NBA OWNERS CRYING POVERTY; SAY 9 OF 30 TEAMS LOST MONEY DURING ’16-’17 SEASON

ESPN (DIS) released confidential NBA financial records indicating 9 of the league’s 30 teams lost money during the 2016-2017 NBA season; despite the teams combining to generate $530 million in net income. While the league has a $24 billion TV contact that is equally shared amongst its 30 franchises; each team negotiates their own local media rights deals, giving a significant financial edge to the teams in the largest markets (The Lakers received $149 million from Time Warner (TWX) for ’16-’17 season, while the Grizzlies received a league low $9.4 million). With total league revenues determining the salary cap (and floor), local revenues keep teams profitable, and that has small market owners concerned. If the large market teams can pay significant luxury tax penalties while remaining profitable, they can theoretically hoard stars and alter the competitive balance within the league.

Howie Long-Short: There is no need to pass around a collection basket for NBA owners. For starters, the net income figures used in this report only reflect “basketball operations”. Several teams own their own arenas. Non-basketball related revenues generated are not included in the calculations. More importantly, the value of these franchises continues to rise with each sale. Leslie Alexander just sold the Rockets for $2.2 billion, 15x (after inflation) what he paid for them just 25 years ago. It is important to remember that no one loses money owning a professional sports franchise.

Fan Marino: The small market owners are worried about the size of local media rights deals altering the league’s competitive balance? What competitive balance? 4 teams have a chance to win the 2017-2018 NBA Championship (BOS, CLE, GSW, SAS). While we are talking about competitive balance, you want the worst team to have the #1 pick. Lessening those odds to prevent tanking is a bad idea.

A confidential report shows nearly half the NBA lost money last season. Now what?

361 DEGREES UNVEILS A SIGNATURE SHOE LINE FOR JIMMER FREDETTE

2011 College Basketball POY, Jimmer Fredette was the leading scorer in the Chinese Basketball Association last season, averaging 37.6 PPG, while winning the league’s MVP award. He was rewarded with a two-year $3.6 million contract (he’ll return to the Shanghai Sharks) and a new shoe contract. Chinese footwear brand 361 Degrees has just unveiled a signature shoe line for the former BYU star. No information pertaining to the price of the shoe or the terms of the agreement were released.

Howie Long-Short: 361 Degrees International Limited has over 5,500 shoe & sporting goods retail stores in China. The company trades over the counter under the symbol OTC: TSIOF. The company reported that H1 ’17 revenues rose 9.5% to $2.8 billion Yuan, with footwear sales making up 46.8% of the company revenues. Look for that number to continue to grow. Chinese fans consider Jimmer a “god”; they are going to buy these shoes.

Fan Marino: No American has had more success in the Chinese Basketball Association than Stephon Marbury. The 2x NBA All-Star won 3 CBA Championships and a CBA Finals MVP award, during 9 seasons in China. At 40 years old, Marbury has recently expressed interested in returning to the NBA.

FOX SPORTS DIGITAL PAGE VIEWS DOWN 88% SINCE PIVOT TO ALL VIDEO

Fox Sports (FOXA) laid off +/- 20 writers back in June, announcing they would be eliminating the writing staff to invest in more lucrative video production. For the first time since that announcement, digital page view figures have been released. According to Richard Deitsch of Sports Illustrated (TWX), Fox Sports’ websites lost 88% of its website traffic between the end of the written era, May 27-June 25 (143.9 million views), and start of the all video era, August 19-September 17 (16.7 million views). It is worth noting for comparison purposes that ESPN had 83.4 million unique digital viewers during the month of August.

Howie Long-Short: I’m going to reserve judgement on the pivot until Q3 financials are released. It’s entirely possible that the company is running lean, having dumped +/- 20 salaries, while generating more ad revenue from the video content. Of course, advertisers aren’t going to continue paying high ad rates if the company has no page views.

Fan Marino: Jamie Horowitz, who loves himself a hot take and was behind the pivot, is no longer running things at Fox Sports. Company President and CEO Eric Shanks said at the time of Horowitz’s dismissal that the company would continue to “execute our playbook”. As a fan, I’m booing the play calls and asking for a new offensive coordinator. Give me high-quality in-depth investigative reporting, not the most outrageous comments a carnival barker can shout on video.

https://twitter.com/richarddeitsch

IMG COLLEGE, LEARFIELD TO MERGE; WILL CONTROL MULTI-MEDIA/SPONSORSHIP RIGHTS TO 90% OF P5 SCHOOLS

IMG College, which holds multi-media and sponsorship rights to more than 90 schools, has agreed to a blockbuster merger with Learfield, which holds rights to 130 other collegiate athletic programs; meaning together they will control the marketing and media rights for 70% of D1 programs and 90% of P5 conference schools. Industry experts speculate the new company could be worth more than $2 billion. Learfield CEO Greg Brown is expected to lead the new entity. Terms of the deal are expected to be finalized in the coming days.

