Wenn Digital, Oak View Group Introduce Sports Photography Digital Rights Management Platform

KodakOne

Wenn Digital and Oak View Group have partnered to bring the Image (and video) Rights Management Platform KODAKOne and its associated cryptocurrency KODAKCOIN to six U.S. sporting venues. Built on blockchain technology, the to-be launched KODAKOne platform will enable fans (+ professional photographers, teams and venues) attending games at those venues to “upload, register and share their work, as well as be compensated for it.” KODAKCoin can be used as a payment for licensing or sale and together Wenn Digital and the six Oak View Group venues will work to build a platform that facilitates in-venue cryptocurrency transactions.

Howie Long-Short: Protecting live event photography rights is a real problem. Photographers have long struggled to prove ownership of their work, have experienced copyright violations and have had difficulties collecting royalties, so KODAKOne looks to be a practical application of blockchain technology within the sports world.

Wenn Digital, which operates the KODAKOne platform and KODAKCoin cryptocurrency, licensed the KODAK brand name for the digital rights management platform and associated token. It’s been reported that KODAK will receive up to $5 million (including $750,000 in cash and $1.5 million in Wenn Digital common stock) for use of their name. On May 21st, having already closed on $10 million in pre-sale investment capital, Wenn Digital launched a Simple Agreement for Future Tokens (due to securities laws) to raise the balance of a $50 million round. As for KODAK (KODK), when the company announced it was pivoting to blockchain back in January, shares rose 272% (peaking at $11.55); though the initial excitement has since been replaced with doubt, shares are up +68% YTD ($5.20).

Back in March, private equity firm Silver Lake Partners invested $100 million in Oak View Group, the entertainment and sports facilities company founded by Irving Azoff/Tim Leiweke. Currently 27 stadiums and arenas use Oak View Group for booking, sponsorship or security services; though Leiweke envisions adding 6-8 more before the end of 2018 (so, there’s plenty of room for KODAKOne to grow with the company). The company acknowledges it’s “going through a massive growth spurt”, but insists it’s with good reason; the NFL, NBA and NHL are “at their healthiest levels ever” and concerts have become increasingly profitable. You can play KODAKOne through Madison Square Garden Company (MSG). Azoff MSG entertainment, a joint venture between Irving Azoff’s management firm and MSGhas invested in Oak View Group.

Fan Marino: For those wondering, AT&T Center (Spurs), Bankers Life Fieldhouse (Pacers), Golden 1 Center (Kings), Talking Stick Resort Arena (Suns), Xcel Energy Center (Wild) and Prudential Center (Devils) are the six venues that KODAKOne plans to launch with.

In other in-stadium news, the NBA has partnered with 15 Seconds of Fame (15SOF) to bring fans in all 29 NBA cities video of their videoboard/live TV appearances while at games. Using facial recognition software, the application identifies the fan and sends them video of the moment. 15SOF is a great idea, but the execution has been terrible. Fans don’t care about the content of the video (waving, dancing etc.), they want video showing their appearance on the jumbotron. In other words, 15SOF should be sending fans wide angle video that reflects the stadium’s atmosphere at that moment, as opposed to the video they’re currently pulling out of context. Kobe Bryant has invested in 15SOF, but there are no ways for our readers to.

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A.S. Roma Sign’s Massive Shirt Sponsorship Deal, Share Price Drops with Semi-Final Leg 1 Loss

Roma

A.S. Roma has announced the largest sponsorship deal in club history, a 3-year pact (begins in ’18-’19) that will make Qatar Airways the club’s official shirt sponsor through the ’20-’21 season. The deal, worth $48.7 million/season (or +/- 2.5x the NBA’s most valuable patch partnership), is among the largest ever signed by an Italian futbol club. The logo of Qatar’s state-owned airline will “adorn the front of the first team’s shirts” and the company will serve as the top flight Italian soccer side’s “Main Global Partner.” Qatar Airways becomes just the 7th kit sponsor in the club’s 90-year history; the first team has played without a shirt sponsor since the ’14 season.

