Playoff Fantasy Football Contest Paying Out in Bitcoin

FanDuel

The NFL Playoffs start tomorrow (Tennessee at Kansas City, 4:35p EST) and FanDuel is giving daily fantasy football players the chance to win Bitcoins (BTC); the first time a sports-tech company has awarded cryptocurrency as a consumer promotion. FanDuel will host a free single-entry contest (aka the Bitcoin Bowl) that will award the winner a single Bitcoin; and a second multi-entry contest, that costs $3 to enter and offers a multi-tiered payout (winner receives 2 Bitcoins). The deadline to enter and select a lineup is kickoff of the Tennessee/Kansas City game.

Howie Long-Short: FanDuel has raised capital from the following public companies (or subsidiaries of public companies) KKR & Co. (KKR), Google Capital (GOOGL), Time Warner/Turner Sports (TWX), NBC Sports Ventures (CMCSA) and Comcast Ventures (CMCSA); so, there are no shortage of ways to play the fantasy sports outfit. As for the popular cryptocurrency, the WSJ reported that Peter Thiel’s venture capital fund bet $15 million to $20 million on Bitcoin; upon release of that report, BTC prices shot up 14% to $15,447. The digital coins were trading at +/- $15,150 on the evening of January 4, 2018.

Fan Marino: Facebook (FB) has entered the DFS space, launching TheScore Fantasy on Facebook Instant Games; accessible only through their Messenger application. The mobile game currently enables you to play NFL, NBA, NHL, MLB & Premier League contests, but only against your friends and there is no monetary incentive to win. It’s not a game for the hardcore DFS player, but the simplistic interface and small roster sizes (just 5 players) could make it attractive to the next generation of football fans; those not yet of age (18) to play DFS.

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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.

Names to Watch: CBS, DIS, FOXA, CMCSA, FB, GOOGL, NFLX, AAPL, SKYAY

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.

Names to Watch: CBS, DIS, FOXA, CMCSA, TWX, RCI, MSGN

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.

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Ticketmaster Accused of Gouging Rugby Fans

Scottish rugby fans have accused The Scottish Rugby Union (SRU) of failing to monitor (and ultimately stop) Ticketmaster, the official ticketing partner of the Six Nations Championship, from selling seats at inflated prices (and collecting exorbitant booking fees) on company owned secondary sites; Seatwave and GetMeIn! Tickets are listed for the more than 10x face value ($118 seats are selling for $2,500) and the perceived conflict of interest has forced the SRU to act. The rugby organization is reportedly speaking to Ticketmaster about removing seats from their secondary sites, while it explores launching a non-profit resale site of its own; where seats are resold at face value or below.

Howie Long-Short: Rare negative news of late, for the LYV subsidiary. Live Nation Entertainment reported its best Q3 of all-time, with the company’s ticketing segment reporting its strongest quarterly adjusted operating income ever. LYV also touted the the introduction of the first open source digital ticketing platform in sports (for NFL) and the increased scale of its Verified Fan product (expects to save fans $100 million in ’17); though clearly not to the scale needed to handle primary distribution of Six Nations Championship tickets.

Fan Marino: If Howie can discuss Scottish rugby, Chilean soccer is fair game. Turner Broadcasting (TWX) won the exclusive broadcast rights to Chilean soccer matches, for the next 15 years; with a $1.3 billion bid. Fox Sports (FOXA) was the favorite to land the rights, but a spokesman for the Chilean soccer commission said regulatory concerns stemming from the DIS deal “influenced the decision.” For comparison purposes, the Argentine Football Association accepted a 5 year $1.03 billion offer from Fox Sports Latin America in March.

Scots rugby bosses ‘failing fans’ over ticket resales with Six Nations briefs going for 10 times face value

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Twitch Expanding Content Beyond Gaming, Adds G-League Live 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 each week (content will also available on demand), beginning on Friday Dec. 15th. 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. The Amazon-owned company with 15 million daily active users has been adding content beyond gaming competition; having recently launched 24-hour channels with Machinima (TWX) and CONtv (CIDM).

Howie Long-Short: While on the topic of e-sports, lifestyle and marketing agency Engine Shop, a subsidiary of Bruin Sports Capital, has acquired The Gamer Agency; a leader in esports strategy, tournament management, live broadcast production and digital distribution that has produced and broadcast +/-100 events in ’17. Bruin Sports Capital, founded by Jon Bon Jovi, raised a $250 million round in 2015; the world’s largest ad agency WPP, led the round. You can purchase WPP over-the-counter under the symbol WPPGF. Bruin Sports Capital owns a stake in On Location Experiences, the company that just acquired PrimeSport; it also invested in Courtside Ventures, an earlier stage VC firm that has invested in stockX and The Athletic.

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. Silver specifically referenced Twitch in his September comments, so this deal doesn’t exactly come out of left field. Coincidentally enough, NBC stumbled in to presenting NFL games in a manner familiar to gamers this season; introducing Madden-cam (perspective most often used in video games, from behind the tailback) during a Patriots/Falcons SNF game that was played in heavy fog, which prevented traditional cameras from picking up the game action. The view has been widely praised and has since been used as the main camera angle in a SNF broadcast.

