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.
Retail Apocalypse Hits Foot Locker, Again
Foot Locker, among 23 companies experiencing a “retail apocalypse”, announced on Friday that it would be closing an additional 110 under-productive stores in 2018; after closing 147 locations in 2017. Mall-centric retailers are struggling as consumer traffic has declined in favor of an e-commerce sales experience. FL is said to be working to reduce its exposure to “deteriorating malls”, instead focusing on opening up 40 “select, high-profile” stores (company opened 94 in ’17).
Howie Long-Short: Foot Locker posted disappointing Q4 ’17 financials (same store sales declined 3.7%), reporting a net loss of $49 million. Sluggish sneaker/apparel sales were blamed for the steeper than expected decline. The Q4 results combined with projections anticipating ’18 sales to be “flat to up low single digits”, sent shares tumbling 12.69% (to $40.04) at Friday’s close. It wasn’t all bad news though, Q4 2017 sales did increase 5% YOY (to $2.2 billion) and the company foresees an H2 ’18 recovery on the horizon. It’s worth noting that FL invested $15 million into Carbon 38, a luxury women’s active apparel company, during Q4 ’17.
Fan Marino: While declining athletic footwear (not a single performance sneaker placed in the Top 10 for ’17 footwear sales) and apparel sales are hurting FL’s business, athleisure as a trend remains popular; continuing to outpace dress and casual. That’s good news for me (I’m a big joggers and t-shirt guy), but better news for Sweat Tailor; a privately-held company that has managed to combine the comfort of sweatpants with the fit/style of jeans/dress pants. You need to check out their 5 pocket pants; they’re a game-changer. Oh, and if you use the code “JWS-ST” you’ll get 25% off. This is NOT a paid advertisement. I’m just looking to introduce a great product.
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European Sports Business News, Analysis and Data Provider Establishes U.S. Presence
SportBusiness Group, a London-based news, analysis and data provider covering the global sports business industry, has expanded business operations to the U.S.; establishing a physical presence within the Americas for the first time. Already counting ESPN, IMG and the NBA as clients, the newly established Miami office will focus on the distribution of in-depth intelligence to clients across the biggest international sports market. JohnWallStreet had the chance to ask CEO Ben Speight about why the company decided to open a U.S. office, the focus of their news publication and where their expertise lies.
JWS: SportBusiness’ expertise has traditionally been on European media right holders. Why did you guys make the decision to expand operations across the Atlantic?
Ben: Our mission has always been to provide best-in-class information, on the best business strategies and business models being used within the sports industry. If we want to provide the richest most valuable insight to our clients then we need to be in as many corners of the industry, to be finding out better information and intelligence; hence, why we opened in the Americas. We need to be on the ground gathering that information, both for our European clients who continue to look at the U.S. because it is undoubtedly the world’s biggest sports market; but, I think increasingly the U.S. market is open minded to look at the what the top European rights holders are doing in terms of monetizing their fans. Whether that be through broadcast rights, sponsorship rights, ticketing or stadium activations. So, what we’re trying to do is be the first information publisher within the sports industry, to have the broadest and most valuable set of case studies, business intelligence and data.
JWS: SportBusiness International is your news publication. Who does it target? What sectors of the industry does it cover?
Ben: It serves rights holders, agencies, broadcasters, sponsors and stadium companies. We’re generalists in that we look at a broad range of sectors within the sports industry and developments within those sectors.
JWS: Is there a sector where the company excels?
Ben: We have specialties in media rights (broadcast rights) and sponsorship rights. We collect data on those 2 sectors, so executives who are working in those industries have the business-critical information necessary to make deals and to extract more information. The data products are geared towards rights holders and agencies. The evolution of our business has us moving away from news and more into data.
Howie Long-Short: SportBusiness Group was acquired by Ricardo Silva’s investment firm (Silva International Investments) in August 2017, joining a portfolio that includes; The Miami FC (MLS) and MP & Silva (owns, manages and distributes media rights). In December 2017, the company invested in Globe Soccer; the company that owns the rights to the annual Globe soccer awards in Dubai.
Fan Marino: Need data to prove that the U.S. is in fact the biggest international sports market? The worldwide sports media rights market is valued at $49.5 billion. U.S. rights holders take in 36% ($18 billion) of that total, with the NFL ($7.3 billion), NBA ($3.9 billion) and MLB ($3.4 billion) regarded as 3 of the 4 most valuable sports media properties in the world. The English Premier League ($4.5 billion) is the only non-U.S. based sports media property generating more than $3 billion/year in revenue. For reference purposes, the Champions League, La Liga and Serie A bring in $2.2 billion, $1.9 billion and $1.5 billion, respectively.
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England’s National Team Replaces Long-Time Official Beer Sponsor
Budweiser (BUD) has announced that it will replace Carlsberg (CABGY) as the official beer of the England senior men’s soccer team following the ’18 Russia World Cup, ending CABGY’s 22-year relationship with The Three Lions. The AB Inbev subsidiary will also become the official pour (includes premium brands) of Wembley Stadium connected by EE. Terms of the deal were not disclosed but, it’s being marketed as the largest official beer partnership in the football association’s history. BUD also stated it would be extending its partnership with The Emirates FA Cup (a domestic knockout competition) and said that it will continue to heavily invest ($1.8 million since ’12) in local grassroots football initiatives.
Howie Long-Short: AB Inbev announced on March 1st its best FY earnings report in 3 years; FY17 EPS increased 42.8% YOY to $4.04. Should the board approve a proposed dividend on April 25th, the total dividend for FY17 would be $4.44. For reference purposes, BUD closed at $110.63/share on 5/3. As a brand, Budweiser grew global revenue 4.1% YOY in 2017. It’s popularity in the U.K. (+16 YOY in ’16) helped the company achieve double-digit top-line growth in that market. It must be noted that for the 5 year period beginning in ’12, BUD’s revenue CAGR of 4.6% exceeds that of all PMCG peers.
Fan Marino: BUD’s first World Cup as an official sponsor of the England senior men’s soccer team will come in 2022, scheduled to be played in Qatar. While the tournament is certain to occur in 4 years, it’s no longer guaranteed the games will be played in the middle east; certainly, not if Saudi Arabia sports minister Turki Al Shiekh has his way. Al Shiekh believes Qatar bought votes during the selection process in 2010. If those suspicions are proven correct, Shiekh would like the competition moved to either England or the U.S; either location would work for BUD drinkers.
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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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