Moag and Company Sports Notes (10 Jan 2020)

Date: Jan 2020

Trivia

What were the first points scored in Super Bowl history?

Last Week’s Answer: Founded in 1883 in the City of Brotherly Love as the Phillies in the National League, the Philadelphia Phillies hold the record for the longest amount of time in the same city with the same name.

Football:

NFL and NFLPA reps have been "addressing the central economic issue in their labor negotiations -- the split of revenue between the sides -- as they attempt to complete a deal" for a new CBA that "would extend beyond" the '20 season, according to the Washington Post. Sources said that league owners and the NFLPA have been "discussing proposals that would give the players" about 48% of league revenue under the salary cap. Sources added that it would be a "slight increase from the players' current share of revenue under the existing 10-year CBA," which is set to expire after next season, and is "in the range of what the owners have believed would be necessary to complete a deal." A source said the sides continue to make "incremental" process toward a potential agreement. However, it is "not clear at this point when such slow and steady movement might produce a deal." The next goal, if not by Super Bowl LIV, "would be to have the deal completed by early March," when the new league year begins with the opening of the free-agent market. It is believed that if the split of revenue is resolved, other issues will "fall into place and a deal would be almost certain to be completed." If there is no deal by early March, the negotiating dynamic "could change because the players must elect new leadership at their annual NFLPA meetings that month".

The SEC and ESPN are hammering out the final details on a contract that will see college football's top broadcast TV property move from CBS to ABC, according to multiple sources. Sources said that ESPN/ABC have committed to pay an annual fee in the low $300M range -- a substantial increase from the $55M per year that CBS currently pays on average. It's difficult to pin a number on this deal since ESPN already held all of the conference's cable TV rights plus the SEC Network. Notably, the conference still has not formally told either Fox or NBC that it plans to go with ESPN/ABC. ESPN's winning bid is predicated on the fact that it could be more creative with scheduling SEC games, especially since ESPN holds all of the conference's cable TV rights. The big question is when ESPN would take over. CBS' deal ends in '23, meaning that it has four years as a lame-duck broadcaster. ESPN will negotiate to get control of those games sooner. But at $55M per year, CBS has a sweetheart deal, and it will take a strong offer to get the network to leave the deal early.

Hockey:

The Arizona Coyotes through the first 42 games of the season have seen local TV ratings increase 23% "compared with the same point in the season last year," according to the Phoenix Business Journal. The team saw its ratings increase 104% for the full month of December, "compared with the same month a year earlier." Coyotes officials said that the ratings boost so far this season is "proof the team has been able to expand its reach and fandom." Coyotes President & CEO Ahron Cohen said, "The ratings are a good litmus with where we are and how we resonate with the greater Phoenix community." The team currently is in second place in the Pacific Division with 24 wins. Having "more star power is the other factor likely driving more eyes to the Coyotes on TV." Cohen said that since acquiring LW Taylor Hall, the team's TV ratings have "increased 25%". The Coyotes have already sold out six games this season, equaling their total from all of last season, with their two most recent sellouts "both exceeding 17,000 patrons." Cohen: "We've positioned ourselves well with a very high season-ticket renewal rate, which is the highest Glendale has seen at 94% from last season. We sold ticket packages and had a huge uptick from previous years. That solid base was built up well before the season".

Golf:

Topgolf is working with JPMorgan Chase and Morgan Stanley as it prepares for an IPO that "could be valued" at $4B, according to the Dallas Morning News. Topgolf has been "expanding rapidly, from 39 locations two years ago to 60 last month with the opening of a three-level, 65,000-square-foot facility in Cleveland." It has three locations in the U.K. and one in Australia. Late last year, Topgolf said that it was "expanding into Mexico, Canada, Europe and Asia." Renaissance Capital Senior IPO Market Strategist Matt Kennedy said that Topgolf "would be the first company of its kind to go public since the Dallas-based Dave & Buster's IPO" in late '14. Topgolf has an "abundance of markets left where it can open, and developers are aggressively going after the entertainment venue that combines golf with food and drink." Entertainment retailing is a category that shopping centers are "adding to reinvent ailing properties with good real estate." Analysts praise the brand for its "first-mover advantage, a national reputation, various versions of its locations under development and proprietary technology, all qualities that make it tougher for potential competitors”. Topgolf's IPO "could come as soon as this year." Topgolf, led by CEO Dolf Berle, has $525M in "outstanding debt". If the $4B number is accurate, "Callaway's 14% stake would then be worth $560 million."

Other:

DraftKings' net losses "grew significantly over the prior year" through the first nine months of '19, according to the Boston Business Journal. The Boston-based betting business revealed that it lost $114M through Sept. 30, a more than 50% increase from the same period in '18. During the first nine months of '19, the company generated $192M in revenue. The financial results were "made public for the first time in a proxy statement" filed by Diamond Eagle Acquisition, the special purpose acquisition firm that is "combining with DraftKings and another gambling tech firm, SBTech, in order to take both companies public." Because the filing's figures "only run through September, they fail to fully capture a major source of revenue for DraftKings: football season." In '18, the company brought in over 40% of its "annual revenue in the final three months of the year." DraftKings Dir of Global Public Affairs James Chisholm said the company is "well-positioned to achieve profitability." He also pointed to two "new product offerings related to sports betting and online gaming," as well as "expansion into new markets, as likely drivers of future profitability." Chisholm added that DraftKings' profitability going forward "depends in part on how many consumers nationwide have access to all of its offerings".

Sources: SportsBusiness Daily; ESPN; Washington Post; Phoenix Business Journal; Dallas Morning News; Boston Business Journal

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