian, Jared Allen, Justin Tuck and Troy Polamalu, doesn’t intend on competing with the NFL; but, seeks to improve its version of professional football by increasing player safety (see: removal of kickoffs), focusing on the fan viewing experience (see: 2-point attempt required after TD) and accelerating the pace of play (see: fewer commercial breaks).

Howie Long-Short: The Alliance of American Football envisions itself as a feeder program for the NFL, a far more attainable goal than competing with the NFL for talent; like XFL 2.0 plans to do. The league also plans to beat the XFL to the punch, starting their inaugural season one-year prior to McMahon’s upstart league. Of course, it’s unknown if the new league has the $100 million runway that McMahon has given the XFL; no information is being released pertaining to the amount of capital raised. The league does have several prominent investors though, including Peter Thiel’s Founder’s Fund, The Chernin Group and Charles King’s M Ventures.

Fan Marino: The league plans to encourage fan engagement by offering interactive fantasy games, with real prizes, during game action; which will be streamed for free on the league app. Sure, that’s the intention now; but, once SCOTUS legalizes sports betting, you can be sure the league will pivot in that direction.

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New Tax Legislation to Curb Corporate Spending on Sporting Events


The Tax Cuts and Jobs Act, which includes legislation prohibiting corporations from deducting 50% of entertainment expenditures from their tax bill (a longstanding tradition), has businesses taking “a hard look at their entertainment budgets.” New law designed to minimize the government’s subsidy and streamline tax code will save the government $2 billion/year and $23.5 billion through 2027. Ironically, the most profitable corporations are likely to experience the least impact, as the new 21% corporate tax rate is just 3.5% (top rate of 35% with a 50% subsidy is 17.5%) above what they’re used to paying; whereas a struggling company paying less than 35% could see a significant increase.

Howie Long-Short: It’s estimated that U.S. Corporations spend “hundreds of millions” annually on entertaining clients at sporting events, so a short-term decline in team revenues could be on the horizon. While that’s not going to please team owners, it should result in some premium seating at reduced pricing for real fans. If you’ve ever wondered why corporations spend so much on tickets, check out this study. It was determined after evaluating 5 million tickets with an average price of $366/ticket (owned by 400 companies), that there’s a ROI of 1,998%!

Fan Marino: While on the topic of government legislation, MLB is urging Congress to pass a bill that would keep minor league players (considered seasonal employees, not protected by the MLBPA) exempt from federal labor laws, after several MiLB players filed lawsuits claiming receipt of as little as $1,100/mo. in compensation. That’s right, a league that generated $10 billion in 2017 revenue is lobbying to pay future talent less than minimum wage. MLB owners are ruthless; they want their prospects to work for free and then try to limit big money deals to 3 years. The MLB player cash grab is over.

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NFL Merchandise Sales +40 YOY, Remains Biggest, Fastest Growing League

NFL 200x200

NFL TV ratings were down another 10% for the 2017 season, indicating the league may not be as popular as it once was; but, Fanatics sales figures tell another story. The company reported that NFL fans spent 40% more on team apparel (jerseys, shirts, jackets etc.) YTD, then they did in Q1 ‘17. CEO Doug Mack also put to rest any talk that the NFL is losing popularity. Despite being Fanatics’ biggest league partner in terms of merchandise sales, it’s the company’s fastest growing league partner (YOY).

Howie Long-Short: The NFL acquired 3% of Fanatics in May 2017 for $95 million, at a $3.17 billion valuation; which was more than 2x revenue at the time. Noteworthy, as retailers Dick’s Sporting Goods (DKS) and Hibbett Sports, Inc. (HIBB) currently have market caps ($3.68 billion, $444 million) worth roughly half of what they generated in 2017 sales ($7.92 billion$973 million). That’s of no concern to NFL owners though, one was quoted as saying he could see Fanatics growing “anywhere from 8-10x”.

