Under the Bernie Ecclestone regime, TV rights and race hosting fees were F1’s primary sources of revenue; but FWONA, under Liberty Media, has focused on expanding its appeal to maximize revenue-generating sponsorship opportunities. Efforts to draw in the female fan (men are currently 50% more likely to watch F1 than women) and the launch of an esports program, are designed to build on already attractive fan demographics. 83% of F1 fans shop online each month, 50% buy products from brands they see marketed during the race, the average F1 fans spends 2 hours/day on the internet and 43% of all internet users are F1 fans. FWONA recognizes it’s going to take time for brands to overcome “their perception of what F1 is”, but, for those who consider the opportunity; they’ll find the company has combined a fan centric approach with a “yes, why not?” attitude. The result has been a series of unique experiential activities at the track (i.e. Heineken pool party at the Monza Grand Prix) and an “authentic integration” of sponsors into the sport.
Howie Long-Short: Liberty Media Corporation, controlled by Chairman John Malone, is comprised of assets including the F1 racing circuit (FWONA, FWONK), satellite radio provider SiriusXM (LSXMA, LSXMB, LSXMK) and the Atlanta Braves (BATRA, BATRK). The company reported Q3 earnings increased 37% YOY (to $168 million). Liberty Sirius XM (+$183 million) and Liberty Braves (+$22 million) drove the growth, while the Formula One Group lost $37 million.
Fan Marino: FWONA has announced plans to revamp how merchandise is sold at the racetrack; creating a “superstore tent”, operated by Fanatics, as opposed to individual team tents. F1 Commercial Chief Sean Bratches has said “all race supporters support the plan”, but that isn’t the case with all teams; Ferrari, which has sold more merchandise than any other F1 team in history, believes it will “lose revenue with the new structure”. They believe impatient fans won’t want the trouble of seeking out the product they wish to purchase. They may be right, NASCAR attempted a similar model in ’15; it was rejected by fans (i.e. sales were down) and the racing series returned to the old scheme for the ’17 season. Red Bull and Mercedes are on board with Bratches plan.
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Major League Baseball increased gross revenue for the 15th straight season in 2017, topping $10 billion for the first time (up from +/- $9.5 billion in ‘15). The growth can be attributed to an increase in sponsorship revenues (+12%), sale of league’s majority stake in BAMTech (to DIS for $2.58 billion) and growing revenues from TV and digital media. Despite the positive financial report, the league reported that total attendance declined for the fifth time in six seasons, dropping below 73 million for the first time since 2002.
Howie Long-Short: The Atlanta Braves are one of two teams (Toronto Blue Jays is the other) that are publicly traded. The Braves Group (BATRA) includes the team, five MiLB teams, SunTrust stadium and other real estate assets (including MiLB ballparks and mixed-use real estate adjacent to SunTrust park). The wholly-owned subsidiary Liberty Media reported Q3 ’17 revenue grew 70% YOY (to $185 million), with ticket sales, concessions, corporate sales, suites and premium seat fees all increasing in the first year at the new ballpark. Owners want new buildings, because new buildings drive bottom line revenue.
Fan Marino: You can invest in the Miami Marlins; if you have $150 million (and can stomach some short-term losses). The team sent out a “teaser” soliciting high net-worth individuals, highlighting the investment opportunity and group’s plans to turn a profit. The deck references stadium naming rights, the organization’s plans to fill open dates on the stadium calendar (with concerts etc.) and an upcoming lucrative new RSN contract (currently the least valuable in baseball, expires after 2020 season) as viable new revenue streams. Bruce Sherman’s group bought the team back in September for $1.2 billion; considered a premium based on the team’s existing financial situation (expected to lose $60 million this season).
MLB Sets Record For Revenues In 2017, Increasing More Than $500 Million Since 2015
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Atlanta’s new Suntrust Park has provided a fresh scene for Braves fans, but also a huge increase in revenue for the franchise. Liberty Media (BATRA), reported a $45 million (or 34%) increase over the same period last year, attributing the growth to improved performance on the field and updated amenities at the new stadium. Operating profit before depreciation and amortization was $27 million for Q2, up from $12 million from last year, however after depreciation and amortization the team showed a $3 million loss. Liberty cited an increase in property and equipment, to support the development of mixed-use real estate around the ballpark, as the cause for the rise in depreciation and amortization expenses.
Braves’ revenue jumps 34% in new stadium, Liberty Media says
Howie Long-Short: Professional sports team owners demand a new stadium every 25-30 years for exactly this reason. New buildings offer new amenities. New amenities bring new revenue.
Fan Marino: Turner Field (the old stadium) opened with the ’96 Olympics. It’s absolutely remarkable the franchise was able to squeeze the city for a new ballpark after 20 years.