September 10, 2020
Millions will no doubt be tuning in for tonight’s NFL kickoff game between the Houston Texans and Kansas City Chiefs. Even though stadiums and arenas are mostly empty, the NFL kickoff means all the major sports are back in action – professional baseball, soccer, basketball, hockey, most of college football, golf and tennis.
This is great news for sports enthusiasts who were relegated to half-heartedly re-watching old game highlights or unenthusiastically binge-watching some utterly forgettable program in place of live competitions. With our favorite players taking to the field, court, course, or ice again, now is the perfect time to also look at the publicly traded companies that stand to benefit from the return of these popular athletic competitions.
Let’s start with the teams themselves. While most are privately held by wealthy individuals and investor groups, a few are part of companies whose shares trade on the U.S. exchanges. Among them are Madison Square Garden Sports Corp. (Tii:MSGS), the parent of the NBA's New York Knicks and NHL's New York Rangers. While the Rangers and Knicks were both eliminated from playoff contention, boisterous New Yorkers no doubt were happy to see their teams back in action. Similarly, Canadian communications and media giant Rogers Communications Inc. (Tii:RCI) owns the Toronto Blue Jays baseball team, and through a joint venture, interests in the NHL’s Toronto Maple Leafs, NBA’s Toronto Raptors, Toronto Argonauts of the Canadian Football League, and Toronto FC of Major League Soccer.
Most sports enthusiasts have made things a bit more interesting by plucking down a few bucks to bet on a game or two. And the dearth of mobile/online options was a dream for those looking to test their luck. While you would imagine the major player in this space, DraftKings (Tii:DKNG) would have hemorrhaged cash during the lockdown, DraftKings reported a 20% rise in year-over-year pro forma growth in June as sports returned. Though the prior months suffered from a lack of sports betting options, the company invested in product and technology to create more unique offerings and live betting for American-based sports and managed to keep customers engaged by creating new product offerings. The stay-at-home nature of COVID also resulted in solid response rates to its advertising spend.
Televised sporting events are big business for broadcasters – many of which have felt the pinch of declining ad sales as a result of the sports hiatus. The NFL alone created $4.6 billion in national TV ad revenue in 2019, according to MediaRadar, an advertising intelligence and sales enablement platform. The absence of sports was the major contributor to a 19 percent decline in overall national TV ad spending this year, says Standard Media Index, a tracker of ad spending. Its return is good news for virtually every network or affiliate of Fox Corp. (Tii:FOX), Comcast Corp. (Tii:CMCSA), ViacomCBS Inc. (Tii:VIACA) and The Walt Disney Company (Tii:DIS), whose broadcast properties include ABC and ESPN.
On the other side of that equation are the major advertisers themselves, who rely on sporting events to reach huge swaths of consumers. According to iSpot.tv, the always-on TV ad measurement and attribution company, the industry relying most on sporting events last year to reach consumers were insurance services – the majority of which are privately held, followed by communications service providers Verizon Communications Inc. (Tii:VZ) and AT&T Inc. (Tii:T); financial services providers, including Rocket Companies, Inc. (Tii:RKT); and of course quick-service restaurants like Yum! Brands, Inc. (Tii:YUM), parent of Taco Bell, and McDonald’s Corp. (Tii:MCD).
Even though sports are currently underway, it’s either in an empty stadium or one that’s limited to somewhere around 25 percent of capacity. Those unable to attend are likely to consider upgrading their home viewing hardware. Typically, the days leading up to the Super Bowl are right up there with Black Friday in terms of mad dashes to get the latest state-of-the-art televisions, but you can expect a considerable run on products by electronic companies like Sony Corp. (Tii:SNE) and Panasonic Corp. (Tii:PCRFY) from those looking for the next best thing to being there.
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