Juventus Building a Global Brand

Juventus Football Club (JVTSF) is looking to build its brand internationally, authorizing the sale of licensed team products in Japan, China and Australia. The Serie A champions are introducing several new product categories as part of the global expansion, including bespoke leisurewear, an exclusive luggage collection and car accessories. All products will be available on e-commerce platforms, like VIP.com, and within select brick and mortar retailers within each region.

Howie Long-Short: VIP.com is a subsidiary of the Chinese corporation Vipshop, which trades on the NYSE under the symbol VIPS. VIPS shares are up 42% since news broke Sunday evening that Tencent Holdings (OTC: TCEHY) and JD.com (JD) are investing $863 million in to the company. TCEHY is putting up $604 million for a 7% stake, while JD spends $259 million for a 5.5% stake. The companies paid a 55% premium for the shares, in what is being perceived as an aggressive attempt to defend against BABA.

Fan Marino: President Andrea Angelli had the one-year ban for his role in a mafia related ticketing scandal lifted, but Italian Football Federation doubled the club’s fine (to $710,000) and will force the team to play its January 22nd match vs. Genoa, with one of the stadium’s main sections closed. Losing the advantage of a rowdy home atmosphere could alter the league’s final standings. The club currently sits one point behind 1st Place Napoli and one point ahead of 3rd Place Inter Milan.

Juventus introduces licensed products in Asia and Australia as part of global expansion

For the balance of today’s newsletter, sign-up here!

Nets Owner Sells 49% of Franchise at $2.3 Billion Valuation

Brooklyn Nets owner Mikhail Prokhorov has agreed to sell 49% of the NBA franchise to Alibaba (BABA) co-founder, Joseph Tsai; with Tsai receiving the option to purchase controlling interest in the franchise in 2021. Prokhorov will remain the operating owner for the next 4 years, while Tsai will not maintain any role on the business or basketball side of the franchise during that time. The deal does not include the Barclays Center, which has an estimated value of $1 billion.

Howie Long-Short: Tsai acquired the Nets at a $2.3 billion valuation, eclipsing the NBA record $2.2 billion that Tilman Fertitta paid for the Houston Rockets. The Nets lost $23.5 million last season (2nd most in NBA, beyond only Detroit), while generating a league lows from its local TV contact. There is simply no way the Nets are worth $2.3 billion. The last NFL team sold was Buffalo, for $1.4 billion in 2014. The NFL generated around $11 billion in revenue during the 2014 season. The NBA generated roughly $8 billion last year. How could NBA teams be worth over a billion dollars more, when the league generates less revenue and pays out a higher percentage to their players?

Fan Marino: Sports fans want 3 things from the owner of their favorite team; a passion to win, a willingness to spend and to stay out of player personnel decisions. Based on that criteria, Prokhorov has been a tremendous owner for the Nets. As a Nets fan though, I’ll never forgive him for hiring Billy King, signing off on one of the worst deals in professional sports history and moving the franchise from New Jersey.

Joseph Tsai agrees to purchase 49 percent minority stake in Nets, sources say

Editor Note: The summary for this story was written by our friends at The Water Coolest. Check out TheWaterCoolest.com for the latest market news and professional advice.

For the balance of today’s newsletter, sign-up here!

LULULEMON CEO SAYS BRICK AND MORTAR RETAIL IS HERE TO STAY

Lululemon (LULU) CEO Laurent Potdevin remains bullish on the future of brick and mortar retail, saying “people don’t want to be stuck on their phone” and those that seek “mindful lifestyles continue to crave human connections”. The company employs 10,000 “educators” to develop those connections within in their 421 stores and an additional 2,500 “brand ambassadors” worldwide to foster human engagement. Potdevin points out that Lululemon should not be grouped with other struggling athleisure apparel companies, as the brand does not sell footwear and controls its fleet of stores (competitors tend to be wholesale companies).

Howie Long-Short: Yoga’s popularity in China is growing and Lululemon is cashing in with sales in the country up 350% YOY. LULU, who has an exclusive partnership with Tmall (BABA), China’s largest B2C e-commerce platform, saw a 100%+ increase in traffic and higher conversion rates lead to a 175% YOY increase in sales on the platform. Rapid growth within the Asian market puts the company’s $4 billion revenue target for 2020 in sight.

