BodyArmor Taking Direct Aim at Gatorade

BodyArmor

BodyArmor has rolled out its largest ad campaign to date (includes 1st TV ad), a comedic series portraying market leader Gatorade as out of touch with the needs of the modern athlete; to run during the NBA Playoffs. Conceived, written and co-directed by shareholder (and Emmy/Oscar winner) Kobe Bryant, the multi-media campaign places athletes in outdated situations; akin to high performance athletes continuing to drink Gatorade during competition (think: Porzingas using carrier pigeons to communicate with family in Latvia, video here). The campaign positions BodyArmor as the sports drink for today’s health conscious athlete, touting differences like “natural flavors and sweeteners, potassium-packed electrolytes and coconut water”; while noting the lack of innovation from Gatorade since its inception in 1965.

Howie Long-Short: BodyArmor remains privately held, but you can play the company via Dr. Pepper Snapple Group (DPS); as the company participated in a $20 million funding round in August ’15. DPS is the company’s 2nd largest shareholder, controlling 15.5% after a $6 million investment in 2017. The company will report Q1 earnings on Wednesday 4.25.18.

BodyArmor is growing rapidly, having generated $122.9 million “in the 52 weeks ending March 19” (+140% YoY). Gatorade (75%) and Powerade (20%) still control the bulk of the “sports drink” market share, with BodyArmor a distant 3rd (2%); but CEO Mike Repole projects the company will own 10% of the market by 2019, a distinct possibility after having recently added 7-Eleven, Walmart and Sam’s Club as distribution partners. For those wondering, Gatorade is owned by PepsiCo. (PEP); Powerade is a subsidiary of the Coca-Cola (KO) Co.

Fan Marino: All BodyArmor spokes-athletes have equity in the company. In addition to Bryant (the company’s #3 investor), the list of athlete-shareholders includes; Trout, Porzingas, Harden, Diggins-Smith, Andrew Luck, Rob Gronkowski, Buster Posey, LeSean McCoy, Richard Sherman, Sydney Leroux, Anthony Rizzo, Dez Bryant and Dustin Johnson.

Spurs Coach Greg Popovich didn’t make the list, but perhaps BodyArmor execs should reach out to him; as he too has recently taken aim at Gatorade. Popovich made it known that he’s not a fan of the “sugary” drink and that he remains unhappy the league’s placement of Gatorade on the post-game press conference podium. The outspoken coach said he “shouldn’t be forced to sell” their products.

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Daytona Champ Finishes 10th at Fontana, Names 2 Stocks He Likes/Owns

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On Sunday, 2018 Daytona 500 winner Austin Dillon participated in the Monster Energy NASCAR Cup Series Race at Auto Club Speedway in Fontana, CA. Martin Treux Jr. won the pole and swept the stages, becoming the 1st NASCAR driver in history to accomplish that feat. Dillon finished 10th, for his 2nd Top 10 of the season. Prior to leaving Los Angeles for Fontana, JohnWallStreet had a chance to connect with Dillon to discuss a few names within his personal stock portfolio, to find out why a 100-year-old company would look to sponsor a car and to ask why he’s still racing in the Camping World Truck Series.

JWS: When we last spoke to you in September, you mentioned that Nintendo (NTDOY) and Cabela’s (CAB) were among the names in your personal portfolio. NTDOY is +25% since Sept. 30th and CAB was acquired by Bass Pro Shops at a 19% premium to its closing price on September 30th. Can you tip us off to a few other names that you like within your portfolio?

Austin: Dow (DWDP) is probably my favorite company. They’re huge behind STEM and have so many engineers around the world building great products. I also have stock in Coca Cola (KO), it’s a good company and I’ve always been a huge Coke fan.  

JWS: In addition to DWDP, Bass Pro Shops and American Ethenol (Growth Energy), AAA is a sponsor on your car. That company was founded in 1902. What are they looking to get out of a NASCAR partnership?

Austin: The youth movement is big to them. It’s a very old brand, but they want to let the younger demographic know about how many people they help service across the U.S. NASCAR is doing a good job of showing the youth movement (amongst drivers) and catering to our younger fans.