Howie Long-Short: Limited shares of A.S. Roma trade on the Borsa Italiana under the symbol ASR (OTC: ASRAF). Interestingly, the share price over the last 30 days has mirrored the first team’s success (or lack thereof) on the pitch. When the club stunned Barcelona (overcoming a 4-1 loss in Leg 1) on April 10th to advance to the Uefa Champions League semi-finals, the share price jumped 22% to $.73; by Tuesday morning it had risen to $.82. The team dropped the first leg of the semi-finals (to Liverpool, 5-2) on Tuesday afternoon and the share price began to dip in after-hours trading; by Wednesday’s close, shares were down -14.7% (to $.70) from Tuesday’s high.

While stock performance has little correlation with wins and losses in North America (see: MSG +48% since Oct. ’15, Knicks winning percentage over same span is .374, RCI hit a 5-year low during the Blue Jay’s first trip to the playoffs since ’93 in ‘15), it requires a closer look in Europe. Like Roma, MANU is having a strong season on the pitch ranked 2nd in the EPL standings; since the club’s August 12th EPL season opener, shares are up 14% (to $19.10). JohnWallStreet will take a deeper dive the correlation between on-field performance and the share price of publicly traded European clubs, in the coming weeks.

Fan Marino: ASR is playing in the Uefa Champions League semi-finals for the first time in 34 years, but the club is going to need a dominant performance (at least a 3-goal victory) on May 2nd (2nd leg), to qualify for the final. Of course, had the team not scored 2 late goals (they trailed 5-0 in Leg 1); all hope would have dissipated. For those wondering, Real Madrid and Bayern Munich are competing in the other semi-final; Real Madrid won the 1st leg 2-1 on Wednesday afternoon.

U.S. soccer fans will have a chance to catch A.S. Roma (+ Liverpool, Real Madrid and Bayern Munich) live in action this summer. Beginning on July 20th, 18 of the world’s top club teams will compete in the 6th International Champions Cup presented by Heineken. The event’s 27 matches are spread across 3 continents (North America, Europe and Asia), with 17 on U.S. soil; Roma will play in East Rutherford (NJ), San Diego and Dallas. You can find full schedule and ticket info, here.

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Oak View Group Raises $100 Million to Pursue “Huge Bets”

Oak View Group

Private equity firm Silver Lake Partners has invested $100 million for an undisclosed minority stake in Oak View Group (OVG), the entertainment and sports facilities company founded by Irving Azoff/Tim Leiweke. Oak View Group, which develops venues and provides consulting services, raised the capital to pursue “huge bets” outside of sports (i.e. music venue in Austin) and to expand internationally (see: Europe, Asia). Currently 27 stadiums and arenas use OVG for booking, sponsorship or security services; though Leiweke envisions adding 6-8 more before the end of 2018. The company acknowledges it’s “going through a massive growth spurt”, but insists it’s with good reason; the NFL, NBA and NHL are “at their healthiest levels ever” and concerts have become increasingly profitable.

Howie Long-Short: Rumors indicate that Silver Lake Partners and Jim Dolan, the Chairman of MSG, are working on a plan that would enable Dolan to eventually buy Madison Square Garden (and perhaps the Knicks and/or Rangers). As the story goes, Silver Lake Partners learned of the investment opportunity in OVG from Jim Dolan, “indicating Silver Lake has been speaking to Dolan.” While I’m not sure how Josh Kosman at the NY Post made the leap between the parties “speaking” and Silver Lake helping Dolan take MSG private, the connection between the two is apparent. Silver Lake Partners has taken an activist position in MSG (6.3%), while Dolan/MSG backs OVG.

Fan Marino: Oak View Group won the rights to redevelop Seattle’s Key Arena (they’re fully financing the deal, no public funding), to house the city’s new NHL franchise (while not yet announced, relocation or expansion is inevitable). Seattle may not be known as a hockey town, but within a 36-hour period in early May, 33,000 people issued deposits ($500 or $1,000) for the rights to purchase season tickets to an unnamed franchise that does not yet exist. As for the team name, OVG filed trademarks on these 13 ideas; Cougars, Eagles, Emeralds, Evergreens, Firebirds, Kraken, Rainiers, Renegades, Sea Lions, Seals, Sockeyes, Totems and Whales. If the goal is to sell merchandise, Kraken must be the choice.

