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


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.

To join our free daily email newsletter list, sign-up here!

Amazon Takes on The Sports World; 25 Companies That Will Be Affected

Amazon has been credited with killing everything from book stores to electronics retailers since its 1994 launch. Now, with a market cap +/- $570 billion and $16 billion in annual operating cash flow, the company is taking aim at the sports world. In our final newsletter of 2017, we look at 4 of AMZN’s recent initiatives and the 25 companies most likely to be affected in 2018.

Amazon Expands Brand Registry Program, Now Includes Nike

In June, Nike (NKE) agreed to join Amazon’s brand registry program; seeking to curb counterfeiting and non-licensed selling within the e-commerce marketplace. The partnership also supports the athletic apparel and sneaker brand’s initiative to boost revenue through a shift to digital and DTC sales, relying less on struggling retailers. Competitors Adidas (ADDYY) and Under Armour (UAA) already have direct-sales deals in place with AMZN.

Names to Watch: FINL, DKS, FL, HIBB, BGFV; LON: SPD, LON: JD

Howie Long-Short: Athletic apparel and sneaker retailers count on NKE (70% of FL business comes from NKE); but NKE launched its “Consumer Direct Offense” strategy in fiscal Q1 ’18, increasing e-commerce business 19% YOY. Mediocre retailers beware, the company is maintaining just a few dozen wholesale relationships as it looks to increase its e-commerce business (from 15% of revenue to 30% over the next 5 years).

Amazon Entering Private-Label Sportswear Business

In October, Amazon (AMZN) announced it was entering the private-label sportswear business and working with the same Taiwanese suppliers, Makalot Industrial Co. (TPE: 1477) and Eclat Textile Co. (TPE: 1476), that some of the world’s biggest athletic brands use. Elcat’s involvement is particularly noteworthy as the company manufactures high-performance sportswear for Nike (NKE), Lululemon Athletica (LULU) and Under Armour (UAA).

Names to Watch: NKE, UAA, ADDYY, LULU; TPE: 1476, TPE: 1477

Howie Long-ShortAMZN wants to be in the private-label clothing business because it pushes retailers to sell inventory on the e-commerce site. Should a retailer choose not to, AMZN will simply produce the item themselves and compete directly against the brand.

The Pursuit of Exclusive Broadcast Rights

In September, the company hired Brian Potter to lead its sports video business. In November, Jim DeLorenzo, head of sports, Amazon Video, said the company was pleased with viewership numbers, engagement and the reliability/quality of the cloud-based streaming service during its season long experiment streaming Thursday Night Football (10 games, $50 million); though it is too early to say if the company will pursue future exclusive sports broadcasting rights. The company has since done deals that will deliver Prime subscribers 37 ATP tour events (previously owned by SKYAY), the AVP Beach Volleyball tour each of the next 3 summers and docu-series on Michigan Football.


Howie Long-Short: NFL Senior VP, Digital Media, Vishal Shah recently said “we continue to think some of the best days are ahead [for traditional TV partners] despite some shifts in the media landscape.” That doesn’t sound like linear television will be excluded in the next round of negotiations, but the NFL is encouraging interested media companies to bid on both television and streaming rights for the leagues TNF package; leaving the door ajar for the tech giants to receive exclusivity for the first time.

Twitch: The Future of Game Broadcasts?

Twitch, the live-streaming platform most often associated with video games, has agreed to stream up to 6 live G-League (Gatorade sponsored NBA minor league) games. Broadcasts will include interactive overlays (viewers can click a team name/logo for player, team, game and season stats), a loyalty program to reward viewer engagement during broadcasts (i.e. custom emotes for group chat) and the ability for users to provide their own live commentary (over the game feed) via the Twitch co-streaming feature.


Fan Marino: NBA Commissioner Adam Silver has gone on record stating he’d like to see changes in the way sports broadcasts are presented; pointing out the lack of live stats and chatter surrounding the broadcast, that gamers have become accustomed to. I’m not ready to give up Mike Breen, Marv Albert and Ian Eagle for Towelliee; but it’s worth watching to see if anyone else is.

To join our free daily email newsletter list, sign-up here!

