Friday was a joyous day around the sports world as an NFL agreement was reached with owners and players. The deal which ensured a lockout would not take part during the season ensured no games would be missed during the regular season.
When news of the lockout first hit the media it was estimated that several industries would feel a pinch in sales and revenue. The biggest losers from a lost season were going to be the fans and the cities which host National Football League teams.
Several publicly traded companies have a large connection to the National Football league. Now that the season is officially beginning, these companies can breathe a sigh of relief and focus on the upcoming season. It has been widely speculated that due to all the press coverage and the notion that a season was saved, that it could be one of the most viewed and followed NFL seasons of all time. I am one to agree with this statement as fans are likely to feel more connected and fortunate that there is an NFL season after all.
The following industries and companies could see increased revenue from a strong season or could have already been beaten down due to the lockout and may see strong share increases over the next couple of weeks. These are not full reports on the companies but more of a guide to names that could benefit from the strong NFL season.
- Buffalo Wild Wings (BWLD)
Buffalo Wild Wings has over 750 sports bars spread across 45 states. Fans gather to watch games on the large projection screens at the restaurants, cheering on their favorite teams while enjoying chicken wings and a large selection of draft beers. Buffalo Wild Wings is also a popular place to host fantasy football drafts. Last year in an interview, CEO Sally Smith estimated that the company would sell 6 million chicken wings on February 6th, 2011, Super Bowl Sunday. The company has realized how important the NFL audience is to it as it even launched a “Save Our Season” campaign on Facebook encouraging fans to like the page in exchange for six free wings if a deal was reached by July 20th. It appears that fans came up just short of the free wings, but the announcement of the season being saved came just in time for the company.
Buffalo Wild Wings is likely to see a small spike in its share price as it is the most recognized sports bar brand in America. The company is a large destination to watch NFL games and is likely to keep up its continued streak of increased sales at its restaurants.
- YUM Brands (YUM)
YUM Brands is the leading restaurant chain in the World with its brand of restaurants. The company owns Taco Bell, KFC, Pizza Hut, Long John Silvers, and A & W. The company has seen a large increase in sales and the number of restaurant locations because of its expanding presence in China and other emerging markets. Pizza is one of the favorite foods of football fans. The Pizza Hut chain is the largest in the United States and is likely to see a large number of sales from football fans.
A company of its size, YUM Brands, is not likely to see a large impact from the football season. The increased sales of pizza will help the company in its domestic market.
- Papa John’s (PZZA)
With over 2600 stores in the United States, Papa John’s is well positioned to capitalize on the demand of pizza by football fans around the country. The company has been growing its number of locations across the United States and in international markets as well.
With a market capitalization of under $1 billion, Papa John’s is a better play on the pizza market than a company of YUM Brands size. Papa John’s is a good bet to see increased carryout sales as fans rejoice that there is a 2011-2012 season.
- Yahoo (YHOO)
Yahoo is a large internet corporation which depends on visitors to its vast collection of websites and advertising sales on these sites. Yahoo is the leader in fantasy football, which is played by millions of people around the world and brings in billions of dollars in revenue. Yahoo is in a prime position to generate revenue from content about fantasy football as well as advertising sales. Several years ago Toyota (TM) and Subway bought all advertising space on Yahoo fantasy football pages to capture this exclusive audience.
A company of Yahoo’s size would be likely to withstand the NFL lockout. However, Yahoo has been hurting and seen advertising sales decrease as it competes with Google (GOOG) and Microsoft (MSFT). The increased exposure the NFL has gotten and the probable increase in viewership will likely bring increased fantasy football players which could be better monetized by Yahoo.
- Disney (DIS)
Disney, the large media conglomerate, appears on this list because of its ownership of the ESPN brand and network. ESPN is the most watched sports network in the United States. The company's website, espn.com, is the most visited sports website in the World. ESPN is a large player in the fantasy sports market and also has exclusive television rights to the Monday Night Football games throughout the season.
The Monday Night Football games are usually the most watched football games of the season and some of the most viewed television events throughout the year. ESPN is a small portion of the Disney media empire. The sporting company has however been one of the bright spots as its customer base and advertising revenue are growing. The loss of seventeen Monday Night Football games would have been very harmful to ESPN and Disney.
- CBS Corporation (CBS)
CBS corporation broadcasts NFL games every Sunday. The broadcasting company is also a large player online in the fantasy football market. The lockout would have been a huge hit to CBS and its earnings.
CBS will see increased viewership for the games it broadcasts this season. The company has a large collection of local regional television stations which broadcast the games for their markets. The company also broadcasts one to two games every Sunday. This is seventeen weeks of games that would have had lower ad sales with the lockout.
- Electronic Arts (ERTS)
Electronic Arts is the large video game company responsible for the Madden franchise. The Madden video games have put the control of actual NFL players in video gamers’ hands around the world. The video game has been featured on television shows and has numerous competitive leagues across the United States.
Electronic Arts has long seen its Madden game as the gem in each year’s lineup. Madden 2010 was the second best selling video game of 2010. The end of the lockout will help build buzz around the game and it will likely sell well as a result.
