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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As NASCAR attendance declines, racetracks have been actively working to add non-traditional events to their calendar, to supplement admissions revenue losses. Tracks located in major markets are having the most success, with Las Vegas Motor Speedway (TRK) hosting more than 1,400/year. The concert industry has been drawn to the massive facilities as the vast parking lots, camping areas and other existing amenities suit the needs of a music festival, but smaller events from women’s professional bowling events to American Royal BBQ contests have also found success at the unorthodox location. It should be noted that while no specifics have been given, even with 1,400 non-traditional events/year at Las Vegas Motor Speedway, the revenue generated from those events makes up less than half of the track’s annual revenue.
Tracks get creative in drive for new revenue
Howie Long-Short: Annual speedway revenues peaked in 2007 at $814 million. Revenues dropped all the way down to $661 million in 2016. These massive facilities cost money to operate and generate nothing when not being used. Why not try to book as many dates as you can fill?
Fan Marino: I’ve never attended an event besides a race at a NASCAR facility, but after watching Tennessee/Virginia Tech play the ’16 Battle at Bristol (TRK) in front of 153,000 people, watching a football game at one has been added to the bucket list.
Speedway Motorsports (TRK), Dover Motorsports (DVD) & Churchill Downs (CHDN) have reported earnings for the quarter ending July 30th. Below is a recap of each company’s earnings report:
Speedway Motorsports (TRK):
Reported increase in both revenue and net income for Q2 ’17, from same time last year (up to $.68/share from $.62/share). YTD revenue and income figures are also up from 2016.
- Good News: Track rentals & ancillary broadcast rights generating more revenue. Attendance & fan interest is trending upward.
- Bad News: Certain admission revenues are down. Management believes underemployment and the absence of a fiscally strong middle class are hurting numbers.
Speedway Motorsports boosts revenue, income
Dover Motorsports (DVD):
Reported slight increase in revenue and net income for Q2 ’17, from same time last year. Reported earnings of $.14/share remained the same.
- Good News: Increase in broadcasting revenue.
- Bad News: Lower admissions revenue for Dover NASCAR weekend.
Dover Motorsports, Inc. Reports Results for the Second Quarter of 2017
Churchill Downs Incorporated (CHDN):
Reported a 3% increase in revenue and 12% increase in net income for Q2 ’17, from same time last year. Reported earnings of $4.81/share, a 17% increase YOY, and $.30 higher than analyst predictions.
- Good News: Increase in racing revenues from a strong Kentucky Derby week. Equity investments and organic growth lead to increase in casino revenues.
- Bad News: Gaming company Big Fish Games saw net revenues decrease by $12.6 million.
Churchill Downs Incorporated Reports 2017 Second Quarter Results
Howie Long-Short: I’m skeptical when companies are still blaming the economy/underemployment in 2017.
Fan Marino: Never been a NASCAR guy. Just can’t get excited by someone driving in circles…even if it is really fast.