Capital One (COF) has purchased the naming rights to Washington’s downtown sports arena, formally known as the Verizon Center and will rename the building, Capital One Arena. The deal is reportedly worth $100 million over 10 years, a significant jump from their previous agreement, and now among the most lucrative naming rights sponsorships in the league. Monumental Sports & Entertainment, which manages the venue, announced a separate $40 million investment into arena with the money going to a new data based effort to analyze fan preferences and a new POS system designed to create more efficient lines.
Verizon Center to become Capital One Arena, starting now
Howie Long-Short: If you are going to measure ROI for a naming rights deal based on social mentions, Capital One should do well. Both the Caps & Wiz are expected to be playing deep into the ’18 playoffs.
Fan Marino: Do you really need to spend $40 million to analyze fan preferences? It’s a simple formula: better food + cheaper beer + more bathrooms = happy fan.
Houston Rockets owner Les Alexander has announced he intends on selling the franchise and it would not be a surprise to see the purchase price push $2 billion. There should be no shortage of interested bidders as NBA teams are cashing in. Forbes’ 2017 valuations project a median operating profit of $23 million/team. On the court, the team is set-up for a short-term run, having signed superstar James Harden to an extension and trading for all-star Chris Paul. Off the court, the Rockets are among the most popular NBA teams in Asia, making them attractive to potential buyers both domestically and abroad.
Why The Houston Rockets Will Become The NBA’s Next $2 Billion Franchise
Howie Long-Short: Alexander purchased the team in 1993 for $85 million. Forbes values it at $1.65 billion today. A return of 18x your initial investment, in 25 years, isn’t bad.
Fan Marino: I keep hearing the Harden extension sold as a reason to buy the franchise. Are the Harden lead Rockets, as currently constructed, beating Golden State? If the answer is no, why do you want to pay him $228 million over the next 6 years?
Grubhub (GRUB) and competing delivery companies are pursuing contracts with stadium operators that will enable them to provide food delivery to all fans; not just the ones sitting in premium seats. Ordering would take place through a mobile application, with delivery directly to the fan’s seat. While many are excited about the prospects of avoiding long concession lines, some remain concerned vendors will get in the way of the game action. No timeframe has been given for roll-out of the program.
You’ll never have to get up for food at the game again
Howie Long-Short: Looking for a way to invest in stadium food delivery besides GRUB? OLO, which handles digital ordering for 35,000 restaurants, may be looking to get into the space. While OLO remains private, Paypal (PYPL) lead a $5 million series B funding round back in 2013.
Fan Marino: Sounds as if the Jets & Giants are going to be among the first teams to try this out (49ers have been doing it for years), this fall. As a Jets fanatic, this new service will help ensure I don’t miss a Hackenberg interception all year.
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?