Moag & Company Sports Notes (29 Apr 2022)

Date: May 2022


How long is a marathon?

Last Week’s Answer: Women were allowed to compete in the modern Olympic games starting in 1900; participating in tennis.   


The NFL is now a shareholder in Endeavor for the first time, having converted a 32% interest in the Endeavor-owned hospitality company On Location Experiences into holding company stock, the company told the SEC. This transaction takes the NFL out of direct ownership of the company it first founded in '15 and makes On Location wholly owned by Endeavor. The NFL now owns about 1.5% of Endeavor, according to SEC filings. When Endeavor acquired a controlling stake in On Location from private equity companies in early '20 for about $660M, the NFL negotiated an option to later increase its minority stake from 13.5% to 32% at the same price established in '20. It recently executed that option for about $89.3M and then converted that ownership to EDR, the filings said. This means the NFL will not execute a second option it had negotiated, which would have increased its minority stake to nearly 45%. That second tranche of equity would have been priced at 15x EBITDA, instead of the original '20 price, and On Location has already grown its top line substantially since the '20 transaction -- namely through a major deal with the IOC to handle ticketing for the next three Olympics. The NFL will maintain its spots on the On Location board, a source said. The NFL founded On Location in '15. Its core asset is a tranche of Super Bowl tickets, which provide the core of On Location luxury hospitality packages for the game each year. The NFL sold equity to RedBird Capital Partners, Bruin Capital and the Carlyle Group to fund growth, and owned just 13.5% at the time of the early '20 transaction with Endeavor. However, the NFL still controls the company’s key asset -- the Super Bowl tickets, licensed to On Location -- and was able to use that leverage to negotiate the option that led to today’s announcement.


Two sites in the vicinity of the Las Vegas Strip have "emerged as frontrunners" for where the Oakland A's "could potentially build a ballpark in Southern Nevada," according to the Las Vegas Review-Journal. One is a site that the team "would purchase outright" while the A’s would "likely enter into a partnership with an existing resort operator on the other site." A's President Dave Kaval "didn’t confirm the location of any of the five sites still in play." Kaval said that the club has "renderings of how a $1 billion domed stadium would look on each of the five sites still in play to help in the decision process." The renderings also allow the A’s to "determine what kind of roof -- domed or retractable -- to build at a potential Las Vegas ballpark to combat the scorching summer heat." The potential site "could be revealed next month," though Kaval "cautioned the process is playing out longer than team officials had anticipated." Kaval said that for sites they would own outright, the A’s are "exploring plots of land that are between 40-60 acres," which would "allow mixed-use development to occur along with a ballpark." Kaval: “There is something to be said about baseball having other stuff around the actual stadium.” The A's are looking at "smaller lots for sites that would tie in to a resort".


The NHL averaged around 460,00 viewers for its U.S. TV telecasts during the regular season across TNT, ABC and ESPN, marking the league’s best figure domestically since '16-17, when NBC and NBCSN averaged 474,000. This was the first season of a new media-rights deal with Turner and Disney. Some regular-season games remain, but those will be on RSNs and ESPN+, a platform whose numbers are not included here. The league last season averaged a total audience delivery of 391,000 viewers across NBC and NBCSN. That puts the league up around 18% season-over-season. NBC Sports averaged 398,000 for the '19-20 season, and 424,000 for '18-19. ESPN and ABC averaged 616,000 viewers (26 games combined). ESPN on its own averaged 469,000 for 16 games, well above what NBCSN averaged last season on cable TV. ABC averaged 856,000 viewers. TNT averaged 361,000 for its package of around 51 telecasts in Season 1 with the NHL.


The final three suitors for Chelsea have been handed an 11th-hour demand to stump up £500M ($623M) more to buy the club, "just days before the potential anointment of a preferred bidder." The trio of "billionaire-studded consortia were informed in the last 48 hours" that Roman Abramovich was demanding that the additional sum be guaranteed by his successors to "augment what would be one of the biggest charitable donations in British history." A source close to the process said that its consortium had been informed of the request earlier this week and was "minded to agree to it," adding that they "understood the demand for the additional sum" had come directly from Abramovich's associates. The three bidders vying to buy Chelsea "have been left stunned" by the 11th-hour request to raise their offers. But the "conclusion to an already prolonged process" has been complicated by the request to increase the price to closer to a £3B ($3.7B) valuation. Given that the groups have "already been asked" to guarantee a further £1B ($1.25B) toward stadium redevelopment plans and investment in the playing staff -- in addition to offers of about £2.5B ($3.1B) for the club -- the cost to become the new owners of Chelsea is approaching £4B ($5B). The extra cash "would be donated to charity as part of Abramovich’s pledge to give away all net proceeds from their sale." He made that promise -- plus a vow to write off the £1.5B ($1.9B) he had loaned the club during his near 20-year tenure -- before he was sanctioned by the Government over Russia’s invasion of Ukraine. Since then, "ministers have made it clear Abramovich will not be permitted to make a penny from the sale." All of the bidders "remained in the race for Chelsea on Thursday evening, suggesting they were willing to entertain stumping up extra cash".

Tennessee Titans RB Derrick Henry, actress and Nashville native Reese Witherspoon and her husband, Jim Toth, have "signed on as minority owners" in Nashville SC, according to the Nashville Tennessean. Henry is now the "fourth NFL player to become" an MLS team owner. The minority-ownership trio "doesn't only bring 'cache' and 'star power' to the team," but it "helps leverage a bright financial future." Benefits from the new partners could include "promotional pieces and advertisements featuring the celebs." Celebrities have "sought MLS partnerships more and more in recent years" -- Matthew McConaughey has invested in Austin FC while Will Ferrell and Magic Johnson are among the celebrity investors in LAFC.


The Churchill Downs Inc. reported Q1 earnings, and its "historical horse racing [HHR] and gaming operations powered much of the record first-quarter performance." CDI posted $87.2M in net revenue from its live racing and HHR operations, fueling $27.9M in adjusted earnings. Those adjusted earnings were up $9.6M compared with the $18.3M reported for Q1 '21. In the gaming/casino segment, CDI reported adjusted earnings of $91.1M, up from the $82.4M reported in the year-ago period., CDI's advance-deposit wagering platform, "saw a decline in net revenue" from $105M to $101.4M as "some online players returned to brick-and-mortar locations".

Sources: SportsBusiness Journal, Bloomberg News; The Athletic; Las Vegas Review-Journal;; London Times; Nashville Tennessean;

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