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MSG Building Glass Sphere Arenas, Market Cap Below Forbes’ Valuations of Knicks/Rangers

madison-square-garden-inc-logo

Madison Square Garden Company (MSG) (in a joint venture with Sands Corporation (LVS), who is contributing $75 million to project) has released renderings of a 360-foot-tall (500-foot-wide) glass sphere (MUST SEE), set to be built behind the Venetian and Palazzo resorts and expected to open in late 2020. The arena, connected to the resorts via a pedestrian bridge, will seat 18,000 and hold concerts, residencies, boxing/MMA and other entertainment events (like mass gaming). MSG is expected to announce plans for the construction of a 2nd sphere in London, noteworthy as the booking and marketing of London’s O2 Arena is controlled by AEG live; a direct competitor of Azoff-MSG. The two companies have a history of preventing acts from performing at the other’s venues.

Howie Long-Short: Forbes released their ’18 NBA team valuations. For the first time, every team was valued at more than $1 billion; with team values increasing by an average of 22% YOY. Over the last 5 years, team values have grown 300%. The potential for international growth (revenue growing in high-teens) has NBA teams selling at a higher multiple (8x revenue), than NFL teams (6x revenue). MSG’s NY Knicks are the NBA’s most valued franchise, worth an estimated $3.6 billion (+9% YOY, on $426 million in revenue). Forbes has the Rangers valued at $1.5 billion (+20%, on $246 million in revenue). MSG’s current market cap is $4.93 billion. If Forbes’ valuations are accurate (they tend to be low), the market is assigning literally negative value to MSG Arena (tax assessment in ’17 was $1.2 billion, not including air rights), the Forum, the Liberty, Counter Logic Gaming and a controlling stake in Tao Group.

Fan Marino: Back in November, MSG announced it would be selling its WNBA franchise to a buyer who would immediately take over control of the team’s operations. Apparently, plans have since changed, James Dolan has stated that despite “numerous interested parties” the company would continue to operate the team. The Liberty plan to move most of their games from Madison Square Garden to the 5,000-seat Westchester Arena (pending county approval), home to the Knick’s G-League affiliate. The move would save the franchise dollars, as the cost associated with holding events at the Garden are significantly higher.

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Sands Corp., MSG Building 2nd Las Vegas Arena, Concessions Sales Up 53% at Falcons New Stadium

Sands-Corp 200x200

Las Vegas Sands Corp. (LVS) has announced that their joint venture with the Madison Square Garden Company (MSG) to build an 18,500-seat arena in Las Vegas, is on track begin this summer. The new venue, to be built behind the Venetian and Palazzo properties (on Sands Ave. between Koval Ln. & Manhattan St.), is scheduled to be completed by the summer of 2020. The venue will reside less than 2 miles from T-Mobile Arena; a newly built 17,500-seat arena that opened in 2016 and the current home to the Golden Knights (NHL).

Howie Long-Short: Sands Corp. owns both the Venetian and Palazzo properties, so the location is logical. It seems excessive, but as Sands Corp. CEO Robert Goldstein explained, “the growth is returning around Las Vegas. The Golden Knights have done extraordinarily well, football is coming; why not?” Many would reason because there is no potential pro sports tenant to place in the building, but Las Vegas is unique in that shows (as opposed to teams) can anchor venues; so, despite the Oak View Group’s participation in this project, no promise exists to bring an NBA team to Sin City.

Fan Marino: Speaking of new sporting venues, the Atlanta Falcons offered the cheapest concession prices in the league ($2 hot dogs, water and pretzels) at Mercedes-Benz Stadium this past season and saw sales (not revenue, as reported elsewhere) increase 53% YOY. Fans came earlier, stayed longer and bought more (16% more per fan) to help offset the reduced markup. While the team didn’t generate as much from concessions as it did the year prior, the Falcons were at the top of the league in fan satisfaction for food and beverages. That’s enough for team owner Arthur Blank, who said “we believe that the direction we’ve taken, given all the other positive benefits, is the bigger revenue play.” No one leaves a sporting event feeling good that they paid $11 for a pretzel and a bottle of water; here’s to hoping the new arena in Vegas (and others around the country) follow Blank’s lead and begin to provide fans a better gameday experience.

