Editor’s Note: Welcome to a daily column we run here at BroBible breaking down the day’s biggest stories in sports business with commentary from the sports money and sports fanatic perspectives. It comes to us via our friends at JohnWallStreet. You can sign up here for their daily email newsletter.
NFL Experience Fails to “Meet Expectations”, To Close Less Than 11 Months After Opening
Less than a year after opening its doors (Dec.
’17), the NFL Experience (NFLX) will be “ending its season” effective September 30th. The 40,000 SF football themed interactive attraction, located at 20 Times Square, had been touted as an opportunity to bring fans closer to the game than ever before. Unfortunately, not enough fans enjoyed the experience; while the league did not release a statement explaining why NFLX was closing, one employee said it had failed to “meet expectations.”Howie Long-Short: The NFL Experience was a joint venture between the league and the entertainment company Cirque du Soleil, though it appears the league’s power brokers offered minimal support (both in the way of cash, operations and promotion) to ensure its success. Cirque du Soleil, served as the lead investor and oversaw the project.
In theory, keeping fans engaged in the off-season and find new ways to drive revenue makes sense, but the location selected likely killed the venture’s chances of success before the project had even got started. 2 other sporting concepts (ESPNZone and Sports Museum of America) had shuttered their Times Square location doors within the last decade and with ground floor space in the area (between West 42nd and West 47th) now commanding rents +/- $2,000 per square foot, NFLX was never going to draw enough visitors to turn a profit.
For those wondering, 90% of Cirque du Soleil is owned the U.S. P.E. firm TPG Capital, the Chinese investment firm Fosun Industrial Holdings and the Canadian institutional investor Caisse de depot et placement du Quebec. Of the 3, only Fosun Industrial Holdings is publicly traded. The company trades on the Stock Exchange of Hong Kong Limited (SEHK), under the symbol 656.
Fan Marino: The NFL Experienced offered fans the opportunity to go “from the practice field to the Super Bowl.” Interactive simulations of gameday experiences (think: walking out of the tunnel onto the field), a 4D rollercoaster theatre and the chance to celebrate with the Vince Lombardi trophy were among the football theme park’s marquee attractions (here’s video). For those who want to make a visit before the venue closes, it will remain open daily between the hours of 10a-8p.
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Blind Auction to Determine Sky PLC Winner
There’s finally an end in sight in the transatlantic battle between 21st Century Fox and Comcast for British broadcaster Sky PLC. Back in August Comcast increased its offer, valuing the London based pay TV group at +/- $34 billion. Under British takeover rules, Fox (owns 39% of Sky PLC) has until September 22nd to top Comcast’s all-cash bid. It now appears as if Fox will have the opportunity to take down Sky, without another bid, before this week’s deadline. The U.K. Takeover Panel has announced a blind auction will determine the winner. Though a best-and-final offer can still be made before Saturday’s deadline, a “sealed bid will [probably] be the only way to decide the outcome.”
Howie Long-Short: Sky is appealing to U.S. broadcasters because it gives them the rare opportunity to expand abroad. With primary broadcast rights to the English Premier League (through 2022), German Bundesliga (through 2021), and Italian Serie A (through 2021), the company is a market leader in the UK, Ireland, Germany, Austria, and Italy.
Generally speaking, European sports broadcast rights sell for +/- 30% less than those in the U.S, but that doesn’t mean Sky’s profitability hasn’t suffered amidst skyrocketing acquisitions costs. The company’s current rights deal with the EPL ($2.25 billion per season) resulted in operating profits for its the UK division declining -14.1% during FY16/17, the first year of new deal (cost cutting moves in ‘17/18 enabled the division to grow operating profits again). In Germany ($1.36 billion per season), the company posted a loss a $5.2 million loss for FY17-18, just one year after recording the division’s first positive result ($52.6 million under old contract). Sky has since conceded rights, so expect the divisions return to begin growing profits again in ‘18/19
Recent developments in Italy have been much more favorable. Thanks to a legal dispute between Serie A and the Barcelona-based MediaPro Group, Sky Italia – in a joint bid with DAZN – retained domestic rights with just a minimal cost increase (+3.2% to $1.13 billion per season); though, it must be noted that reaching subscription milestones could result in the fee increasing by as much as $116 million/season.
Sky PLC’s stock has nearly doubled since Fox first agreed to buy the remaining shares of London based broadcaster at a 35% premium back in December 2016. Shares closed at $83.34 on Wednesday, meaning investors still see +/- 6% upside from Comcast’s latest bid.
Fan Marino: Sky customers in the U.K. have been hurt by the increased competition for sports rights market as they’ll now need to pay for Amazon Prime and Eleven Sports if they want Golf’s US Open, the Tennis PGA Championships, or the Spanish La Liga.
While Howie mentioned that Sky has dropped rights to lower their expenses in several markets, one place you won’t find Sky cutting costs is with domestic futbol rights as they drive subscriptions. All three divisions reported subscriber growth during FY17/18 (UK: 13.0m; Germany/Austria: 5.2m; Italy: 4.8m) despite each carrying fewer games than under the terms of their previous deals.
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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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