Fan Marino: Speaking of footwear, NBA MVP Russell Westbrook is the new face of Jordan Brand (NKE). Westbrook signed a 10-year deal that will make him the highest paid endorser in the history of the company. Westbrook will also get his own signature shoe line. While financial terms of the deal were not released, Westbrook shouldn’t be short on cash. He recently signed the richest deal in NBA history, a 5 year $205 million extension with Oklahoma City.

Lululemon CEO: Retail isn’t dead because people ‘crave human connections’

ALIBABA ACQUIRES MOBILE GAMING COMPANY, LAUNCHES DIVISION TO DEVELOP OWN TITLES

Alibaba (BABA) Digital Media and Entertainment Group has announced the acquisition of mobile gaming company Ejoy and its plans to launch a new games division; just 6 months after laying out plans for a $145 million venture into mobile gaming distribution. The new division will develop its own titles and leverage the resources of BABA sister platforms, like online videos and movies, to push its way in to the world’s largest gaming market. The Chinese online gaming industry was last estimated to be worth $11.8 billion and is expected to grow to $27.5 billion by the end 2017.

Howie Long-Short: While late to the game, Alibaba is not new to the gaming sector. In 2014, the company made a $120 million investment into mobile gaming co. Kabam, the developer behind Marvel: Contest of Champions and Kingdoms of Camelot. The expected growth within the industry certainly provides BABA the opportunity to carve out market share, but they have some ground to make up; competitors Tencent (OTC: TCEHY) and NetEase (NTES) currently bring in 70% (41.2% and 28.5% respectively) of all Chinese online gaming revenues collected. It is worth noting that online gaming revenues accounted for 47% of TCEHY’s 2016 total revenue.

Fan Marino: Retired gamers and nostalgia junkies spent last weekend on their couches, as Nintendo re-released its classic Super NES system on Friday September 29th. The console, originally released in November 1990, includes 21 games including classics; “Super Mario World” and “Yoshi’s Island”. The biggest complaint I’m hearing about the re-released version? The controller wires are still too short! The more things change, the more things stay the same.

Alibaba Is Making Bold Moves in Online Gaming With Newest Acquisition

 

ALIBABA EXECUTIVE PURCHASES SAN DIEGO NLL TEAM; JOINS KROENKE, PEGULA AS TEAM OWNERS

Alibaba (BABA) Executive Vice Chairman, Joe Tsai, has purchased the San Diego based expansion franchise of the National Lacrosse League, set to begin play for the 2018-2019 season, for $5 million. With the expansion, NLL now has teams in 10 cities with the intention of adding a couple of new franchises annually. League attendance surpassed 10,000/game last season (up 12%) and the NLL now has 25,000 subscribers to their digital TV network, launched just 9 months ago. Tsai, a former Yale lacrosse player worth an estimated $11.4 billion, has also expressed interest in purchasing a piece of the Brooklyn Nets.

Howie Long-Short: When guys like Stan Kroenke and Terry Pegula are investing in teams, the league has a future. It is also a lot more affordable than buying an MLS expansion franchise these days ($150 million).

Fan Marino: Did you know that NLL games are played indoors? Unlike collegiate lacrosse that is played on an outdoor field, NLL is played indoors in a rink or “box”. The games are 6 on 6, each teaming having a goalie and 5 “runners”.

Lacrosse League Expands to San Diego With Alibaba Billionaire

JAPANESE GIANT SOFTBANK GROUP INVESTS $1 BILLION INTO FANATICS AT $4.5 BILLION VALUATION

Japanese telecom giant Softbank Group Corp (TYO: 9984) has made a $1 billion investment into Fanatics Inc, a leading sports merchandise licensor that handles e-commerce sales for a variety of teams & leagues, including the NFL and MLB. The deal places a $4.5 billion private market valuation on the company. Fanatics sells everything from t-shirts to lawn chairs and has built a burgeoning memorabilia business with the likes of Steph Curry, Ronda Rousey, and Peyton Manning, signed to exclusive contracts. Softbank is looking to compete with the likes of Nike, Adidas, and Under Armour within the licensed sports apparel space.

FanaticsBanner.png

SoftBank to invest $1 billion in sports retailer Fanatics amid aggressive spending spree

Howie Long-Short: Want to invest in Fanatics, but not interested in Softbank? Alibaba (BABA) contributed to a $170 million round in June 2013, at a $3 billion valuation.

Fan Marino: Fanatics is the ONLY place I shop for licensed sports apparel. Just make sure you don’t pay full retail; they are always running 20-30% off sales!