JWS: You recently participated in a Camping World Truck Series race. You’re a Daytona 500 Champion. Why are you still racing on that level? 

Austin: We had a new partner come in, an app (GoShare) that wanted to run in truck series. They came up with the idea to do it in the truck series because they’re kind of like an Uber for truckers. So, if you want your house moved, you can call them instead of calling a moving service and anyone with the right equipment can come and help move your stuff.

Howie Long-Short: Auto Club Speedway is owned and operated by International Speedway Corp (ISCA), a publicly traded corporation that also owns 12 other tracks including; Daytona International Speedway and Talladega Superspeedway. Other assets include Motor Racing Network (nation’s largest independent sports radio network), Americrown Service Corp. (concessions company) and Daytona One (retail, dining and entertainment development). On January 25th, the company reported full-year 2017 revenue ($671.4 million) grew to levels it hadn’t seen since ’10, sending share prices up 10.6% (to $45.30). Shares hit a high of $47.15 on February 1st, before settling back down to $44.25 at Friday’s close.

Fan Marino: You’ve been on a whirlwind media tour since winning at Daytona and mentioned that your favorite experience was doing Shaquille O’Neal’s podcast. As a 4x NBA Champion, did Shaq have advice for you?

Austin: He said, “take your mother out to dinner with your wife and take the trophy with you, after dinner leave the trophy with your mom and go and get like 5 or 6 more.”

Editor Note: Austin has not yet given the trophy to his mom, he’s holding on to it a bit longer; though he has plans to in the future.

Editor Note 2.0: Austin has a YouTube show, BarnLife. You can check out previous episodes, here.

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March Madness Continues to Generate Record Television Ad Spend, Growth Rate Slowing

March Madness

The NCAA men’s basketball tournament remains “the second largest post-season sports franchise, trailing only the NFL playoffs”, in terms of television advertising expenditure; but, the ad spend growth rate for the Big Dance trails that of the NBA, MLB and NFL post seasons, over the last 5 years. Though 97 advertisers (a record) spent $1.28 billion (also a record) on television advertisements during March Madness ‘17, that total has grown just 3.3% annually since topping $1 billion for the first time in 2012. For comparison purposes, the NFL is growing +9.7% annually with advertisers having spent $1.55 billion during the most recent postseason. The NBA (3rd largest post season franchise) has experienced 11.7% YOY growth over the same period, with brands increasing their total postseason ad expenditure to $934 million in 2017.

Howie Long-Short: The prohibitive cost of advertising during the NCAA tournament, relative to global audience size (or lack thereof), is likely the biggest reason March Madness’ ad spend growth rate trails the NFL, NBA and MLB postseasons. NCAA bylaws preventing companies from using the names (or likeness) of the college athletes in their advertisements, also places them at a competitive disadvantage relative to the pro sports leagues. It should be noted that the NCAA’s ad spend growth rate is “in line with rights fees increases.” For informational purposes, General Motors (GM, $83 million), AT&T (T, $66 million) and Coca-Cola (KO, $56 million) spent the most among advertisers during the 2017 NCAA men’s basketball tournament.

Fan Marino: Loyola University-Chicago won its first NCAA tournament game since 1985, upsetting the University of Miami on a 3 pointer at the buzzer; a highlight that will live in March lore forever. Among those in attendance were 98-year-old team chaplain Sister Jean Dolores-Schmidt. Dolores-Schmidt is no front-runner. Prior to November (she broke her hip keeping her out of action), she had only missed 2 games since ’94. She has a plaque in the school’s hall of fame, had her own bobble head night at the arena and still issues scouting reports on upcoming opponents. Her 11th seeded Ramblers are scheduled to play 3rd seeded Tennessee on Saturday. No doubt, she’ll have some thoughts on how to stop Grant Williams; UT’s unanimous all-SEC first team selection.

