Moag and Company Sports Notes (20 Sep 2019)

Date: Sep 2019

Trivia

Who did the Chicago Cubs play in the 1908  World Series?

Last Week’s Answer: Major League Baseball Hall-of-Famer Nolan Ryan signed with the Houston Astros as a free agent following the 1979 season, agreeing to MLB’s first million-dollar per year salary and also the first of its kind in any professional team sport. 

Football:

Online lender SoFi will pay more than $30M annually for the next 20 years to entitle the new NFL stadium under construction outside L.A., sources said, making it the largest deal in U.S. naming rights history. The partnership, formally unveiled, eclipses the previous NFL high-water mark of $20M annually at the New York Jets/Giants’ MetLife Stadium, and Chase’s $30M annual deal with MSG for extensive promotional rights that stop short of entitlement. Depending on exchange rates and precise terms, it may also eclipse Scotiabank’s C$40M deal in '17 to rename the Air Canada Centre. SoFi’s CEO is Anthony Noto, the NFL’s former CFO. The high valuation reflects the expected prominence of the $5B stadium complex due to open next summer. It will host both the Los Angeles Rams and Chargers, Super Bowl LVI, the ’23 CFP, the ’28 Summer Games' Opening and Closing Ceremony, and major concerts. SoFi’s name will be covered up during the Games under IOC rules, but dealmakers believe there is value in being known as the future home of the Olympics until then. The 70,000-seat stadium is designed to expand to up to 100,000. Eventually, it will anchor a 298-acre redevelopment of the former Hollywood Park horse racetrack about four miles west of LAX. Along with stadium rights, SoFi becomes a sponsor of both tenants, the Chargers and Rams, and will sponsor the adjacent performance venue.

Baseball:

The Los Angeles Dodgers sale of a "minority share in the club to two investors" will "not affect control" of the team, according to the L.A. Times. Mark Walter remains the team Chair, while Stan Kasten remains the team President & CEO. The Dodgers previously have "considered selling an ownership stake to partners that could help the team expand its reach into Mexico and South Korea." However, the investors in this deal are "believed to be American businessmen." It was "not immediately clear who the businessmen are, what percentage of the team they might now own, how the Dodgers might use the capital infusion or when the team might announce the deal". The sale "concludes an effort" that began in '17. Because of "mushrooming franchise values across all major U.S. sports, owners have found it increasingly difficult to sell shares." But even with a "whopping price tag, there probably is no dearth of prospective investors for the Dodgers, a marquee, global brand".

Basketball:

Michael Jordan has agreed to sell a large piece of the Charlotte Hornets to two N.Y.-based investors, with the process "already underway and the sale expected to close quickly," according to the Charlotte Observer. A source said that the deal "does not involve" Jordan "giving up majority ownership" of the team. Sources said that Jordan "controls about" 97% of Hornets equity. Jordan is "bringing in" Melvin Capital Founder & Chief Information Officer Gabe Plotkin and D1 Capital Founder Daniel Sundheim. Both prospective owners "must be approved by the NBA." A source said that Jordan "plans to remain the Hornets’ primary owner 'for a long time.'" The percentages Plotkin and Sundheim are buying "have not been revealed, nor has the price they are paying." In February, Forbes "estimated the Hornets were worth" about $1.3B. A source said that Jordan is "attracted to adding investors with deep resources who might offer new ideas regarding technology advances." Jordan has "some minority investors who own small shares of the team that all pre-date his buying control." Neither Plotkin nor Sundheim has "previous ownership experience with major-league teams". A Hornets exec said that he would be "surprised if this deal doesn’t at least provide the new investors a right of first refusal to buy control, should Jordan ever choose to sell" the team in its entirety.

Hockey:

The NHL and NHLPA are "believed to be making progress towards a potential three-year extension" of the CBA that would run through '25, according to SPORTSNET.com. The NHLPA's decision "not to trigger an early end to the current agreement ... should also raise hopes that an even longer extension might be in the offing." This development is a "welcome change for a league that has experienced three straight lockouts" and saw the entire '04-05 season "shuttered before the salary cap was instituted." It has "come about because the owners feel they have a fair system where revenues are split 50-50 and the cap is tied to the overall growth of the business." The NHL had "previously let its own deadline to re-open the CBA pass on Sept. 1." Had the players "decided to trigger" a September '20 end to the CBA, there was "some fear that it might derail the positive bargaining" that has already happened. Now the work can "continue without the semi-imminent threat of a deadline". It is "not believed that the two sides have gotten down to the true nitty, gritty details as of yet," though yesterday's decision by the NHLPA "indicates a willingness on both sides to keep at it on the negotiating front." There "certainly does not seem to be the appetite from within either camp to force the issue or go looking for a fight." However, labor peace "shouldn’t be taken as a given simply because the NHLPA passed up on the opportunity to opt-out".

Soccer:

MLS Commissioner Don Garber met with Carolina Panthers Owner David Tepper and other leaders last month in Charlotte, marking the "latest step in Tepper's campaign to add an MLS club to his portfolio," according to the Charlotte Business Journal. Charlotte Mayor Vi Lyles confirmed that she "met with Garber while he was in town, along with center city advocates and local business executives." Referring to Bank of America Stadium, MLS Exec VP/Communications Dan Courtemanche said of Charlotte's bid, "Their location in the urban core appeals to our young, urban, digitally savvy audience." One of Tepper's "challenges is the fact that he's going against league trends by positioning his bid as one that would put a Charlotte club in an NFL stadium rather than a soccer-specific venue." Courtemanche said that the Fire's decision to move back to Soldier Field was "spurred by proximity to millennial audiences who tend to live near downtown." St. Louis' expansion club and Sacramento's anticipated MLS team will pay a $200M entry fee, but the 30th team will "likely pay more." Courtemanche said that "no fee has been set".

Other:

There are "plenty of signs" that the Univ. of Michigan football brand is "returning to marquee program status with rising revenue, ticket sales and recruiting classes," according to MLIVE.com. While UM coach Jim Harbaugh has "not been an over-the-top success on the field" since taking over the job in '15, he has been a "big winner off the field when it comes to Michigan's financial situation." Since Harbaugh arrived in Ann Arbor, the football program's "operating revenue has grown" from about $97.1M during his first year to nearly $125M in '17-18. At the same time, the football program is "spending more than ever before under Harbaugh," more than $40M each of the past two years. Part of the reason for the "explosion in revenue" has to do with the Big Ten and its six-year, $2.64B media rights contract agreed to in '16 with ESPN and Fox. Meanwhile, UM football "remains a box office smash," as season ticket sales have remained "strong during Harbaugh's four-year tenure." After sales "dipped below 78,000" in '14, they have "climbed above 87,000 each of the last four seasons." In August, the school announced it had "sold 91,934 this year -- the most during the Harbaugh era." UM football under Harbaugh also "inked its lucrative 11-year apparel deal with Nike" in '15.

Sources: SportsBusiness Daily; The Athletic; ESPN.com; L.A. Times; Charlotte Observer; SPORTSNET.com; Charlotte Business Journal; MLIVE.com

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