World Wrestling Entertainment Inc. (WWE) announced it will be launching its subscription based WWE Network in China; after agreeing on a revenue-sharing deal with PPTV, a video streaming subsidiary of Suning Commerce Group (SHE: 002024). China is the final frontier for the WWE, which averaged 1.63 million subscribers during Q2 ‘17 and streams in over 180 countries worldwide. The WWE has acknowledged that expansion into China is “critical to the company’s future growth”, as its major cities are home to more than 140 million fans, only some of which are currently consuming content legitimately.
WWE shares rise as streaming channel launches in China
Howie Long-Short: While the WWE’s pivot from PPV to subscription based programming has proven successful stateside, subscription-based streaming services are yet to become mainstream in China. Asia is a huge opportunity, but it may take some time to gain real traction.
Fan Marino: Did you know? Tian Bing is the first China-born superstar in WWE history. He made his debut at WrestleMania 33.
NFL owners are prepared to give Commissioner Roger Goodell a 5-year extension through 2024, to keep him in his current role through the next round of labor and media (CBS, CMCSA, FOXA, DIS) negotiations. Terms of the deal have not been released, but the contract is expected to pay Goodell in the range of $35 million/year. The NFL players union has already threatened a work stoppage in ’21, so stability at the top remained the owners preference; and while Goodell has been a target of criticism for fans, the league has grown exponentially under his watch.
Staying Put For A While: NFL Close To Extending Goodell’s Contract Through ’24
Howie Long-Short: Goodell isn’t an owner, he’s an employee. How is it possible he made $150 million during his first 8 years as commissioner, while Tom Brady only made $99 million during that same period? Both work for Bob Kraft…
Fan Marino: Goodell says he’s going to be at Foxboro for the opener. Barstool is giving away 70,000 “clown” towels. This should end well.
The Nebraska Board of Regents approved an 11-year deal worth $128 million ($64 million in cash, $64 million in apparel and equipment) to remain with Adidas (ADDYY). The new contract, the largest ever for an Adidas school, pays out $2.5 million more in cash and $1.6 million more in product, than the previous did in its first year. The school, which has been with Adidas since 1995, did not receive offers from Nike (NKE) or Under Armour (UAA).
Nebraska, Adidas each looking to benefit more from new apparel contract
Howie Long Short: For comparison sake, UCLA, Adidas’ previous flagship school, signed a 15 year $280 million deal with Under Armour in 2016.
Fan Marino: Nebraska signed with Adidas in 1995. ’95 Nebraska was among the best CFB teams of all time. Coincidence?
Barclays Center owner Mikhail Prokhorov is pressuring the Islanders to play a significant portion of their games during the 2018-2019 season at the Nassau Coliseum. Prokhorov, who also owns the Coliseum, is working to avoid defaulting on a contract signed by former owner Bruce Ratner, that guaranteed a professional hockey team would play at the recently renovated arena, in exchange for a contract to manage the facility. Negotiations are ongoing as the Barclays Center, which currently hosts the Islanders, is eager to get out the back-breaking deal that costs $55 million/year in guaranteed payments to the team, while the Islanders are looking for increased flexibility in the lease. The NHL has not announced if they would allow regular season games to be played at the Nassau Coliseum.
Prokhorov pressuring Islanders to play at Nassau Coliseum
Howie Long Short: When stadiums/arenas sit vacant, they lose money. It’s unfathomable to think that the Barclays Center is actually better off without the Islanders playing games there.
Fan Marino: The site lines at the Nassau Coliseum were among the best in the NHL. Fully supportive of this move.
YogaWorks (YOGA) finally made its public debut, pricing 7.3 million shares at $5.50/per, while raising $40.2 million in the process. The company had previously tried and failed to sell 5 million shares at $12-14/per, citing “market conditions” while postponing its July 20th scheduled debut. While those bullish on YOGA cite a subscriber base that is 40% millennials and has 60% earning $75,000 or more, the nationwide yoga chain has posted net losses two years in a row. In the filing, the company which currently owns 50 studios, announced it is in deep negotiations on 14 more at a cost of $5-6 million.
YogaWorks (YOGA) Completes Its Discounted IPO, Raises $40.2 Million
Howie Long Short: “Market conditions” is code for lack of interest. In this case, the shares were simply overpriced.
