MLS Becomes 1st U.S. League to Publicly Support Legalized Gambling
The NFL, MLB, NBA, NHL & NCAA all publicly oppose New Jersey’s pursuit to legalize sports gambling in the state, but MLS Commissioner Don Garber went on record at the recent Yahoo! Finance All Markets Summit supporting Governor Chris Christie’s efforts. Garber sees an opportunity for MLS to pave the way in supporting change to gambling laws, as his league doesn’t face the same public scrutiny those opposing New Jersey’s stance. The Commissioner noted how gambling is a part of the sport’s “DNA”, referencing in-stadium betting within the English Premier League; and explained how much revenue (an estimated $150 billion/year gambled illegally) would be generated, if gambling were to be legalized and taxed.
Howie Long-Short: There is a prevailing feeling that that the SCOTUS is going to declare that the federal government cannot prohibit states from authorizing legalized sports gambling. If that happens, established gaming sites/apps are going to have a huge lead on the abundance of competition looking to enter the space. The Stars Group (TSG) would be among the companies in the position to benefit. The Poker Stars parent company, which generated $305 million in total Q2 revenue (+ 6.8% YOY) and recently launched Poker Stars Power Up (a poker/video game hybrid), could easily expand their sports book and enter the U.S. market.
Fan Marino: Point spreads and the over/under not your thing? Try prop bets! Paddy Power (PDYPY) is offering odds on the city that will land Amazon’s (AMZN) $5 billion HQ2; with Atlanta, the front-runner at 2-1. Austin (3-1) and Boston (6-1) have the 2nd and 3rd best odds among the 238 cities that submitted bids. Unfortunately, Paddy Power does not accept bets from U.S. residents.
Nets Owner Sells 49% of Franchise at $2.3 Billion Valuation
Brooklyn Nets owner Mikhail Prokhorov has agreed to sell 49% of the NBA franchise to Alibaba (BABA) co-founder, Joseph Tsai; with Tsai receiving the option to purchase controlling interest in the franchise in 2021. Prokhorov will remain the operating owner for the next 4 years, while Tsai will not maintain any role on the business or basketball side of the franchise during that time. The deal does not include the Barclays Center, which has an estimated value of $1 billion.
Howie Long-Short: Tsai acquired the Nets at a $2.3 billion valuation, eclipsing the NBA record $2.2 billion that Tilman Fertitta paid for the Houston Rockets. The Nets lost $23.5 million last season (2nd most in NBA, beyond only Detroit), while generating a league lows from its local TV contact. There is simply no way the Nets are worth $2.3 billion. The last NFL team sold was Buffalo, for $1.4 billion in 2014. The NFL generated around $11 billion in revenue during the 2014 season. The NBA generated roughly $8 billion last year. How could NBA teams be worth over a billion dollars more, when the league generates less revenue and pays out a higher percentage to their players?
Fan Marino: Sports fans want 3 things from the owner of their favorite team; a passion to win, a willingness to spend and to stay out of player personnel decisions. Based on that criteria, Prokhorov has been a tremendous owner for the Nets. As a Nets fan though, I’ll never forgive him for hiring Billy King, signing off on one of the worst deals in professional sports history and moving the franchise from New Jersey.
Pitino Files Suit Against Adidas, Claims Intentional Infliction of Emotional Distress
Former Louisville basketball coach Rick Pitino has filed a lawsuit against Adidas (ADDYY) claiming payments made by the company to elite high school players, that led to his termination at the school, ultimately damaged his reputation. Pitino has filed on grounds of “intentional infliction of emotional distress”, firmly stating that he had no knowledge of any payments made to recruits. The FBI believes otherwise. In findings released last month, it’s alleged ADDYY had $100,000 funneled to prized recruit Brian Bowen on the school’s behalf; with Pitino directly calling ADDYY Head of Global Sports Marketing, Jim Gatto, for the bribe money.
Howie Long-Short: Pitino’s complaint against ADDYY states “this lawsuit is about more than just money; it is Coach Pitino’s vehicle for proving that he had nothing to do with Adidas’ outrageous, wrongful, and illegal conspiracy.” Who is he kidding? As the influential journalist/cultural critic H.L. Meckem once said “when somebody says it’s not about the money, it’s about the money.” If Pitino can prove that he had “no part — active, passive, or through willful ignorance”, he’ll be able to argue Louisville fired him without just cause; ensuring his legal right to the $44 million remaining on his contract.
Fan Marino: Deadspin writer Patrick Hruby wrote an article arguing that Bowen was a bargain at $100K and that his intrinsic value is upwards of $1.72 million. Don’t buy it. A player would have to be a Top 17 NBA draft pick coming out of high school (which isn’t even permitted) to earn that much money. Terrance Ferguson was a 2015 McDonalds All-American, who committed to Arizona. He instead chose to play overseas, earning roughly $1 million in Australia during the ’16 season. He was selected with the 21st pick in the 2017 NBA draft. He will earn $1.487 million this season. You can argue a college scholarship isn’t fair compensation for the biggest of collegiate stars, but to suggest they should be paid $700K more than they could receive anywhere else in the world is absurd.
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