Welcome to a new daily feature we run here at Fantom breaking down the day’s biggest stories in sports finance with commentary from the equities analyst 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.



President Trump sent out a tweet on Tuesday morning rhetorically asking “Why is the NFL getting massive tax breaks while at the same time disrespecting our Anthem, Flag and Country? Change tax law!”. The statement has caused some confusion amongst the public, as the NFL voluntarily relinquished its federal tax-exempt status in 2015. However, the league does still receive subsidies (worth billions), on the state level, for the construction of privately owned stadiums. In October 2016, the Nevada state legislature approved the expenditure of $750 million, in public money, for the construction of Mark Davis’ new Las Vegas football stadium.


Howie Long-Short: It is important to distinguish fact from fiction. While it is true that the league office was tax-exempt prior to 2015 (NHL and PGA Tour still are), the 32 teams were not. All revenues generated from sponsorships, broadcast deals, and ticket sales have always been taxed. The only untaxed money were league office profits, estimated to be worth $10 million/year. A drop in the bucket for a company that will generate $14 billion this year.


Fan Marino: 45 also found time to opine on ESPN SportsCenter Anchor Jamele Hill, saying “with Jemele Hill at the mike, it is no wonder ESPN ratings have tanked, in fact, tanked so badly it is the talk of the industry!”. Hill, who previously referred to the President as a “white supremacist” is currently on suspension from the network for a 2nd violation of “social media guidelines”.  I’m no fan of SC6, but I’m certain cord cutting, the proliferation of streaming/OTT services and a shift to digital media consumption, all rank higher on the list of reasons why ESPN subscription numbers (and hence ratings) are down.




The NBA and Rakuten (OTC: RKUNY) have signed a comprehensive media partnership worth a reported $225 million; making the Japanese e-commerce and internet services giant the league’s exclusive distribution partner for live game broadcasts in Japan. The company’s messaging platform, Rakuten Viber, will be an official media platform for the NBA, giving league content to the services’ 900 million users. On the marketing side, Rakuten will also now sell select NBA & team merchandise globally, through its e-commerce platform. This is the 3rd major sports deal Rakuten has signed in the last 12 months, following a $235 million jersey sponsorship deal with FC Barcelona and a $60 million jersey sponsorship deal with the Warriors. CEO “Mickey” Mikitani has stated the company “wants to be a household name like Google and Facebook.”


Howie Long-ShortRKUNY is the largest e-tailer in Japan, with roughly 25% of all transactions in the country taking place on their site. However, with Japan’s aging population, if the company is to become a household name, the likes of Google and Facebook, they’ll need to grow internationally. Mikitani believes to do that, they need to hire the best talent they can find world-wide. In 2012, he implemented English as the official language of the company, so that the Japanese staff could seamlessly communicate with non-Japanese speakers. Since then, the company has started to invest internationally, acquiring U.S. cashback website Ebates and taking stake in both Lyft and Pinterest.


Fan Marino: Globalization remains the league’s most promising avenue for future growth and no American pro sports league has a bigger international following than the NBA. Perhaps that is why new Rocket’s owner Tilman Fertitta felt comfortable investing in the league, but said he “would have been scared to pay $2.2 billion for an NFL franchise”. Howie is the finance guy, but for my $2.2 billion I’m buying a pro football franchise. For all the negative talk surrounding the NFL, look at the TV ratings. Last Thursday night’s Bucs/Pats game drew 15.4 million viewers. The average 2017 NBA playoff game drew less than 5 million people. I don’t believe there is an NFL franchise with an intrinsic value less than $2 billion.




ESPN has had an eventful week. The company finalized a distribution deal with Altice; terms of which are particularly notable, as the deal represents the first of several renegotiations in a new round of carriage fee talks with pay-TV operators. On the content side of the business, the company announced a partnership with Cycle Media to create branded original programming and acquired the broadcast rights to Formula 1 racing (FWONA), beginning in 2018. As for talent, the company hired Katie Nolan, formally of “Garbage Time” on FS1 and confirmed reports of a new late-night show on ESPN2, hosted by Barstool Sports’ Big Cat & PFT Commenter.


Howie Long-ShortIn the end, Altice caved. They agreed to pick up nearly every ESPN channel (including the SEC & ACC Networks), implement a rate increase for those channels and raise minimum household penetration thresholds. What choice did they really have? It’s not like they can afford to let subscribers walk. As for the FWONA deal, it’s noteworthy that the terms enable the racing organization to maintain OTT rights to their races.