Fan Marino: The company cited 30 million visits last year. If Millennials are making 12 million of those trips (40%), perhaps it isn’t avocado toast killing their chance of home ownership… Doesn’t anyone work anymore?!?
Instagram (FB) has announced a new feature, to be introduced globally within the next few months, that is going to enhance sports broadcasts for fans. Tentatively known as “live with”, the newly developed feature will give broadcasters the ability to provide a viewer with the option to join the broadcast, as a co-host, in a split screen fashion. Real world applications for the technology include the ability to conduct remote interviews, to provide unique camera angle/view options and to connect players with fans/influencers.
How Instagram’s New “Live With” Feature Can Work For Sports Teams
Howie Long Short: Networks can save millions of dollars/year by broadcasting games remotely. Is this the first step to fan acceptance?
Fan Marino: Which broadcast network is going to be progressive enough to “live with” the Bills Mafia during their NFL pregame show?
The NFL saw an 8% decrease in TV viewership during the 2016 season and ad buyers are projecting additional losses during the 2017 season. A Variety survey of commercial ratings projections (taken from the 3 top media buying agencies) indicated that fewer people are expected to watch commercials live during NFL games and within the 7 day period following the broadcast, than last season. While some believe the NFL has peaked, its games still draw higher ratings than just about anything else on television.
Madison Avenue Predicts Football Viewership Will Drop Again This Year (EXCLUSIVE)
Howie Long Short: A drop in ratings means less ads to sell. Broadcasters promise ad buyers a number of impressions. If they fall short, they use future ads as “makegoods” to offset the difference. Needless to say, those are ads that can’t be sold to other buyers.
Fan Marino: For the first time in 25 years the NFL isn’t rapidly growing and the league’s owners are looking to give the Commissioner a 5 year contract extension through 2024. Why now? Who else is paying him $35 million/year?
Beginning next season, NBA teams will have the option to sell advertising space on their uniform. At least 12 teams have announced 3-year jersey sponsorship deals, ranging in value from $4 million to $8 million per year. While previously difficult to measure branding ROI, companies like IdenTV now enable brands to track their sponsorship efforts using facial and object recognition technology within live video. Logos on NBA jerseys are expected receive at least 2 billion+ impressions, across various media platforms, over the course of a season.
What Is The Value Of Jersey Sponsorship?
Howie Long-Short: This is still a rounding error for corporate sponsors’ ad budgets, but as a fan, I wonder how many years until these turn into soccer jerseys?
Fan Marino: How do you slap a corporate logo on the Celtics or Lakers jersey? Is there no sanctity left in sports?!?
An investment group lead by lawyer Chuck Greenberg has submitted a letter of intent to purchase the NHL’s Carolina Hurricanes. The group will keep the team in Raleigh. While the LOI is non-binding, negotiations are far enough along that attorneys for both sides are reviewing the terms. There is currently no timetable for the sale, but a deal could potentially be finalized prior to the October start of the season. Current owner Peter Karmanos has stated he believes he can sell the team for $450 to $500 million.
Hurricanes sales draft agreement goes to lawyers; Greenberg meets with Centennial Authority chairman
Howie Long-Short: As of November ’16, Forbes had the team’s enterprise value at $230 million. It is known that Greenberg’s group has struggled to raise money. I can’t see this deal closing anywhere near the $450 million Karmanos wants.
Fan Marino: Carolina is the least valuable NHL franchise. Uphill battle selling hockey in North Carolina, when UNC, Duke and N.C. State are playing hoops at the same time.
Between 2013-2016, ESPN (DIS) has lost 9 million subscribers, dropping from 99 million subscribers to 90 million, and recent Nielsen figures indicate that the figure could now be as low as 87 million. At an estimated $7.50/subscriber, you can assess that DIS incurred a $1.08 billion deficit over that time frame, with the number still growing. DIS shareholders are hopeful that their recently announced OTT streaming service will offset the losses. It is difficult to project if that is going to be the case. The business model, price point and content to be included have yet to be announced.
Can Streaming ESPN Solve Disney (DIS) Stock’s Problems?
Howie Long-Short: The question is not even whether this nebulous minor-league streaming service can offset cable subscriber losses, but how much further losses to come they can stem. Without any details, it sounds like not enough–and not soon enough.
Fan Marino: I don’t see 12 million people signing up at $7.50/mo., to watch games that aren’t good enough to be broadcast on the mothership.