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POWERADE To Debut New Brand Platform During March Madness

Powerade

POWERADE, the Official Sports Drink of the NCAA, will launch a new brand platform centered around POWER to coincide with the start of March Madness. Entitled “That’s Some Kind of Power”, the Wieden + Kennedy campaign provides a fictional account of what could have happened had POWERADE been around “back in the day.” JohnWallStreet spoke with Jason McAlpin (Sr. Brand Manager) and Alex Ames (Sr. Manager Integrated Marketing) about how the company distinguishes itself from a crowded sports drink category, the use of hyperbole and humor in brand messaging and what the company has planned for March Madness.

JWS: Why has the company chosen to distinguish itself from the competition, within a crowded sports drink category, by focusing on POWER?

Jason: POWERADE’s mission is to be the fuel for athletes and help them power through, so they can become the best athlete possible. That’s how we define success. POWER is in our name. It’s something that we can credibly own and uniquely claim, it’s something we have 30 years of equity in. It’s what we provide to athletes and most importantly, it’s something that the athletes create themselves. So, the campaign is the articulation of that platform.

JWS: The campaign relies on hyperbole and humor to get its message across. How did the creative side of the campaign come about?

Alex: We looked at POWER in sports and it’s not quiet, it’s hyperbolic. Mohammad Ali, one of the most hyperbolic athletes in history, put more power behind iconic moments with humor. At the end of the day, sports are entertainment; sports are fun. We really wanted to circle around these 2 words; humor and hyperbole, to unlock a unique tone within the category.  

JWS: What does the campaign entail beyond commercials?

Alex: Within March Madness, we’ll be sponsoring the POWER “move of the day” and POWER “in the paint”; focusing on those powerful moments. We’ll also be on the ground as a part of fanfest, as we have been for years.  

Howie Long-Short: Sports drinks are a growth category, having hit $25 billion in 2016; after rising at an APR of 7% over the prior 5-year period. Originally designed for athletes, sports drinks have since reached a mainstream audience seeking a seemingly healthier alternative to soda. POWERADE, owned by the Coca-Cola Company (KO), and Gatorade control roughly 94% of the market; with POWERADE generating roughly $1 billion in annual sales. For reference purposes, Gatorade generates roughly $5 billion/year in sales.

Fan Marino: During March Madness, POWERADE will run a 30-second national television spot entitled “Ankles”; along with 5 unique 15-second videos. You can check out the NEVER SEEN BEFORE spot, here.

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Rule 40 Prevents Olympic Athletes from Cashing in During Games

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IOC bylaws designed to provide exclusivity to official IOC sponsors (paying a reported $100 million over 4 years, or more), effectively prevent Olympic athletes from monetizing their own likeness; both during the Games and the days leading up to and following competition (Feb 1-Feb 28). Violations of Rule 40, the specific regulation that forbids the unauthorized public use of athlete names, images or reference to their Olympic performance in commercial advertisements, are subject to litigation. For reference purposes, GE, Coca-Cola (KO), Procter and Gamble (PG) and Visa (V) are among the official worldwide sponsors of the Pyeongchang Winter Oympics.

Howie Long-Short: Despite the staggering dollars the IOC earns from its official sponsors, the organization managed to lose money in 2017; $99 million after adjustments. Though, the figure lacks significance in a non-Games year. The organization saw an increase in sponsorship income ($493.2 million) relative to 2016 ($410 million) and a drastic rise when compared with the same stage, in the last Olympic cycle ($141.5 million).

Fan Marino: Savvy Tinder users are altering their location to Pyeongchang, to find love…in the notoriously sexually-charged, Olympic Village. Tinder Passport, a feature that allows paying users to change their location (so they can connect with people anywhere), has seen a 1,850% increase in “passporting” to the Olympic Villages. While overall usage (+348%), right swipes (+565%) and matches (+644%) are all up too, parents of Olympians should rest assured; organizers have arranged for an Olympic record 37 condoms per athlete, at the Pyeongchang Games.