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WSJ: Just 7 Ways to Publicly Invest in Sports, JWS: Not the Case

wsj-wallstreetjournal

The WSJ published a recent story asserting there are few ways to directly invest in sports, a notion we dispute. The article deemed just 7 publicly traded equities to be sports-related and based their conclusion, that fans are better off watching and playing sports than investing in them, on the performance of 2 exchange traded funds; one of which (FANZ) has beat the S&P since its July ’17 inception, which would seem to counter to their argument. The article cites Matt Hougan, the CEO of Inside ETFs, and his belief that most of the economic value within sports (ownership and player contracts) “comes in private transactions”, to support the author’s thesis; but fails to pay consideration to the revenue streams that support those contracts (and generate ownership profits). It’s worth noting that JohnWallStreet follows over 100 sports-related equities.

Howie Long-Short: Sports teams generate revenue from 4 sources; broadcast rights, ticket sales, sponsorships and merchandising. Several publicly traded equities use a similar business model; Churchill Downs (CHDN), International Speedway (ISCA), Dover Motorsports (DVD) and Speedway Motorsports (TRK), and thus should also be included on the list. Others, like Acushnet Holdings Corp. (GOLF) and Callaway Golf Company (ELY), are undeniably directly tied to sports; and no one would claim your basket was unfocused if companies like Nike (NKE), Lululemon (LULU) and Fitbit (FIT) were to be included. Oh, and don’t forget Activision Blizzard’s (ATVI) new esports league (Overwatch); their inaugural season starts today.

Fan Marino: The story names the New York Knicks, New York Rangers (MSG), Atlanta Braves (BATRK), Manchester United (MANU) and Borussia Dortmund (BORUF) as the teams you can purchase equity in. The Toronto Blue Jays, Toronto Maple Leafs (RCI), Juventus F.C. (JVTSF), A.S. Roma (ASRAF) and SS Lazio (BIT: SSL) are also all publicly traded.

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PBR Kicks Off Silver Anniversary Season Tonight

PBR

Professional Bull Riding (PBR) and VF Corp/Wrangler (VFC), partners for a quarter century, will open the NYSE this morning. Launched in 1992 by 20 rodeo cowboys (each put up $1 million) looking to establish an organization that would oversee bull riding as an individual sport; PBR has made it possible for bull riders to earn a living. Going in to the start of the 25th anniversary season, 34 riders have made over $1 million in career earnings. The silver anniversary season kicks off (no pun intended) tonight at Madison Square Garden (MSG).

Howie Long-Short: Since being acquired by Endeavor in ’15, PBR has increased event attendance 11% (annual audience of 3 million) and television ratings on CBS by 12% (average of 1.3 million viewers/event). Endeavor is privately held, but VF Corp/Wrangler (VFC) is publicly traded. The company, which owns a couple dozen brands including The North Face, Majestic Athletic and Vans (revenue +26% in Q3 ‘17), has seen its share price increase 41% over the last 12 months; with the growth driven by its highly productive DTC business (+17% in Q3 ’17).

Fan Marino: Wondering how PBR scores bull rides? Rules require riders to ride for 8 seconds with one hand in the bull rope and one in the air to earn a score. If the rider makes the 8 second buzzer, he receives a score. If he does not make the 8 second buzzer then he receives no score for that attempt. After each 8 second ride or attempt, PBR judges award scores (up to 100) both to the bulls (up to 50, based on difficulty) and the riders (up to 50, based on control); the combined number becomes the official ride score. The rider with the most points at the event’s conclusion is the winner; the rider who accumulates the most points throughout the season is the PBR World Champion — winning the coveted gold buckle and million-dollar bonus.

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NY Sports Fans No Longer Need Cable, MSG Now Available on DIRECTV NOW

DIRECTV NOW has added MSG Networks (MSG, MSG+) to its programming lineup, becoming the 2nd live TV streaming service to make the RSNs available nationwide. While news of the distribution deal broke back in September, the channels just became available to subscribers through the networks’ live streaming and video on demand platform, “MSG GO”. It should be noted that DIRECTV NOW subscribers within the greater New York metro area (and all of NY State), have access to all MSGN content (i.e. no blackouts).

