President Trump is considering overhauling a program that provides 300,000 foreign visitors/year (primarily college students) with the opportunity to work temporarily in the United States. As part of his “Buy American and Hire American” campaign, Trump is evaluating several options including; the elimination of J-1 via program, imposing new requirements on program participants and/or requiring employers to prove they are unable to find Americans who want the temporary jobs. Ski resort operators are particularly concerned and have urged Trump administration officials to keep the program intact, as foreign students are estimated to fill 7,000 jobs during the December-March U.S. ski season.
Howie Long-Short: Ever ski/snowboard Hunter Mountain? Mount Snow? Jack Front? They are all owned by ski resort operator Peak Resorts (SKIS). SKIS recently announced revenues of $7.5 million for Q1 2018, a 6% YOY increase, during their slowest time of the year. The company also expressed optimism for the upcoming season, as sales of its “Peak Pass” is up 9% from this time last year.
Fan Marino: Don’t confuse the J-1 program for cheap labor. Ski resorts are required to pay the same salaries to foreign students that they would to U.S. citizens and in some cases, are required to invest in housing or meal plans for students studying abroad. If the resorts could hire local, they would.
Ski resorts and others worry the Trump administration may cut visa workers program
Facebook (FB) has agreed to a partnership with Barstool Sports that will give Watch, FB’s new video platform, original sports programming content. “The Barstool Tailgate Show” will cover college football storylines and comedic news from a different campus each week, with shows airing on Facebook Live prior to the Saturday night ABC/ESPN (DIS) primetime game. Barstool Founder Dave Portney and former Colts Punter and Barstool personality Pat McAfee, will host the show. Financial details of the deal were not released, but Facebook is investing in the production of the show and would be the ones to secure future and benefit from corporate sponsors.
Howie Long-Short: Barstool had a live show Super Bowl week on Comedy Central (VIAB). The show had 310K viewers and beat the Daily Show by 7% in the 18-34 male demo, on Monday January 30th (their first show). That is where the good news ended though, by Thursday, February 3rd, the audience had fallen to 217K viewers, no better than the worst rated Futurama rerun that the network ran the week prior.
Fan Marino: Watch is quickly scooping up non-traditional sports content that Millennials eat up (see: “Ball in the Family”). It’s a smart strategy for a company that wants to be in the sports streaming business, isn’t getting NFL games (existing deals run through 2022) or NBA games (existing deals run through 2025) anytime soon, and needs to put out original content to draw video advertising dollars that will drive future revenue growth. What kind of Stoolie is on Facebook at 7:30p on Saturday night though?
Fitbit (FIT) has announced a partnership with Dexcom (DXCM) that will enable the brand’s new Ionic smartwatch to continuously monitor user glucose levels through a G5 mobile sensor, beginning in early 2018. The deal means that diabetes patients will be able to seamlessly transfer up to the minute glucose level data to their wrist for easy access. Dexcom’s G5 system for blood sugar monitoring requires users to embed a sensor just below the skin, with a compatible app providing levels updates every 5 minutes.
Howie Long-Short: Fitbit making the move from fitness tracking to health tracking is wise. The stock is at its highest price since January, when the company laid off 6% of its staff and first announced its intentions to introduce a smartwatch.
Fan Marino: Dexcom already has a partnership in place with Apple (AAPL), so this deal isn’t giving Fitbit a leg up in the smartwatch race. In fact, Apple is reportedly working on a non-invasive real-time glucose monitor for future versions of their Watch and is apparently far enough along in development that the company has begun feasibility testing.
The Federal Reserve System has approved the proposed acquisition of World’s Foremost Bank (Cabela’s credit card business) by Synovus Bank, eliminating the last significant hurdle in Bass Pro Shops’ purchase of Cabela’s (CAB). Under the proposed deal, Synovus (SNV) would assume $1.2 billion in deposits, $4.1 billion in non-deposit liabilities and the balance of World’s assets, approximated to total $5.7 billion. Capital One (COF) would take over credit card receivables upon completion of the deal. Back in July, Cabela’s shareholders overwhelmingly voted (78%) in favor of selling the retail business for $4.2 billion. The deal is expected to close by October 3rd.