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Coca-Cola Extends Long-Standing Partnerships with NASCAR, International Speedway Corporation

Coke

Coca-Cola (KO) has extended partnerships with NASCAR and International Speedway Corporation (ISCA) through 2023, extending a 50-year association that has made the brand one of the “most recognized sponsors” in the sport. The integrated agreement means that KO will remain the “Official Soft Drink of NASCAR” and be the leading (non-alcoholic) pour of 21 NASCAR sanctioned race tracks (ISCA owns 12) for the 2018 season. In addition to pouring rights, KO’s immersive NASCAR marketing approach includes race entitlements (Coca-Cola 600, Coca-Cola 400) and the Coca-Cola Racing Family; a group of top drivers that make appearances and are featured in advertising, promotions and packaging.

Howie Long-Short: Back in early October, ISCA reported revenue for the quarter ending August 31st rose 2.2% (to $131.9 million), despite race attendance continuing to decline; with the hosting of non-traditional events, food, beverage & merchandise sales offsetting sagging ticket sales. The company has set 2017 revenue guidance at $660-$670 million; for comparison purposes, ISCA generated $661 million in 2016. The race track owner/manager will report 2017 full year earnings on January 25th.

Fan Marino: The Coca-Cola Racing Family includes 3 of the Top 11 in the Monster Energy NASCAR Cup Series standings; Denny Hamlin (6), Kyle Larson (8) and Austin Dillon (11). Prior to last season’s playoffs, I had a chance to sit down with Austin Dillon (a market buff) and talk to him about the personal stock portfolio he manages (i.e. not his retirement account). I asked him, if there was a trade you could take back; what would it be?

Dillon: I messed up on Tesla (TSLA), badly. I had it at $44. One of my engineers was like ‘it’s not going anywhere’ and I sold it (currently at $344). I had around 200 shares.

Fun Fact: Dillon played for the South-East team in the 2002 Little League World Series.

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MLB Sets Record for Sponsorship Revenue Generated in a Season

MLB has set a league record for sponsorship revenue generated in a season, taking in $892 million in 2017; a 7.9% increase YOY and up 26% from just 5 years ago ($663 million). Newly signed deals with Coke (KO), Nathan’s Famous (NATH), Old Dominion Freight Line (ODFL) and 5-Hour Energy along with the addition of presenting sponsorships for the playoffs and World Series, are credited driving the growth. New Era, StubHub (EBAY), Budweiser (BUD), Majestic Athletic and State Farm were the league’s 5 most active sponsors. The data was compiled by ESP Properties, a sports & entertainment research and consulting firm owned by WPP (WPPGY).

Howie Long-Short: MLB finished a distant 2nd among the 4 major U.S. professional sports leagues in sponsorship revenues generated. The NFL brought in $1.2 billion during the ’16 season, the NBA did $880 million and the NHL generated a league record $505 million in ’16-’17 (5.9% increase YOY). With the addition of the Adidas (ADDYY) contract, the NHL is expected to set another record this season.

Fan Marino: While on the topic of baseball, Astros OF George Springer hit a HR in the 7th inning of Game 5 of the World Series, that appeared to explode upon landing. You can check out the video here. While logic points to perfect placement and immaculate timing by the Astros pyrotechnic staff, conspiracy theorists will claim the balls are juiced…with TNT. I suppose it’s possible. The teams have combined for a World Series record 22 home runs through 5 games.

Behind Coke, YouTube, Camping World, MLB Sponsor Spend Hits $892M In 2017

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SPORTS ETFS LAUNCHES INDEX FUND FOR SPORTS FANS; CONSISTS OF OFFICIAL LEAGUE SPONSORS

Looking to invest in sports, but not confident in your ability to select individual equities? SportsETFs has launched a Pro Sports Sponsors Index, consisting of 66 companies that are official sponsors of the 4 major sports leagues. Trading under the symbol (BATS: FANZ), the equally weighted index is a collection of highly recognizable brands including Coca Cola (KO), Pepsi (PEP) and McDonald’s (MCD). With sports media rights set to increase at a compound annual rate of 5.5% through 2020 and with sports sponsorships expected to increase at a compound annual rate of 3.9% over that same time period, the ETF hopes to capitalize on the growth potential associated with pro sports league partners.

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There’s a new way to bet on the companies that bet on sports

Fan Marino says: I found it noteworthy that NASCAR sponsors were not included. I was looking forward to seeing Carl Long’s marijuana-vaping company, on the list.