Editor’s Note: Welcome to a daily column we run here at BroBible breaking down the day’s biggest stories in sports finance with commentary from the sports money and sports fanatic perspectives. It comes to us via our friends at JohnWallStreet, publisher of a free e-mail newsletter focused on sports related public equities and their subsidiaries.
You can sign up here.Golf Viewership Directly Correlated to Woods’ Performance, Equipment Sales +8% YoY
One can debate Tiger’s impact on equipment sales, but his impact on television viewership is undeniable. Tiger was in contention at 3 of the 4 majors this summer and final round viewership rose significantly for each; +14% YoY for The Masters (finished 32nd), +37% YoY for the British Open (finished 6th) and +69% YoY for the PGA Championship (finished 2nd) – when 8.5 million tuned in. The final round of the one major that Woods failed to make the cut for, June’s U.S. Open, posted the 3rd lowest television audience in tournament history.
Howie Long-Short: NPD Group reported that golf equipment sales rose +8% YoY (to $2.5 billion) for the 12-month period ending on June 30th. It was a welcomed return to black for an industry that saw notable manufacturers (think: Nike, Adidas) and retailers (see: Sports Authority, Golfsmith) exit the business over the last several years. Sales shouldn’t slow down anytime soon; 10,000 baby boomers retire each day and junior sales rose +31% YoY.
Callaway Golf (ELY) and Acushnet (GOLF) have both benefited from rising equipment sales. ELY’s Rogue line of woods/irons and new Chrome Soft balls drove a +30% YoY sales increase during the most recent quarter and company shares are up +72% over the trailing 12 months. ELY hit a 17-year high earlier this month ($23.60), closing on Friday at $22.52. As for GOLF, the company grew Q2 sales 11.7% YoY (on a consolidated basis) on the back of increased Titleist clubs (718 Irons, Vokey SM7 Wedges) and Titleist golf ball sales. GOLF shares are up +60% over the last 12 months; they’ll open at $27.00 on Monday 8.20.
It’s worth mentioning that while women’s equipment sales rose +7% YoY, TaylorMade has made no effort to land those golfers; at least not via sponsorship on the LPGA Tour. Golfweek reported that back in June the company told the LPGA Tour’s top golfer Inbee Park that only players who use their drivers are eligible for free products (she had asked for a few replacement clubs); an unusual response as it’s considered “professional courtesy” for the top players within the game. The company also hasn’t sent a rep out to a LPGA event yet this season and the tour’s equipment trailer no longer “carries a TaylorMade sign.”
Fan Marino: NBCUniversal Group has signed a 3-year pact to carry the PGA Tour’s live-streaming subscription service. Beginning in ’19, NBC Sports Gold subscribers will receive more than 360 hours of exclusive programming including Thursday and Friday morning coverage from all 28 tour events. Pricing has yet to be set, but expect it to be in-line with its other offerings ($49.99-$69.99).
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F1 Experiencing Significant U.S. Viewership Growth, Operating Income Declines -69%
Formula One returned to ESPN (ABC and ESPN2 also have races) this season following a 2-decade absence from the network and the racing circuit is experiencing significant viewership growth; particularly impressive, considering F1’s audience increased +70% over the proceeding 5 years. April’s Bahrain Grand Prix saw an average of 683,000 viewers tune in, making it the largest U.S. cable audience for an F1 race since ’12; while May’s Monaco Grand Prix recorded 809,000 viewers, the largest audience to watch an F1 race on cable-television since 1995. The encore presentation on ABC drew another 2.1 million viewers, reflecting a +40 YoY increase on the live and tape-delayed broadcast audience figures. It’s worth mentioning that ESPN is running a simulcast of Sky’s F1 broadcast coverage.
Howie Long-Short: F1 teams are expected to split $921 million in ’18 prize money, which would be $45 million less than they received in ’16; despite an increase in the number of races. That’s because F1 teams split 68% of the circuit’s underlying profits, and costs have increased significantly (think: rebranding, new headquarters, eSports) since the Liberty Media acquisition. The $921 million figure may represent a best-case scenario. F1 is facing the difficult decision to re-brand again, compensate 3M or engage in a costly legal battle with the manufacturing company over its new logo.
Rising costs (+$27 million) and declining revenues (-$31 million to $585 million) drove F1 operating income down a staggering -69% (to just $14 million) during the most recent quarter. FWONK shares closed at $35.15 on Friday 8.17.
Fan Marino: When Liberty Media took over Formula One in January ’17, it touted the “enormous” opportunity to add sponsors “in the short term.” Well, nearly 2 years later that prediction has yet to come to fruition. In fact, the racing circuit grew sponsorship dollars less last year (+$11 million) than any time in the past decade; reporting just $273 million in sponsorship revenue.
The circuit lost marquee sponsors Allianz and UBS in ‘17 and has yet to replace them, but annual escalators in existing pacts have prevented sponsorship income from declining in ‘18. For those wondering, the most notable deal F1 has signed this year was with Amazon Web Services; the agreement includes both traditional sponsorship and technology services that will enable the circuit to build out its digital capabilities.
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What is JohnWallStreet?
JohnWallStreet, located at the intersection of sports and finance, is a destination for the educated sports fan.
While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related business news, in easily digestible bites, with commentary from both the sports money and sports fanatic perspectives.
We’ll cover publicly traded professional teams & stadiums (MSG, RCI, BATRA, MANU), television networks (DIS, FOXA, CMCSA, CBS, TWX, MSGN), apparel & footwear companies (NKE, UAA, ADDYY, FL, LULU), equipment companies (GOLF, ELY, FIT), ticketing companies (EBAY, LYV) content and facilities providers (CHDN, DVD, ISCA,TRK, LMCA). If it trades on Wall Street, and has a sports angle, it’s in our wheel house.
Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Securities & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.
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