Howie Long-Short: Cabela’s shareholders are breathing a sigh of relief, as the Fed’s October 3rd deadline was quickly approaching. The company recently reported Q2 profits/earnings, with YOY same store sales down 9.7% and profits down 25% from 2016 figures. Had the deal not been approved, Bass Pro Shops almost certainly would have walked away or demanded a lower sales price.
Fan Marino: There is apparently a trend of teenagers jumping into the large aquariums at Bass Pro Shops. Anything for the Snapchat!
ESPN is experimenting with the implementation of “SportsCenter Right Now” segments, 90 second updates designed to provide the viewer with up-to-the-minute game scores or breaking news. By January, the spots will appear several times an hour within all daytime ESPN programming and during halftime of games aired on ESPN/ABC (DIS); simultaneously airing on ESPN.com and within the home screen video player on the ESPN app. ESPN is using “SportsCenter Right Now” to keep the SportsCenter brand relevant, in a time when fans can access highlights on demand through various social media channels.
Howie Long-Short: SportsCenter ratings have fallen 30% since 2010 (40% in younger demo), so something had to be done. Turning SC into a digital property makes sense. Expecting Jemele Hill and Michael Smith to drive viewers, does not.
Fan Marino: For fans of ESPN radio, the spots will sound familiar. They are the live TV equivalent of the updates that have run 2x/hour on the station for years. Of course, as a loyal Mongo, I prefer to get my updates from the Mink Man.
TV networks saw a 12% YOY increase in viewership during the first 3 weeks of the preseason, suggesting that regular season numbers would pick up from a disappointing 2016 season. But last Thursday night’s season opener between the Patriots and Chiefs drew a 14.6 rating, down from 16.5 last year; making it the least watched opener since 2009.
TuneIn has partnered with the NFL to provide fans worldwide with the home and away, national and Spanish radio broadcasts of all 32 NFL teams. JWS wanted to find out how if radio saw a similar uptick in preseason listeners and how the opener rated. TuneIn VP of Marketing, Scott Parker, provided some insight:
Scott Parker: “Year over year, our number of preseason listeners grew by 70%. This is indicative of all of the ways people are consuming NFL content, especially with the growing usage of streaming audio, in the preseason. We actually had success in a unique Preseason stunt featuring a joint Audiocast with the Patriots and Texans. We do see a correlation between Preseason and Regular season and saw record numbers for the season opener.”
Howie Long-Short: TuneIn isn’t public, but the company is backed by Comcast Ventures. CMCSA co-led a $50 million round in April 2017 to fund the buildout of TuneIn’s Premium Subscription service offerings.
Fan Marino: A recent ESPN (DIS) poll indicated that 68% of avid NFL fans live outside their favorite team’s home market. I’m not sure how ESPN defined avid, but that can’t be accurate. Americans live a median distance of 18 miles from where they grew up.
Nike’s (NKE) iconic Jordan Brand, which at one time instantly sold out weekly releases, has unexpectedly struggled over the last several quarters. As fashion has trended away from high-end basketball sneakers and towards low-tops that best fit with skinny jeans and joggers, the Jumpman Brand has struggled to adjust. Nike’s solution has been to increase the volume of Jordan sneaker releases; but with most pairs lacking high demand, many fail to sell out immediately, raising the possibility of long-term brand erosion.
Howie Long-Short: In January 2015, Jordan Brand made up 96% of the sneaker resale market. Adidas (ADDYY) had 1%. Adidas now has 45%. Considering the sneaker resale market is estimated to be valued at $1.2 billion, that’s a lot of Adidas shoes being bought (and resold) in place of Jordan’s.
Fan Marino: Morgan Stanley says that “Nike has lost its core sneaker enthusiast customer to Adidas.” As a sneaker head, I say that is a gross exaggeration. I recently bought a pair of Adidas EQT Support ADV. They are already on their way back to Adidas. They were a pain to put on, the wife hated the way they looked and I didn’t find them to be particularly comfortable.
