MGM Resorts International (MGM) has purchased the San Antonio Stars of the WNBA and has announced intentions to relocate the franchise to Las Vegas for the start of the 2018 season. The Stars, who become the 3rd pro sports franchise to announce relocation to Sin City since ’16, will play its home games at the MGM owned 12,000 seat Mandalay Bay Events Center. NBA legend Bill Laimbeer has been named the team’s head coach and president of basketball operations.
Howie Long-Short: With acquisition of the Stars, MGM becomes is the 2nd gaming company to purchase a WNBA team; Mohegan Sun owns the Connecticut Sun. While news of the acquisition isn’t going to move the MGM share price, the move makes sense as the Stars will fill open dates at a MGM venue. The Stars are the first professional sports franchise under a MGM umbrella that includes the T-Mobile Arena; home to the Las Vegas Golden Knights. MGM is treating the Stars as a trial run for an NBA team, as they would like to land a co-anchor tenant for their arena.
Fan Marino: Speaking of gambling, for the 2nd time in 3 weeks MNF finished with a wild backdoor cover. With the Titans up 7, the ball on their own 27 and just a minute to play; a single first down would have won the game and made those who bet the Colts +7.5 winners. However, on 3rd and 5, Derrick Henry broke free for a 73-yard TD to ice the game and reward those who placed their money on the Titans. Had Henry simply gone down after picking up the first down, the Titans still would have won the game but the team would have failed to cover 7.5 points.
MGM Resorts revealed as buyer of WNBA franchise for Las Vegas
NFL owners will meet today and vote on Ticketmaster’s (LYV) exclusive control of the league’s secondary ticket market, which runs through the 2018 season. Should owners vote to end the ticket sales and distribution company’s exclusive reign, teams would have the option to select their own ticketing partners. Ticketmaster would remain the league’s preferred primary provider, with incentives to utilize the platform, but teams would be given the freedom to choose their “official secondary” partner.
Howie Long-Short: Increased distribution leads to greater competition and ultimately lower prices. Ticket Club, a platform that combines spec selling with a no-fee subscription model, estimates that fans saved $20 million on 2016 Super Bowl tickets using secondary markets; as opposed to NFL on Location, the league’s primary market vendor. Here is to hoping NFL owners vote in the best interests of the fans and provide us with a true open market.
Fan Marino: Last week a couple of Minnesota Timberwolves season-ticket holders filed a breach of contract lawsuit against the team for switching to a mobile ticketing system that “fundamentally, and unlawfully, alters the way ticket holders may use and transfer tickets”. The Wolves want fans to exclusively use Flash Seats (owned by Cavs owner Dan Gilbert), sell their tickets for at least 75% of the face value and transfer the seats using the application. Those restrictions create a lose-lose proposition. Fans are unable to unload tickets; the seat sits empty which hurts the crowd atmosphere and the team loses out on potential in-stadium revenue.
NFL May Terminate Ticketmaster Monopoly
Columbus Crew Owner Anthony Precourt has announced the MLS team will be moving to Austin for the 2019 season, if plans for a downtown stadium in Columbus are not approved within the next 12 months. Columbus has struggled financially, finishing in the bottom 3 of every MLS business metric for a decade, as stadium amenities lag far behind league standards. Team President Alex Fischer said Precourt has turned down offers to sell the team to investors who wish like to keep the franchise in Columbus.
Howie Long-Short: Same story, different city/franchise. Precourt wants a public subsidy for his private business and since Columbus hasn’t been willing to give it to him, he will go to Austin to get it. Stadium deals are never a good investment for taxpayer funding. The taxes collected on any hypothetical “economic growth” will never off-set the upfront funding spent.
Fan Marino: Precourt has no intention of staying in Columbus, even if they were to approve public financing for a new stadium. Any pretense of staying in Columbus is about squeezing more money out of Austin. That’s a shame. The Crew are an original MLS franchise and had the league’s first soccer-specific stadium. They’re also having a good season on the pitch, qualifying for the 2017 playoffs. It’s always the fans that lose in these negotiations.
Columbus Crew Angling Toward Relocation to Austin in 2019
A study published by the Economic Enquiry, found that Twitter (TWTR) is a better predictor of sporting event results than odds makers. During the ’13-’14 English Premier League season, mathematicians at the University of East Anglia (U.K.) used software to analyze 13.8 million tweets (5.2/second). They compared the results with in-play betting on Betfair (PDYPY) and found that at any given second, a positive “combined tone” about one team indicated that team had a better chance of winning than the odds suggested. The software’s recommendations produced an average ROI of 2.28% on 900,000 bets; particularly astounding when you consider PDYPY gamblers lost an average of 5.41% on those same matches.