Howie Long-ShortMSGN, spun off from MSG back in 2015, reported Q1 ’18 revenue grew 3% YOY (to $157 million). It’s not surprising to see the company simply plugging along, as 90% of MSGN revenue comes from affiliate fees; fees negotiated to span extended periods of time. Earlier this month, the company announced plans for a $150 million share buyback plan. DIRECTV NOW is an AT&T (T) subsidiary.

Fan Marino: The addition of MSG Networks (MSGN) gives DIRECTV NOW subscribers access to Knicks, Rangers, Islanders, Devils, Sabres, Liberty (WNBA) and Red Bulls (MLS) games. The OTT service also carries the YES network, home of the Yankees and Nets. NY sports fans (except for Mets fans) no longer need cable. Of course, once ESPN renegotiates the contracts for the 22 RSNs it acquired from FOXA and adds MLB games to ESPN+; Mets fans can join in on the cord cutting fun.

DIRECTV NOW Just Added MSG & MSG+

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Islanders Win Belmont Park Bid, To Remain in NY

The New York Islanders proposal to construct a new 18,000-seat arena (plus a hotel, retail village and 10,000 ft. “innovation center”) on a site adjacent to the Belmont Park racetrack in Elmont, has been accepted with a formal announcement coming later today. After years of trying to get a new stadium built on Long Island, the team left for Brooklyn following the 2014 season; but fans unhappy with the commute and poor ice quality in a venue designed for basketball had the team looking for another home. County officials are urging the team to play in the renovated Nassau Coliseum until the new arena is ready; but the arena seats just 13,900, lacks public transportation and isn’t viewed by the league “as a suitable option for the Islanders.” The team has stated it will play next season’s games at the Barclays Center as contractually obligated.

Howie Long-Short: Sterling Development Partners (real estate firm, run by the Wilpon family) and Oak View Group (arena development company, recently awarded Key Arena renovation project) are the team’s development partners. You can play the project through Madison Square Garden Company (MSG). Azoff MSG entertainment, a joint venture between Irving Azoff’s management firm and MSGhas invested in the OVG. OVG clients include the Prudential Center (Devils), Madison Square Garden, Quicken Loans Arena (Cavs) and The Wells Fargo Center (Flyers, 76ers).

Fan Marino: Had Empire State Development selected the competing NYC FC bid, the Islanders would have relocated. Co-owner John Ledecky acknowledged there was no “Plan B”. The clarity will also help the team in negotiations with star John Tavares, who is eligible to sign an extension come July 1. This was truly best case scenario for Islanders fans.

Islanders set to move to arena next to Belmont Park

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Seattle City Council Approves Key Arena Renovation, NHL Team Likely For ’20-‘21

The Seattle City Council has approved a $600 million renovation of Key Arena to attract an NHL team (and possibly an NBA team back) to the emerald city. The plan is to have the renovation completed by October 2020, in time for the start of the ‘20-‘21 NHL season. The NHL is expected to decide in July if it will be relocating an existing team to the market or if it will award the city an expansion franchise; the league would like to balance out its conferences (currently 31 teams) and has arena issues in both Calgary and Arizona that need to be addressed.

Howie Long-Short: The approved deal is between the city and Tim Leiweke’s Oak View Group (OVG); an advisory, development and investment company for the sports and live entertainment industries. The Oak View Group is fully financing the $600 million deal (i.e. no public funding) and will contribute an additional $40 million to mitigate traffic and parking problems around the arena; with another $20 million going to local charities. You can’t invest directly in the Oak View Group, but you can play the Key Arena project through them. Azoff MSG entertainment, a joint venture between Irving Azoff’s management firm and the Madison Square Garden Co. (MSG), has invested in the OVG.

Fan Marino: I’m confident that Seattle is going to land an NHL franchise, but if they don’t, it wouldn’t be the first time OVG built an arena without delivering the promised tenant. The group built the Sprint Center in Kansas City, promising to land a winter sports franchise within 2 years. The planned relocation (Pittsburgh Penguins) fell through and no local ownership group (with interest in purchasing an NHL or NBA team) has emerged since. That won’t be an issue in Seattle. A prospective ownership group already exists, including; investment banker David Bonderman and movie producer Jerry Bruckheimer.

NHL? NBA? A look at what could happen now that Seattle approved KeyArena renovation

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