Nike has a problem with its Jordan brand that was previously ‘unthinkable’
JWS published a story earlier this week discussing how the NFL has implemented the use of technology within the game of football. Premiership Rugby has also embraced the sports-tech revolution; with developments changing the way its coaches train players and analyze performance. Below are a few companies making an impact:
IMAX Corp. (IMAX) – Players utilize IMAX video booths to watch footage filmed from both “lamppost” cameras as well as drones. Video footage from training, matches and even individual player clips are available for viewing.
Catapult Group International Ltd. (ASX: CAT) – The OptimEye S5 GPS device is used by 10/12 Premiership rugby clubs. The handheld device is placed into a pouch on the back of each player’s shirt, processing thousands of performance related data points/second, including; distance, velocity and speed.
Vimeo (IAC) – Video application providing players secure access to private clips of training sessions.
Howie Long-Short: Vimeo is owned by InterActiveCorp (IAC), a media and internet company that owns 150+ brands including; Match Group (i.e. Tinder), HomeAdvisor and Dictionary.com. IAC recently posted Q2 earnings of $.74/share, easily beating estimates of $.50/share. The company posted revenues of $767.39 million in Q2 ’17, up 2.9% YOY.
Fan Marino: Rugby teams aren’t the only ones using the CAT OptimEye S5. Brazil’s 5x World Cup Championship International Soccer team, the defending NBA Champions (Golden State Warriors) and at least a dozen NFL teams, also use the GPS system to track player performance.
How GPS, drones, and apps are revolutionizing rugby
ESPN (DIS) has reached an agreement with boxing promotor Top Rank, that gives the network exclusive rights to air the promotions’ fights on their TV networks, the ESPN app, their DTC streaming service and on PPV. The partnership likely means the end of the long-standing PPV relationship between Top Rank and HBO (TWX). ESPN will air 18 Top Rank main events in the first year of the deal, with the first coming on September 22nd, featuring Oscar Valdez and Gilberto Ramirez. Financial terms of the deal have not been released, but the agreement is expected to run for 4 years.
Howie Long-Short: While financial terms haven’t been released, you can use the existing UFC/Fox Sports (FOXA) deal as a frame of reference. Fox Sports currently pays the UFC $115 million/year for its broadcast rights. It has been rumored that when the UFC/Fox Sports contract expires in 2018, the UFC will be seeking upwards of $450 million/year under the terms of a new deal.
Fan Marino: 2017 has shown if you put high quality fights on network/cable television, people will tune in. July’s Pacquiao/Jeff Horn fight did 4.4 million viewers, the most for a fight on cable television since 1995; while the March ‘17 Keith Thurman/Danny Garcia bout peaked at 5.1 million viewers, the most for a fight on network TV since 1998.
Top Rank signs exclusive four-year deal with ESPN
Draft, the daily fantasy sports application purchased by Paddy Power Betfair (LON: PPB) back in May, is making its push to compete with DFS market leaders DraftKings and FanDuel, as the NFL season gets ready to kick off this weekend. Instead of burning through cash on TV and radio ads, Draft’s strategy is to reach sports fans on social media, through their favorite athletes. Shaquille O’Neil is hosting a Week 1 head-to-head contest for his 14.6 million Twitter (TWTR) followers, while Chad Johnson, Michael Vick, Richard Sherman and Antonio Brown are also endorsing the DFS app.
Howie Long-Short: FanDuel and DraftKings have a huge lead in the DFS race, but those companies have spent the last year in the courtroom. Draft now has a market leading gaming operator backing it and a user acquisition strategy that makes sense. Expect Draft to become a household name.
Fan Marino: Athlete endorsements are great, but the best way for Draft to acquire users quickly is to promise them an even playing field (i.e. no sharks). During the first half of the 2015 MLB season, 1.3% of players paid 40% of the entry fees while winning 91% of the profits, on DraftKings & FanDuel. The casual player needs to believe they can win.
Floyd Mayweather, Shaq, Richard Sherman are all promoting the same daily fantasy app