Jefferies investment bank analyst Randal Konik is predicting the newly released Steph Curry 4 “will become the #1 sneaker in basketball this year”, leading to a rebound of the Under Armour (UAA) brand (down 44% YTD). After years of rapid growth, the UAA reported its second straight losing quarter in August; pointing to a sluggish signature market and weak consumer reception to the Curry 3 as reasons for the decline. UAA is taking a different marketing approach with the Curry 4; releasing the shoe in phases, while limiting distribution and colorways to create consumer demand.
Howie Long-Short: Konik points to the Curry 4 “championship pack” selling for 80-100% above retail, as evidence of a pending turnaround. I’m not so sure. Just a handful of stores received them and those that did had just a couple hundred for sale. You can create buzz selling in limited quantities like that, but you won’t generate meaningful revenues that way (see: Adidas/Yeezy); and unlike ADDYY, UAA doesn’t have a Stan Smith, NMD or Superstar to drive their resurgence. Konik’s most valid argument for UAA upside? LULU having a higher market cap than UAA “makes no sense”.
Fan Marino: The “championship pack” included: 2 pairs of Curry shoes, 2 pairs of Stance socks, a golf divot tool and a signed letter from Curry. The pack retailed for $400. The Curry 4 is selling for $130. Steiner Sports sells Steph Curry autographed photos for $299. Fans lucky enough to land a pack would seem to have gotten their money’s worth.
Stephen Curry’s new shoe will spark an Under Armour turnaround: Analyst
Time Inc. (TIME) is working to sell off some of the smaller entities within their portfolio, as the company focuses on developing its core assets; People and Time magazine. Golf Magazine and Golf.com are among the TIME properties for sale, despite both experiencing significant growth over the last year. Recent comScore metrics indicate unique monthly visitors at Golf.com are up 76% YOY (to 3.3 million) with mobile traffic, video consumption and social reach all experiencing a similarly high percentage growth. While the targeted price has not been disclosed, reports indicate a sale could occur by the end of November.
Howie Long-Short: Houlihan Lokey (HLI), a $2.7 billion boutique global investment bank that focuses on corporate finance business, restructuring and financial advisory services, is handling the sale. The company, which has grown revenues from $681 million in ’15 to $872 million in fiscal ’17, seems to have found a niche in the golf industry. HLI successfully negotiated TopGolf’s ‘16 acquisition of the online game World Golf Tour and was hired to steer the sale of The Club Company, a chain of 13 golf clubs in the U.K.
Fan Marino: TIME has announced that effective Jan. 1, it will be decreasing the frequency in which it publishes Sports Illustrated. The company will publish just 27 issues (including the swimsuit edition) in 2018, down from 38 issues this year. I’m disappointed to hear that. While I haven’t been a subscriber for years, SI was a “must read” during the early 90s-mid 00s when I became obsessed with sports. I would flip to the back page to read Rick Reilly’s piece first. Not familiar with Reilly’s work? Here’s a link to 10 memorable “Life of Reilly” pieces, worth checking out.
It’s a bittersweet split with Time Inc. for Golf magazine, Golf.com
MLB is reportedly considering expansion, radical realignment and a revamped playoff format. Portland and Montreal have been mentioned as the cities most likely to receive expansion franchises. Expansion would bring the total number of MLB teams to 32, leading to the creation of 4 8-team divisions (currently 6 5-team divisions) based on geography and the addition of two playoff teams.
Howie Long-Short: Why would a league that struggles to find quality pitching with 30 teams, add 2 franchises? Expansion fees! Arizona and Tampa Bay each paid $150 million to join MLB back in the late 90s. The NFL got $700 million to add a Houston franchise. MLS is taking in $150 million for their expansion franchises. The addition of 2 teams is going bring the league’s existing owners more than $1 billion to divvy up. I’m sure that will help them get over their frustrations with the 5th starter.
Fan Marino: Should the league decide to expand, it is likely the number of games/season would be reduced to 156 (from 162). Each of the 4 division winners would qualify for the division series with the next 8 teams, regardless of division, qualifying for Wild Card games. Playing 156 games (none of which are a one-game series) to determine the 12 best teams and then having 8 of them play in single elimination games, makes no sense. I’m certainly no baseball purist, but the elimination of the American and National Leagues is likely to upset those that are.
EXPANSION COULD TRIGGER REALIGNMENT, LONGER POSTSEASON
Ticketmaster (LYV) has signed a 5-year extension with the NFL to provide the league with the “first open architecture, fully digital ticketing system in sports”. The platform utilizes Ticketmaster’s “Presence” software to track ticket-trading and the identify of attendees; while validating and authenticating seats purchased within other marketplaces. Ticketmaster will remain the NFL’s preferred primary ticketing partner and will continue to operate the league’s resale marketplace (NFL Ticket Exchange). Financial terms of the new deal were not disclosed, but it is expected that Ticketmaster will be paying more than the $200 million it paid on the expiring deal.
Howie Long-Short: As I noted yesterday, increased distribution leads to greater competition and ultimately lower prices. An open market best suits the fans’ interests. The NFL’s new ticketing system, open to other licensed marketplaces, gives fans the “broadest participation possible” from resellers. Great news for those who want to attend NFL games.
Fan Marino: Russia sold 2.6 million tickets to the 2018 World Cup, but not all those seats are within the stadium. FIFA requires World Cup venues hold a minimum of 35,000 people. 60-year-old Ekaterinburg Arena, a 2018 World Cup venues, apparently doesn’t. To maintain the historical façade of the stadium, organizers have decided against reconstruction and instead have chosen to comply by building a temporary seating structure outside the venue. You’ve got to see this to believe it.
Ticketmaster is taking NFL ticketing digital
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