Kentucky Derby Splits Beer Sponsorship, adds 3 Partners; Replaces Soft Drink Sponsor

Corona Extra

Tomorrow’s 144th running of the Kentucky Derby, presented by Woodford Reserve, falls on Cinco de Mayo (as does the 145th edition) and Corona Extra, Angry Orchard and Budweiser have all signed on to sponsor the day’s celebrations. Combined, the 3 brands will replace Stella Artois as the event’s beer sponsor. Corona Extra will serve as the Official Import Beer of North America’s oldest, continuously-held sporting event; hosting a fiesta in the infield for the 160,000+ in attendance and sponsoring Cinco de Mayo parties across the country. Angry Orchard, the Official Hard Cider of the Derby, plans on using the platform to show their newest innovation; Angry Orchard Rosé. Budweiser acquired the rights to serve as the Official Domestic Beer sponsor and for those wishing to remain sober, Coca-Cola has replaced Pepsi as the event’s Official Soft Drink provider.

Howie Long-Short: Louisville based Brown-Forman Corp. (BF.B) took over title sponsorship of the “most exciting 2 minutes in sports” from Yum Brands (YUM) and is using the exposure to market their Woodford Reserve bourbon; the key ingredient in a mint julep (the event’s signature drink). On March 7th, BF.B released its fiscal Q3 ’18 financials; a strong report that reflected net sales growth +9% YoY (to $878 million), with operating income up +11% YoY (to $304 million). The company’s American whiskey brands, Old Forester and Woodford Reserve, each contributed double-digit underlying net sales gains during the quarter (ended on January 31st). BF.B’s Q3 ‘18 results are comparable to net sales (+9% YoY to $2.5 billion) and operating income growth (+15% YoY to $894 million) over the first 9 months of the company’s fiscal ‘18 year. BF.B’s share price is up 42% over the last 12 mo., but has remained relatively flat YTD (-2%).

Constellation Brands (STZ) owns 100+ brands within its portfolio, including Corona Extra. In March, the company reported fiscal FY18 results that included “EPS growth of almost 30%”; the “5th consecutive year (that the company) achieved industry leading EPS growth of more than 20%.” Corona brand sales contributed to the growth, +4% YoY to 138 million cases.

Angry Orchard is a subsidiary of the Boston Beer Company, best known for brewing Sam Adams. Trading under the symbol SAM, the company reported Q1 ’18 earnings on April 25th. Net revenue rose +17.8% (to $28.8 million) as shipment volume increased 15%. CEO Jim Koch noted that the company had seen a “significant improvement in Angry Orchard trends”. SAM hopes that its new Angry Orchard Rosé product can draw clientele from the beer and wine categories.

As for Churchill Downs, Inc. (CHDN), in March the company announced it would be acquiring casinos in Pennsylvania and Mississippi, as it prepares to capitalize on legalized sports betting. Both PA & MS have passed sports betting legislation that would change their laws, should the SCOTUS strike down PAPSA. CHDN also owns brick and mortar casinos in Illinois, Kentucky and Louisiana, 3 other states actively working towards sports betting legalization. Following release of the news, shares climbed to a 52-week high ($268.20). They’ve only continued to rise.

The company reported Q1 ’18 financials on April 28th, including a rise in both net revenue +13% YoY (to $189.3 million) and adjusted EBITDA +36% YOY (to $49.2 million). CEO Bill Carstanjen attributed the growth to strong performance from the company’s casino and TwinSpires businesses. Casino adjusted EBITDA increased $9 million YoY, while TwinSpires’ adjusted EBITDA increased +$3.3 million as the company increased its handle to 20.2%; a significantly higher take than the balance of the thoroughbred industry (14%). CHDN shares are up 64% over the last 12 months (S&P +/-10%) and 17% since April 13th, currently sitting at $274.85 (Thurs. close).

It’s worth noting that JP Morgan recently assigned a $1.8 million valuation to the Kentucky Derby, roughly 48% of CHDN’s $3.74 billion market cap.

Fan Marino: 19 million people are expected to tune in on television for tomorrow’s race and Louisville icon Rick Pitino is likely to be one of them, despite co-owning a horse (Coach Rocks) running in the Kentucky Oaks. When fired by the University of Louisville in November, Pitino vowed to never return to the state. He’s since softened his stance, but in early April leveled an ultimatum stating he wouldn’t return to Churchill Downs unless both David Grissom (University Chairman) and John Schnatter (Papa John’s, Vice Chairman), “retire from the University Board of Trustees”. Of course, Grissom and Schnatter are the guys who fired Pitino when college basketball’s pay-to-play scandal broke. I admire Pitino’s pettiness, but fail to see how his absence hurts Grissom/Schnatter; it certainly seems as if Pitino is cutting off his nose to spite his face.

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UFC Heavyweight Champ on His Day Job and a Fight with Joshua/Wilder

Modelo Stipe_19937+39

UFC heavyweight champion Stipe Miocic became the most decorated heavyweight champion (record 3 straight title defenses) in UFC history on Saturday night, defeating Francis Ngannou by decision at UFC 220. Following the fight Dana White expressed interest in a fight between Miocic and Daniel Cormier. Miocic may have other ideas. Just days before the fight, JohnWallStreet got the chance to talk with the champ about the title of “baddest man on the planet” and a potential fight with Anthony Joshua.

JWS: You work during the day as a part-time fire fighter. Is that a paying job?  Do you ever wonder if your time would be better spent training?