Howie Long-Short: The predictive power of social media works if you’re analyzing the right sections of the crowd. TWTR can beat the house. Unfortunately, the average gambler lacks the ability to analyze the tone or crowd worth following; and certainly, not in real time. The “wisdom of crowds” isn’t going to put casinos out of business.
Fan Marino: Speaking of gambling, casinos were illegal in Japan until parliament passed a controversial law last December allowing them to be part of larger resorts. Now American gaming companies are actively competing to gain foothold in a market that can be “bigger than Las Vegas”, according to Chairman of MGM Resorts International (MGM) James Murran. Both Las Vegas Sands (LVS) & MGM have repeatedly stated they would be willing to spend at least $10 billion in Japan, while Melco Resorts & Entertainment (MLCO) has expressed it would be willing to spend “whatever it takes” for the opportunity.
Twitter Could Be The Key to Successful In-Play Sports Betting, Says Study
The Las Vegas Convention and Visitor’s Authority (LVCA) has signed a 20-year, $80 million contract to be the naming sponsor for the 51’s new ballpark. The deal has upset Las Vegas residents, as both the sponsoring organization and the amount agreed upon are atypical. A review of more than 250 professional sporting venues failed to turn up another government agency that sponsors a building. Furthermore, there are at least a dozen MLB teams that bring in less than $4 million/year from their stadium sponsorship deals.
Howie Long-Short: Of course Las Vegas residents are upset. This is a sham of a deal, executed while the city recovers. No other minor-league team has a naming rights deal worth more than $1 million. For $4 million/year, the LVCA could have had their name on nearly all 15 Pacific Coast League (PCL) parks. Heck, HHC bought into the team in 2013 at a $20 million valuation. This is a construction subsidy dressed as a naming rights deal and it’s a tremendous waste of tax payer dollars.
Fan Marino: As it currently stands, the 51s are without MLB affiliation for the 2019 season when the ballpark is scheduled to open. Their current affiliation with the New York Mets expires at the end of the ‘18 season and the NY franchise recently purchased the Syracuse Chiefs (another Triple A team); meaning they won’t be renewing. It is possible the new affiliate will not be announced until as late as September 2018. The Brewers and Nationals have been mentioned as possible replacements.
LVCVA’s $80 million ballpark deal to Las Vegas 51s is a major-league ripoff
FC Barcelona is reportedly offering star Lionel Messi a record $100 million to sign a contract extension with the club, worth $650,000/week; as his current deal expires with the end of this season. Barcelona, having already lost Neymar to Paris Saint-Germain (following a record $263 million transfer) this year, could not afford to lose Messi too. Rumors had been circling that the Argentinian star was interested in leaving the club to play for Manchester City. Messi has yet to formally accept the extension, but Barcelona captain Andres Iniesta has indicated he will.
Howie Long-Short: FC Barcelona spends 84% of total revenues on player salaries. That is an astoundingly high figure. NBA, NHL and MLB players are guaranteed roughly 50% of total revenues and NFL players take home slightly less than that. The NFL generated $13 billion in revenue in 2016. A 35% difference would mean that NFL owners are splitting $4.55 billion, that is earmarked for players in Europe. I’m sure American athletes will love reading that.
Fan Marino: To put $100 million into perspective, only 26 players in NFL history have made that much in total on-field earnings. For Messi, that is just the signing bonus. Peyton Manning made more money than any other NFL player in history ($248.7 million) and his brother Eli Manning ($219.3 million) is the only other NFL player to have made $200 million in on-field earnings.
Barcelona is reportedly giving Lionel Messi a record $100 million signing bonus — and they’re going to use an unusual way to pay for it
The Chicago Cubs television broadcast contact with NBC Sports Chicago expires in 2020 and the team is exploring selling OTT streaming rights, separate from a new linear TV contract. The Cubs partnered with Facebook (FB) this past season on a test run, simulcasting 4 games, and came away pleased with the results. The 4 games averaged 222,000 unique viewers, with first 3 averaging 259,000 (no marketing was done for the 4th game). For comparison purposes, the 2016 WS Champion Cubs averaged just 156,000 viewers for their local TV broadcasts (35% increase from ’15).
Howie Long-Short: The next round of TV contracts (for all leagues/teams) may not dramatically rise in value as the television audience continues to shrink, but the aggregate for live broadcast distribution rights will keep professional sports revenues on an upwards trajectory. Selling OTT rights separate from linear rights is a no-brainer as it provides a wider audience and another lucrative source of revenue. The structure of these contracts is going to be interesting to follow. Zuckerberg has already expressed that unlike traditional broadcast rights deals, he’s far more interested in rev-share partnerships than he is in paying out billions in guaranteed rights fees.