NBA Inks Twitch Pact to Live-Stream Minor League Games With Fan-Interaction Features

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UFC Looking to Increase TV Rights Fees by 160%+

The UFC’s contract with Twenty-First Century Fox (FOXA) expires at the end of 2018 and the ultimate-fighting organization is currently negotiating its next television deal (PPV not included) with several broadcast outlets; after turning down $200 million/year, as part of a multi-year extension with FOXA. The UFC, which will receive $160 million in the final year of the expiring 7-year contract, has been looking to increase that revenue stream to between $420-$450 million annually; but with FS1 main cards down 13% YOY (to 866,000) and FOX specials down 30.9% YOY (to 2.1 million), there have been no takers to date. CBS, NBC, ESPN, Turner Sports, Amazon and Oath are potential destinations, should the UFC walk away from FOXA.

Howie Long-Short: Turner (TWX) is most interested, but with the UFC wanting to wrap up negotiations later this month (or early 2018 at the latest) and Turner tangled up in the AT&T-Time Warner troubled merger, the timing may not be right. They also lack the broadcast network necessary to draw UFC’s biggest audiences. It’s certainly possible that the first offer (the Fox offer), is the best offer the UFC is going to receive (in terms of both money and reach). The UFC might hit $420 million in television revenue, but it’s going to come from linear and streaming rights combined.

Fan Marino: NBC (CMCSA) would be a logical destination (NBCSN has a comparable audience size to FS1) as they also own the rights to Al Haymon’s “Premier Boxing Champions” series, but the framework of that deal is far different than what Dana White and Co. are looking for. Haymon isn’t getting hundreds of millions in guaranteed annual payments; he’s purchasing time on NBC (at least $20 million annually) and spending additional money to promote and market the fights. As a boxing fan, I’m glad he is; we’re getting world class fighters (see: Adrian Broner, Deontay Wilder), in prime-time (i.e. not 12:30a EST), for free (i.e. not on PPV).

UFC is facing its most important contract negotiation

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Nike Paying $1 Billion to be the NBA’s Official Uniform Supplier, Stars Covering Up Swoosh

Nike became the official supplier of NBA uniforms this season, having agreed to pay $1 billion over the next 8 years for the right to place their company logo on team jerseys, shorts and socks; but the partnership has gotten off to a rocky start. The new jerseys have been tearing and stars Steph Curry and James Harden, who represent competing sneaker companies, have gone out their way to avoid having the Nike logo visible near their shoes; rolling or cutting down their socks to protect their lucrative endorsement contracts. Unfortunately for Nike, nothing in the NBA’s operations manual prohibits a player from wearing team issued socks as they please.

Howie Long-Short: While Nike (NKE) can’t be pleased, they signed this deal to put their swoosh on jerseys; not socks. Adidas was the league’s previous official uniform supplier and their contract didn’t even include socks (Stance was the league’s supplier during the ’16 season). ADDYY held their earning call on Thursday and while the news was overwhelmingly positive, the company did note that the loss of the NBA jersey contract has hurt basketball revenue sales. In this case, their loss is NKE’s gain.

Fan Marino: Want to get a good look at Curry’s (or Harden’s) newest player exclusive? Strap on your Samsung GearVR or Google Daydream headset and pull up a courtside seat to the game. Intel (INTC) has announced a partnership with Turner Sports (TWX) that will enable the company to broadcast select NBA on TNT games using TrueVR technology; beginning with the 2018 All-Star game. Users will be able to choose their camera angle (including courtside) and freeze and watch highlights in 360 degrees.

Nike paid the NBA $1 billion to use its uniforms, and 2 of the NBA’s biggest stars are hiding the swoosh

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A Streaming Service for the Sports Fan

Sports fans that are considering cutting the cord may want to look at the channel lineup for FuboTV; a sports-centric, OTT, live TV streaming service that offers fans the “most sports for the least money”. Originally introduced as a skinny bundle for soccer fans, the service now carries a variety of sports on 37 (of 65) channels (both regional and national) including; FS1, FS2 and NBCSN. The $40/mo. niche bundle is looking to stand out in a crowded streaming TV market that includes; Hulu (TWX), YouTube TV (GOOGL), DirecTV Now (T), Playstation Vue (SNE) and Sling TV (DISH). Amazon (AMZN) and Verizon (VZ) will also be introducing streaming bundles soon.

Howie Long-Short: FuboTV has raised $75.6 million to date, with several publicly traded companies investing in the streaming provider. 21st Century Fox (FOXA), Sky (SKYAY) and Scripps Networks Interactive (SSP) all participated the $55 million Series C round that closed in June; so there are no shortage of ways to play the OTT streaming service.

Fan Marino: FuboTV has 100,000 soccer-loving subscribers, but is counting on their next 100,000 subscribers to be fans of traditional American sports. The carriage deals they’ve signed to date have given them some valuable programming (like the World Series), but you can’t convince the American sports fan to cut the cord without ESPN’s network of channels. ESPN (DIS) holds the rights to the College Football Playoffs (and NBA) through 2025 and MNF through 2021. If your key differentiator as an OTT streaming service is your sports programming, you must carry those games. The success of the service, at least as it is currently marketed, depends on it.

The next 100,000 subscribers: FuboTV’s skinny bundle moves beyond live soccer

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