Fan Marino: NFL draft season is upon us (draft is April 26-28). It’s a particularly heavy QB class, with 6 players (Darnold, Rosen, Allen, Mayfield, Rudolph, Jackson) having the chance to be selected on Day 1. The NYJ, looking for a QB since ’69, gave up 3 2nd round selections (to Indianapolis) for the right to move from the 6th spot to the 3rd spot. One would think that would guarantee the team a QB, but ProFootballTalk isn’t so sure; Mike Florio believes Saquon Barkley (RB, Penn State) is the guy the team is targeting. As a Jets fan, I know where this is going (WATCH).

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Gaming Experiences “Cultural Moment”


Last Wednesday night, between 1a-5a EST, Drake (rapper), JuJu Smith-Schuster (Steelers WR), Travis Scott (rapper) and Ninja (a pro gamer) set an all-time, non-tournament, record for concurrent viewers on a single individual’s Twitch channel (628,000, previous record 388,000) as they streamed themselves playing Fortnite; a popular online survival game with 45 million players. Curious viewers followed along (many chiming in with funny one-liners) as the foursome navigated last-man-standing, 100-man, “Battle Royales”. Despite the late start, the virtual collaboration garnered mainstream attention (see: Chrissy Teigen’s tweet); the significance of which was not lost on Twitch SVP of Marketing Kate Jhaveri who called it “a cultural moment in terms of building awareness around the appeal of social video.”

Howie Long-Short: Fortnite was developed by Epic Games, a privately held company that Tencent (TCEHY) maintains a 40% stake in. TCEHY reported in November that YTD profits were up 69%, with mobile and PC gaming driving the revenue growth; but, those figures don’t account for the recent success of Fortnite. We’ll need to wait for Q4 ’17 and Q1 ’18 financials to see the game’s impact. As for Ninja, he’s making at least $350,000/mo. in subscription fees streaming Fornite on Twitch. TIME pegged the figure at $560,000/mo. I’ve heard the number estimated to be as high as $1 million/mo.

Fan Marino: The City of Arlington and Esports Venues, LLC are investing $10 million into Arlington Convention Center to create a 100,000 SF esports stadium, the largest venue of its kind in North America. Their goal is to bring the “biggest tournaments in the esports industry to Arlington”, a potentially significant financial boon for the city if successful. How big is the opportunity? An old industrial city in Poland, with a population of 300,000, drew 113,000 people for the “World Cup of esports” last year.

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UMBC Gets $119 Million in Media Exposure within 24 Hours of Virginia Upset  


According to Meltwater, a media intelligence company, UMBC’s historic upset of number one seed Virginia generated an estimated $119 million in media exposure for the University (within 24 hours of the game); roughly 1/3 of the publicity value the school has received over the last 12 months. 37% of +/- 50,000 news stories mentioning the University over the last year, have been written since Friday night. Social media is abuzz too, with 87% of the school’s social media mentions within the last 12 months coming on Friday night or Saturday; as the UMBC athletic department built its twitter following 1,730% (as of 1p Sunday afternoon), from 5,000 to 91,500.

Howie Long-Short: The true value of the victory will be realized in the fall of 2019, when freshman enrollment is expected to swell. Noteworthy upsets at Georgia State (enrollment +28.5% in Fall ’16, beat #14 Baylor in March ’15) and Middle Tennessee State University (enrollment +16.9% in Fall ’17, beat #2 Michigan State in March ’16) provide guidance in terms of what can be expected; though, the distinction of becoming the first #16 seed to win an NCAA tournament game will give UMBC a “longer tail than your usual upset.” 1,772 freshman enrolled at UMBC in August 2017. If the school just manages to match MTSU’s enrollment increase, conceivable considering Butler increased enrollment 43% following it’s run to the ‘10 finals, it would add +/- 300 students. With in-state tuition over $5,700/semester, the win is worth a minimum of $3.5 million/year to the University.

Fan Marino: Jairus Lyles is UMBC’s best player. He hit a 3-point shot at the buzzer in the conference championship game to send UMBC into the dance, scored 28 points in their win over UVA and a team high 12 points in Sunday night’s close loss to KSU; but, no one has gotten more attention following Friday night’s win than Zach Seidel, the man behind the twitter account. Seidel, who lacked a strategy going into the game (he’s doesn’t usually handle the Twitter account for men’s basketball), has since been interviewed by everyone from The New York Times to CNN to Slam Magazine.

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