Howie Long-Short: WME-IMG is a privately held company, but you invest in it through Japanese internet/telecom giant, Softbank (OTC: SFTBY). Softbank invested $250 million into the company at a $5.5 billion valuation in 2016. That investment has done well. WME-IMG recently closed on a $1.1 billion investment round with the company valued at $6.3 billion.

Fan Marino: College Presidents looking to shake up their athletic department should place their first call to IMG President, Tim Pernetti and offer him a blank check. Prior to being made the “fall guy” in the Mike Rice scandal; he oversaw a successful Rutgers football program, set fundraising records at the school and negotiated the deal that brought the University into the Big10. I don’t believe you can hire a better A.D. than Tim Pernetti.

IMG College Negotiating Merger With Learfield To Create Media Rights Juggernaut

CAMPING WORLD TO BECOME THE OFFICIAL SPONSOR OF MLB LEAGUE CHAMPIONSHIP SERIES

Camping World Holdings (CWH) and MLB have announced a multi-year partnership that will make CWH the official sponsor of the League Championship Series’, beginning with the 2017 post season. The mutually beneficial partnership will provide CWH the ability to expand brand awareness through a variety of broadcast, digital, social, mobile and in-park platforms; while offering MLB access to outdoor enthusiasts and new outlets to sell MLB gear. The partnership also makes CWH the presenting partner of Spring Training, will provide exposure for CWH subsidiaries Gander Outdoors, Good Sam, Overton’s, The House & Windward/W82 and gives CWH brands permission to produce MLB licensed items in a variety of consumer product categories. Financial terms of the deal were not released.

Fan Marino: Camping World CEO Marcus Lemonis, a fanatical Cubs fan, is also the star of CNBC’s show “The Profit”. On the show, Lemonis offers struggling small business owners, investment capital and expertise, in exchange for ownership stake. Lemonis earned some good will last fall when he donated 2 of his 4 Field box tickets for Game 3 of the World Series, so a 97 year-old-fan and his son could attend the game.

Howie Long-Short: Camping World Holdings recently reported “record” Q2 ’17 earnings, with net income up 26.3% to $105 million and net income margin up 40 basis points to 8.2%. The company increased revenues 20.7% to $1.3 billion YOY, as it continues to expand its product offerings beyond RVs. This is what Lemonis does. He turns companies around.

MLB, Camping World announce multi-year partnership

EXCLUSIVE: KEVIN HARVICK DISCUSSES HIS PERSONAL PORTFOLIO

The Monster Energy (MNST) NASCAR Cup Series playoffs are underway, with 16 drivers competing to be crowned Champion at the Homestead-Miami Speedway on November 19th. JWS got the exclusive opportunity to sit down with 2014 Champion, Kevin Harvick to discuss his investment portfolio, sponsorship partners and sports marketing agency.

JWS: How important is it to you to have sponsors that you would invest in?

Kevin Harvick: The companies that you believe in and invest in, are the companies that you want on your car. I can tell you Exxon Mobil (XOM) is in my portfolio.

JWS: How have you managed to maintain long-term partnerships with several of your sponsors?    

Kevin Harvick: We’ve been fortunate through the years to develop what we have with the Busch Brand (BUD), Jimmy John’s, who’s been with us since 2009 and Textron (TXT), who started with us back in 2007. We’ve kind of found the niche with each of those companies in terms of what they like to do, how they like to entertain and where they like go.

JWS: Does having KHI Management (his sports marketing agency) help in terms of signing NASCAR sponsorship deals?

Kevin Harvick: The thing that makes us unique and different is that we have a sports agency that represents 2 PGA golfers, Donald Cerrone (UFC) and Harrison Burton (motocross). We’ve tried to make ourselves more diverse so that when we are trying to cut a deal for a NASCAR sponsorship, we have a family of assets that we can blend in; golf tournaments, UFC fights, etc.

JWS: How closely do you follow the market?

Kevin Harvick: I wake up with Maria (Bartiromo). I like to understand what is happening in the world. I spend a lot of time paying attention to it because I’m intrigued by it.  

Fan Marino: Textron is a large cap aerospace, defense, security and advanced technologies industrial conglomerate that happens to own E-Z-GO. E-Z-GO sells golf carts. The company reported revenues were up 2.6% YOY to $3.6 billion in Q2 ‘17. Revenue growth was attributed to the company’s May acquisition of Arctic Cat.

Howie Long-Short: The NASCAR Cup Series playoffs started this past Sunday with a race at the Chicagoland Speedway. Harvick currently sits in 3rd place in the standings, 35 points behind the leader (Martin Treux Jr.) The next race is Sunday 9/24 at the New Hampshire Motor Speedway.