- Ebay Inc. (EBAY)
In 2007, Ebay purchased Stubhub for just over $300 million. The deal at the time helped Ebay in the ticket resale market which it was not a large player in. Stubhub competes with Tickemaster in the ticket industry and is great for buyers and sellers. The company is large in the sports market.
The day the announcement of the ending lockout was made, traffic was already up on the site. NFL tickets are sold for each week’s game on the site. Season ticket seller use stubhub.com as a great way to sell any tickets for games they can not attend.
- Sirius XM (SIRI)
Sirius is the exclusive radio provider of all NFL games. Fans who live out of the state of the team they follow can not always see their team on television and may turn to satellite radio instead. Sirius is greatly positioned to help NFL fans follow their favorite teams.
Sirius competes in a heavily competitive field of bringing music to fans but is the clear leader in the sports market. Every NFL game can be heard in its entirety. The NFL lockout might have hurt Sirius’s growing subscriber base. I own share of Sirius (See My Holdings Here) and recommend them to others as well.
- Comcast (CMCSA)
Through its acquisition of General Electric’s (GE) NBC Universal branch, Comcast acquired the Super Bowl for the 2011-2012 season. Perhaps no company would have been more hurt by the lockout on a pure revenue basis than Comcast. Thirty second ads for the 2011 Super Bowl were $3 million each, a number which has grown for the most part each year.
Comcast has grown its cable television subscriptions recently and is becoming a media powerhouse with the NBC Universal acquisition. A lockout of the full season would have been a tremendous bump in the road. Look for shares to fully see their value by January or February of 2012 around Super Bowl time.
- Nike (NKE)
Nike is the worldwide leader in the sports apparel market. In 2012, the company will have its logo seen on all NFL jerseys. Until the start of the contract, Nike counts on its sponsorship deals with individual players to get their name and logo on to American’s televisions. Nike has deals with Aaron Rodgers, Adrian Peterson, Drew Brees and many others.
Nike is not dependant on football to move its revenue or profit. The company is a large player in many countries throughout the world spread across different sports. Nike however has to be happy that a ten year deal was put in place, which means next year its jersey sponsorship will start as planned.
- Adidas (ADDYY.PK)
Adidas is one of the leading sports apparel companies in the world. Based in Germany, the company has strong ties to several of the major sports and its star athletes. Adidas also owns Reebok, which is the sponsor of all NFL jerseys through this season. The 2011-2012 season will be the last season of Reebok’s exclusive jersey sponsorship. Reebok also has a deal with Chad OchoCinco for its ZigTech brand.
Adidas has not been a big player in the NFL market. Reebok, its wholly owned subsidiary, has been a large player in the sport of football though. This will be the last year that Reebok has exclusive rights to the jerseys of every NFL team. Adidas should be happy that this deal went through so it can get the most out of this last-year deal.
- Under Armour (UA)
Under Armour is a smaller play on the sports apparel industry with a market cap of under $4 billion. The company is a relatively new player in the professional sports market. Under Armour counts Tom Brady, Cam Newton, Ray Lewis, and Julio Jones to its roster of individual athletes who have merchandising deals. The company is also the official supplier of gloves in the NFL. Under Armour perhaps had the most to lose by the lockout of all the apparel companies. The company has more NFL players under contract than other sports. The company also took a big risk by signing the exclusive rights to Cam Newton, the number one pick in the draft.
Under Armour is most fortunate that the NFL deal went through. The company has been expanding its contract athletes over the years. The company had sponsorship obligations double from 2009 to 2010 across all its sports. The shares of Under Armour have been steadily increasing over the years but the company is still in its growth stages and represents a great long term opportunity.
- Dreams, Inc. (DRJ)
Dreams, with a market capitalization of just over $100 million, is a small company that could grow tremendously from a great NFL season. The company operates Fans Edge stores and the fansedge.com website selling sporting memorabilia and merchandise to consumers across the country. The company is growing the number of stores and increasing its online sales.
Jersey sales for NFL players should be up initially and with the likely trade and free agent frenzies, fans will likely have new players to follow and support with merchandise. This is a great small cap play on the sporting markets and should be researched and looked at in further detail in a later article.
- Double Eagle Holdings (DEGH.PK)
Double Eagle Holdings owns the Fuse Science brand and company. The stock which trades as a pink sheet stock with a low market capitalization of under $25 million is a great play on the growing supplement market for amateur and professional athletes. The company also has been adding quality business professionals to its board of directors. Recent announcements have placed people with experience from SC Johnson, Bayer (BAYZF.PK), Merck (MRK), Michelin, General Mills (GIS), and Covidien (COV) will all help steer the company in the right direction. The company has signed deals with Michael Vick, Mike Neal, Antonio Brown, Tyron Smith, Derek Sherrod, and Jimmy Smith of the National Football League.
The company is betting heavily on endorsement deals with NFL athletes to test and promote its patent pending supplements. The company is likely to see increased press and word of mouth from a good NFL season this year. This small cap is definitely worth more research as it could break out this year.
I recommend buying shares of Papa John's, Electronic Arts, Sirius, Comcast, Under Armour.
I am conducting more research before recommending Double Eagle Holding and Dreams.
Market Caps taken from Yahoo Finance.
Disclosure: I am long SIRI.