Fan Marino: Nolan is a star that FS1 oddly wasn’t using. She’s got a great sense of humor, a sharp tongue and Sports Emmy to her name; a strong addition to the ESPN roster. For those not familiar with Big Cat & PFT Commenter, they are the hosts of Pardon my Take; a sports podcast that draws 2 million listeners/episode. You don’t have to be a fan of Barstool to like these guys. PFT is one of the funniest personalities in sports.




Depressed golf sales are beginning to have a direct financial impact on the PGA Tour’s biggest stars; as manufacturer volume dwindles, endorsement deals are decreasing in breath and value. With NKE and ADDYY out of the golf equipment space, it was expected that niche brands like Callaway (ELY), Titleist (GOLF) and Ping would sign “free-agent” players to all-encompassing endorsement contracts (hats/clothing/shoes/clubs/bags). That hasn’t been the case. The smaller players that remain have opted instead to sign players to less lucrative equipment-only contracts and in some cases, terminate relationships all-together. Sergio Garcia and TaylorMade announced they have mutually parted ways, effective immediately, ending Garcia’s 15-year endorsement of the company’s equipment. Rumors are circulating that he will sign a new, likely smaller deal with Callaway Golf (ELY).


Howie Long-Short: Tiger Woods couldn’t make golf equipment profitable for Nike, so from the manufacturer perspective, I have strong reservations as to the ROI on golf equipment endorsement deals. On the athlete side, the manufacturers that remain simply don’t have the same size marketing budgets. Instead of seeing massive all-encompassing deals, expect players to take an ala carte, sum of the parts approach to sponsorship dollars.


Fan Marino: Traditionally manufacturers have wanted tour players to maintain uniformity with their equipment and to wear the company logo on their hat; so that casual fans could identify the clubs a player is using. In what has become a fragmented marketplace, there are several companies still capable of offering all-encompassing endorsement deals; Acushnet (GOLF) with Cobra/Puma (i.e. Rickie Fowler) and Titleist/Footjoy and ELY are among them.




Berkshire Hathaway’s (BRK.A) Russell Athletic has decided to exit the team uniform business (primarily HS and youth leagues) and turn its focus towards a “longer-term, more-healthier place” in consumer retail. A new line of “heritage” styled lifestyle and streetwear clothing, to be launched at Barney’s before to being sold at retailers like Urban Outfitters, will be a part of the company rebrand. A partnership with S&S Activewear (3rd largest U.S. distributor) provides the company with access to previously unreachable corporate and promotional business. Russell plans to maintain its team channel; selling non-uniform items and using S&S Activewear to service those sales.


Howie Long-Short: There is certainly some cache surrounding the “heritage” market, with companies like Champion (HBI), Fila USA (KRX: 081660) and Calvin Klein (PVH) experiencing recent resurgences. HBI reported Champion Q2 ’17 revenues were up 7%, with Fila USA and Calvin Klein up 11.5% ($71.3 million) and 8% ($786 million) respectively, over last year’s figures. It’s been 20 years since Russell Athletic has been relevant, but if you wait long enough, everything comes back into style.


Fan Marino: For those too young to remember, Russell was the largest marketer and manufacturer of athletic apparel in to the early 1990s; when Nike (NKE), Adidas (ADDYY) and Under Armour (UAA) began to pump big dollars into D-1 athletic contracts. Just 2 programs remain with the once dominant brand, Georgia Tech and Southern Miss, both of which have contracts ending with the company in 2018. There has been no word on if their new suppliers will offer cut-off jerseys, the signature look from Russell’s heyday.

Below is the Howard Hughes Corp. story for you to run on Friday 10/13.  HHC is an equity that is going to be far below the average reader’s radar.



The Howard Hughes Corporation (HHC) has announced plans for a new 10,000 seat ballpark in downtown Summerlin, NV, where the company is working on a massive master planned community (MPC) for 160,000 people. The new stadium, to be ready for the 2019 season, will house the Las Vegas 51s; a minor-league baseball team HHC acquired controlling interest in earlier this year. HHC also announced this week that ESPN has signed a multi-year, 19,000 SF lease for a NYC studio at South Street Seaport’s Pier 17; their $731 million waterfront redevelopment project.


Howie Long-ShortHHC owns the land the stadium will be built on, they have an $80 million stadium naming rights deal in place and replacing a 34-year-old park, with a state-of-the-art facility will certainly increase team revenues come 2019. So, I like this project. The 51s are just a small piece of the $5.16 billion (market cap) conglomerate though, as the company develops and operates MPC’s and mixed-use properties across 14 states.


Fan Marino: ESPN has said the NYC facility will have 2 studios for television and 1 for radio, though they’ve yet to announce which shows will be broadcast from the pier. As for the network’s often-discussed SC6 show, Michael Smith will be hosting the show solo for the balance of Jamele Hill’s 2-week suspension for her 2nd violation of social media policy.

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