RCI May Sell Blue Jays, Worth $1.65B+

Rogers Communications, Inc. (RCI) is exploring a sale of the Toronto Blue Jays and its minority stake in Cogeco Communications (TSX: CCA), as the company focuses on growing revenue and increasing margins within its wireless and cable divisions. While talks remain in the exploratory stages and no deal is imminent, RCI is seeking “surface value” for the Toronto baseball franchise; believing the team remains undervalued within the larger conglomerate. Should the company sell the team, you can still expect RCI to carry Jays games; CFO Tony Staffieri stated, RCI “would like to get the content without having the capital tied up on our balance sheet”. The Canadian communications giant acquired the Blue Jays in 2000 for $137 million.

Howie Long-Short: Forbes valued the franchise at $1.3 billion (based on projected revenue of $278 million); I say that’s far too low. The Marlins, which lost $60 million in ‘17, sold for nearly 6x revenue; though I certainly would argue the Jeter group overpaid. If you’re going to give Toronto the same multiple, which isn’t unreasonable when you consider the franchise was projected to turn a profit of $22.9 million in ’17, you must assume the sale price is going to be at least $1.65 billion. I should note that shares of RCI are up 27% YTD.

Fan Marino: Blue Jays television analyst Gregg Zaun was recently terminated by Sportsnet after several women accused him of “inappropriate behavior and comments”. It is unclear how many women came forward and what the behavior entailed. To Sportnet’s credit, he was terminated immediately following an investigation into his wrongdoing.

Blue Jays Owner Rogers Communications Considering Selling Franchise

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

Mike Golic Talks About Some Personal Finance Decisions

ESPN’s (DIS) long-running morning drive radio show Mike & Mike, is coming to an end; with the last show scheduled for Friday. Beginning Monday November 27th, Mike Golic will be joined in studio by new co-Host Trey Wingo. Golic & Wingo will air weekdays from 6-10a EST, with simulcast on ESPN2 (moving to ESPNU in January). JohnWallStreet had the opportunity to catch up with the guys to discuss finance, the NFL and their new show. In part 1 of a 3-part series, Mike Golic talks about some of the personal finance decisions he’s made.

JWS: Who handled your finances during your time in the NFL?

Golic: When I got into the league at 21 years old, my brother (Bob) was with IMG out of Cleveland; so, I went with them as well. I made the decision without even thinking about it. I hired them as my agent and they did everything. All my bills went to them. I was a business major, so it wasn’t like I was inept; but I said this is what you guys do, you offer this, I’m going to take it. You guys take care of my money to the point of paying my rent and bills.  

JWS: Did you think that you would make enough money playing football to carry you through the balance of your life?

Golic: No, I was in the league for 3 years before I made $100,000. This was before free agency, so even if I had been an all-pro player, the monster deals weren’t out there. I knew I could make some money.  In my 9 years, my salaries equaled up to a little more than $2 million. Certainly, nice money, but it wasn’t going to take care of me for the rest of my life.

JWS: Did you overspend during your playing career?  

Golic: I got drafted by the Houston Oilers and broke my ankle in training camp, so I was on injured reserve my whole rookie season. I went out a lot and when I went out a lot, I would buy drinks a lot; for a lot of people. 3 months in to the season, my agent and financial advisor called; he said, just because your credit card has a limit every month, does not mean you hit it.  That was my ding-ding moment. I’m not seeing anything because everything was going to them. I was only making $62,000 and I was just kind of spending it. I learned the lesson of man, know what is going on.

JWS: When did you decide to be more pro-active with paying your own bills?

Golic: When I got married and Chris (wife), who has an accounting degree, said we’re not doing this anymore. I’m going take care of the bills. The money is now going to run through us and I’m going to keep an eye on it.

Howie Long-Short: Mike earned $62,000 as an NFL rookie. Today’s NFL rookie minimum is $465,000. Had Mike played in today’s era, simply earning the league minimum in each of his 9 seasons, he would have made over $8.335 million in his playing career; more than 4x his actual on-field career earnings total.

Fan Marino: Fun Fact: One of the first investments made on Mike’s behalf was the purchase of shares in the Boston Celtics. The NBA franchise was traded on the NYSE until its 2002 sale. Currently the Knicks (MSG) and Raptors (RCI) are the only publicly traded NBA franchises. Howie seems to think MSG is undervalued.

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