DISNEY PUSHING ALTICE TO PICK UP ACC/SEC NETWORKS IN NYC MARKET; SUBSCRIBERS WILL LOSE ESPN IF NO DEAL REACHED BY MONTH END

Disney’s (DIS) contract with cable operator Altice USA (ATUS) expires at the end of the month and the ESPN parent company is asking ATUS to carry the ACC Network, the SEC Network and expand distribution of the ESPN flagship channel (i.e. less skinny bundles w/o it) within the NYC market, as conditions for a renewal. Should talks fail, subscribers would lose access to ESPN. Verizon Communications (VZ), ATUS’ main competitor in the market would likely be the beneficiary should disenchanted subscribers opt to make a change. It is the first of several TV distribution contracts that DIS will work to renew over the next 2 years. If successful, the approach will help DIS stem the loss of subscribers cutting cable or subscribing to skinny bundles that exclude live sports.

Howie Long-Short: Altice became a player in the NYC market when it purchased Cablevision and acquired their 2.4 million subscribers. The company recently announced a one-year, $1.2 billion share buyback plan, that reflects the company’s confidence in hitting near-term financial targets and boost shareholder returns.

Fan Marino: More than 90% of NYC isn’t going to be pleased with the incremental cost increase associated with the addition of the ACC & SEC Networks; but NYC CFB fans are about to get high quality football, heavily subsidized by their irreverent neighbors. Now, if they would only add the Pac-12 Network…

ESPN Pushes College Channels on Altice in New Fee Talks

BJORN BORG EXPANDING INTO U.S., U.K. AND GERMANY; TO COMPETE WITH LULU, NKE, ADDYY AND UAA

Bjorn Borg AB (STO: BORG) will be expanding into the U.S., U.K., and Germany, as the company looks to become a global brand. Once known for their brightly colored underwear, BORG has spent the last 3 years transforming itself into a sportswear brand that intends to compete with the likes of Lululemon (LULU), Nike (NKE), Adidas (ADDYY) and Under Armour (UAA). The company has yet to decide if it will open brick and mortar stores, find a wholesale partner or sell its product through department stores as it prepares to increase its presence in London and Berlin.

Howie Long-Short: BORG already has some of its product in London stores and hasn’t gained any significant traction. The U.K. and Germany combined are generating less than 10% of company sales. To expect them to drive growth in 2019 is wishful thinking. CEO Henrik Bunge insists that Bjorn Borg’s fame/name will enable him to compete within the U.S. market. I’m telling you that they can’t compete and shouldn’t try.

Fan Marino: Not a tennis fan? Between 1974 and 1981 Bjorn Borg won 6 French Open Titles and 5 Wimbledon Championships. In 1979 he became the first player to win $1 million in prize money in a single season. He’s among the all-time greats.

Bjorn Borg Targets London, Berlin in Growth Push Leading to U.S.

 

APPLE WORKING TO PROVE WATCH IS A MEDICAL DEVICE; WOULD BECOME “MUST HAVE”

Apple (AAPL) has confirmed a report that it has teamed up with Stanford University on a heart study to determine if the Apple Watch can accurately detect cardiac arrhythmias. The goal of the study is to convince the FDA that the Watch’s heartrate monitor is accurate/sensitive enough to be used as a screening tool. Up until now, AAPL has been able to avoid federal oversight as the Watch has been classified as a wellness tool. The company also reported that it is expanding its partnership with Aetna (AET), to determine if the Watch can reduce overall health costs.

Howie Long-Short: CEO Tim Cook has stated “medical health activity is the largest or 2nd largest component of the economy, depending on the country”; so, the outcomes of these studies are going to be crucial to the future of the Watch. If AAPL can make the successful transition from fitness to medical, the Watch becomes a “must have” for high risk patients and sales soar. I’m of the belief that it isn’t a matter of if, but when they can prove they are saving lives.

Fan Marino: The latest AAPL watch includes LTE, meaning you no longer need to have your iPhone with you and connected to make calls, run apps, etc. It’s a big development for people who use the Watch for fitness tracking functionality, but if you don’t already have the Watch, it’s not convincing you to buy one. It’s certainly not convincing me.

It’s official: Health, not just wellness, is Apple’s future

AMAZON MAXIMIZING THURSDAY NIGHT FOOTBALL STREAMING RIGHTS WITH 5 VERSIONS OF EACH GAME

Amazon (AMZN) purchased the rights to stream 11 Thursday Night Football games during the 2017 season, starting with the Bears/Packers game on September 28th; and they fully intend on maximizing their global audience. The e-commerce giant will offer 4 unique streams of each game in addition to the CBS broadcast; Spanish, Brazilian and Portuguese versions, as well as secondary English feed. Each feed will have their own announcers calling the game over the CBS-produced video.

Howie Long-Short: CBS Chairman Sean McManus doesn’t think Amazon streaming the game is going to have any effect on their ratings. It’s hard to argue against him. Amazon boasts 80 million Prime subscribers; but Twitter has 300+ million active monthly users and they only drew an average of 265,000 viewers/min during last season’s TNF games. How does Amazon even match those numbers?

Fan Marino: Relax NFL fanatics. The secondary English feed isn’t going to feature “homers”, a coaches film room or a roundtable of personalities. It’s designed for an English-speaking audience that is new to the game. Think Football 101.

Amazon gives NFL global feel?