Fan Marino: Cubs Manager Joe Maddon was ejected from Game 1 of the NLDS for arguing an umpire’s call on a play at the plate. Maddon wasn’t upset with the rule itself (preventing a catcher from blocking the plate without possession of the ball), but the interpretation (the trajectory of the ball put the catcher in the runner’s path to the plate). Maddon went on to explain that not all rules are good rules, using Chicago’s unpopular soda tax ($.01/ounce) as an example. Perhaps Madden has a point. 9 days after implementing the tax, lawmakers voted to repeal it. As for the Cubs playoff series against the Dodgers, Justin Turner hit a 3-run walk-off home run on Sunday night to give the Dodgers a 2-0 series lead.
Cubs pleased with Facebook livestream test
President Trump has blurred the lines between sports and politics and lost some high-profile hotel guests in the process. At least 17 teams (out of 123 in NFL, NBA, MLB & NHL) had stayed at Trump owned properties in the years leading up to the start of his Presidential campaign; 16 of which no longer do. The New York Post reach out to all 123 American pro sports franchises, 105 responded to their inquiry; 0 would confirm its players currently stay at Trump properties, though most declined comment as to why they were going elsewhere. Warriors Coach Steve Kerr explained why Golden State chose to make a change saying “he continually offends people, and so people don’t want to stay at his hotel.”
Howie Long-Short: NBA teams pay roughly $20,000/night for rooms and food. If you figure each of the 11 teams that no longer stay at the Trump SoHo, came to NYC an average of 3x/year (to play Knicks and Nets; some Eastern Conference, some Western Conference), that property alone has lost $660,000/year in revenue.
Fan Marino: More than 1/3 (12 teams) of the NBA stayed at the Trump SoHo, as recently as 2010 (1 remains); with stars like Russell Westbrook raving about the property in the press. Losing their business isn’t just costing Trump revenue, he’s losing free advertising from valuable social media influencers. According to Opendorse, an online platform that connects brands with athletes, a single Russell Westbrook (5 million followers) tweet is worth a minimum of $20-$30K. Westbrook came in at #30 on their 2016 Top 100 highest-paid athlete endorser list.
Most pro sports teams have stopped staying at Trump hotels
Amazon (AMZN) is 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). Both manufacturers have begun to produce limited quantities for AMZN, as the company looks to test the market before entering in to long-term contracts.
Howie Long-Short: AMZN 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 product themselves and compete directly against the brand. That’s not good news for retailers (LULU shares dropped 4.9%, UAA down 2.8% since Friday’s announcement), but it does offer manufacturers a viable new revenue stream. Eclat expects its new e-commerce clients to generate up to 12% of company revenues in 2018, with the potential for that percentage to grow significantly.
Fan Marino: There are no shortage of media stories pointing to the end of the athleisure trend, so hearing that AMZN is first looking to get into the space is big news for those of us who live in joggers. Bezos isn’t known to be late to the party, so I’m betting this concept of dressing comfortably isn’t going out of style anytime soon.
Amazon Is Getting Into Sportswear
NBA sponsors spent a record $861 million during the 2016-2017 season, a 7.8% jump from 2015-2016 and a significant increase from the projected 4.3% annual increase in overall sports sponsorship expenditures. Sponsorship dollars are expected to rise again during the 2017-2018 season, with a new 8 year/$1 billion Nike (NKE) uniform deal beginning and teams selling advertising patches on their jerseys for the first time. State Farm, Anheuser-Busch Inbev (BUD), Gatorade (PEP) and Tissot (OTC: SWGAY) were the league’s most active sponsors during the ’16-’17 season.
Howie Long-Short: The data was compiled by ESP Properties, a sports & entertainment research and consulting firm owned by WPP (WPPGY), an international advertising & PR firm. Back in August, WPPGY cut full year revenue projections to between 0-1% for 2017 as some of their high-profile clients have cut back on ad spend (the consumer goods sector, in particular). CEO Martin Sorrell warned that Facebook (FB) & Google’s (GOOGL) dominance as advertising platforms and Amazon’s (AMZN) disruption of the retail sector are holding back ad growth world-wide. If he’s right, things are going to get worse for WPPGY (and others in the advertising world) before they get better.
Fan Marino: 9 of the league’s 30 teams had team sponsorship revenues below the league average last year; Charlotte Hornets, Denver Nuggets, Detroit Pistons, Milwaukee Bucks, Minnesota Timberwolves, New Orleans Pelicans, Philadelphia 76ers, Sacramento Kings and Utah Jazz. Only Charlotte and New Orleans do not have jersey patch sponsorships in place for this season. Is it a coincidence that the other 7 were proactive in securing lucrative ad patch deals? Probably not.
Sponsorship Spend On NBA Tops $880M, Will ‘Skyrocket’ With Nike, Jersey Deals