Stipe: It is a paying job, but I do it because I love helping people out and giving back to my community. I love Cleveland. That was a big reason why I partnered with Modelo; we share a strong sense of community and both value the fighting spirit in and outside of the Octagon. 

JWS: New UFC Sponsor Modelo highlights you in a new ad campaign. The campaign focuses on “blue-collar minded” individuals. Does that mean you aren’t in to all the cars, jewels, furs etc. that we see guys like McGregor or Tyson with?

Stipe: You could say that. Being able to partner with a brand that shares the same values in terms of hard work and giving back to the community was one of the big things that attracted me to working with Modelo. I get to tell my story as a firefighter, and more than just an athlete, and that’s an opportunity that doesn’t come around too often. 

JWS: You were an accomplished boxer growing up a part of the Golden Gloves program. I saw you challenged Anthony Joshua for title of “baddest man on planet.” Are you serious about pursuing a fight in the boxing ring with him or was that simply a fun idea trying to capitalize on the money Mayweather/McGregor got for their fight?

Stipe: Boxing was a big part of my upbringing. I would love to fight the winner of Joshua and Wilder, but all that matters to me right now is fighting this Saturday; after that, let’s talk. 

Howie Long-Short: Constellation Brands (STZ) acquired Grupo Modelo’s U.S. business from Anheuser-Busch InBev (BUD), back in 2013. Earlier this month, STZ reported Q3 ’17 profits increased 21% YOY (to $491.1 million), despite revenue falling .6% (to $1.8 billion). It wasn’t Modelo’s fault though, beer sales increased during the quarter; wine & spirits experienced revenue decline. Something to watch, the company recently acquired 9.9% of the marijuana company Canopy Growth (TSE: WEED).

Fan Marino: LeBron gets all the credit for bringing the Cleveland its first title since 1964, but Stipe beat him to it winning the UFC heavyweight title at UFC 198. I asked him if that bothered him (it would bother me, I’m petty).

Stipe: Not at all. The Cavs had me at a few of their playoff games and even at their victory parade back in 2016. I also met up with a bunch of those guys to cheer on the Indians in the World Series together. What Lebron has done for Cleveland, on and off the court, has been awesome to see and we’re both just trying to represent for our city. We share a mutual vision – for those to see the work we do in our community and inspire them to do better.

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UFC Heavyweight Champ on His Day Job, New Ad Campaign and a Fight with Joshua/Wilder

Modelo Stipe_19937+39.JPG

UFC heavyweight champion Stipe Miocic will defend his title tomorrow night (Jan. 20) against Francis Ngannou at UFC 220 (PPV). With a win, Miocic would break the UFC’s record for most successful heavyweight title defenses; becoming the most successful heavyweight of all time. Official UFC sponsor Modelo Especial recently announced a partnership with Miocic (the brand’s first with a UFC fighter) that will include a TV commercial airing later this year. JohnWallStreet got the opportunity to ask the champ a few questions about his day job, the new ad campaign and the title of “baddest man on the planet”, just days before the fight.

JWS: You work during the day as a part-time fire fighter. Is that a paying job?  Do you ever wonder if your time would be better spent training?

Stipe: It is a paying job, but I do it because I love helping people out and giving back to my community. I love Cleveland. That was a big reason why I partnered with Modelo; we share a strong sense of community and both value the fighting spirit in and outside of the Octagon. 

JWS: New UFC Sponsor Modelo highlights you in a new ad campaign. The campaign focuses on “blue-collar minded” individuals. Does that mean you aren’t in to all the cars, jewels, furs etc. that we see guys like McGregor or Tyson with?

Stipe: You could say that. Being able to partner with a brand that shares the same values in terms of hard work and giving back to the community was one of the big things that attracted me to working with Modelo. I get to tell my story as a firefighter, and more than just an athlete, and that’s an opportunity that doesn’t come around too often. 

JWS: You were an accomplished boxer growing up a part of the Golden Gloves program. I saw you challenged Anthony Joshua for title of “baddest man on planet.” Are you serious about pursuing a fight in the boxing ring with him or was that simply a fun idea trying to capitalize on the money Mayweather/McGregor got for their fight?

Stipe: Boxing was a big part of my upbringing. I would love to fight the winner of Joshua and Wilder, but all that matters to me right now is fighting this Saturday; after that, let’s talk. 

Howie Long-Short: Constellation Brands (STZ) acquired Grupo Modelo’s U.S. business from Anheuser-Busch InBev (BUD), back in 2013. Earlier this month, STZ reported Q3 ’17 profits increased 21% YOY (to $491.1 million), despite revenue falling .6% (to $1.8 billion). It wasn’t Modelo’s fault though, beer sales increased during the quarter; wine & spirits experienced revenue decline. Something to watch, the company recently acquired 9.9% of the marijuana company Canopy Growth (TSE: WEED).

Fan Marino: LeBron gets all the credit for bringing the Cleveland its first title since 1964, but Stipe beat him to it winning the UFC heavyweight title at UFC 198. I asked him if that bothered him (it would bother me, I’m petty).

Stipe: Not at all. The Cavs had me at a few of their playoff games and even at their victory parade back in 2016. I also met up with a bunch of those guys to cheer on the Indians in the World Series together. What Lebron has done for Cleveland, on and off the court, has been awesome to see and we’re both just trying to represent for our city. We share a mutual vision – for those to see the work we do in our community and inspire them to do better.

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