Not many public companies own baseball teams any longer, Walt Disney Co. (DIS) was a seller to Magic Johnson owned group and Time Warner Inc. (TWX) is out and Tribune Company sold the Cubs to the Ricketts Family after Sam Zell exited stage left, it is mostly about the periphery companies that broadcast or sell related items that have a stake in MLB and the 2015 season.
Most of the value derived by parent clubs is in the private shares of the baseball team itself and that enterprise value, which is growing quickly. All pro sports teams – from soccer to NFL franchises – grow at astonishing rates, leaving public company returns behind. There are plenty of revenues embedded in the MLB beyond ballpark sales, as apparel and beer are sold everywhere, and the games are broadcast and watched on nearly every device in every living room and every bar and restaurant across America. So take a glance at a TV this afternoon, and what you will see is America’s pastime in full bloom.
Sirius XM Radio (SIRI) : Not sure how many new cars will be adding Satellite Radio to listen to MLB games and few know to look back at what happened to SIRI during decline. Shares in Sirius were 0.08 at the bottom, and have moved as high as $4 per share during the cycle. It’s a lesson in how undervalued shares can be during massive liquidations, and it’s also a lesson in flagging growth six years into an aging bull market. Shares in SIRI can erode by 50% in 2015 if we get any kind of selloff back to $2 from its current $3.93. Like an aging star athlete who is struggling to get on base, Sirius will be the first sent to the minors in a market reversal.
Jarden Corp (JAH) Jarden has made batting helmets since 1977 via it’s Rawlings Division and recently changed CEO’s, but the revenue portion of the pie is smaller for Jarden, and the change here will take a few years to move the needle. The real concern here is that Jarden represents consumer demand across a large swath,from Bicycle playing cards to Sunbeam appliances and Coleman camping equipment. During the recession in 2009, shares fell from a lower level at $20 per share down to $4, but at $55 per share today, I see it impossible to maintain these levels, and seem vulnerable to a sharp selloff in any market where the possibility of intrest rate hikes are present. This is akin to your number one starter going on the DL and needing an appointment with Dr. Jobe.
Anheuser Busch Inbev (BUD) You’ll find safety in numbers thanks to the diversity of Inbev, and its overall size only makes it vulnerable to slight pullbacks if the market turns. People will always drink beer and buy guns if the economy turns, and even at a lofty $125 per share, a 10 -15% pullback will always draw larger mutual funds into the fray. For this reason, BUD is the consumer stock of choice. This is not your Harry Carey drunken sailor any longer…it‘s a mature, diversified company in a growing beverage market. Further still, BUD has a lot of options to purchase revenue with its massive share base, and thanks to its ability to use its shares as collateral, it seems like a juggernaut. I don’t see shares under $100…unless Harry comes back to life with a Falstaff beer in hand.
Under Armor, Inc. (UA) Think about wearable cameras in uniforms. Over the next decade, it will entirely change how we watch sports. On a recent conference call, I heard the CEO say the smartest thing I’ve heard a CEO say in a while. I’m paraphrasing here, but speaking on outsourcing camera technology to companies like Apple, Inc. (AAPL) and GoPro, Inc. (GPRO) , he said he thought that internally, they could do a better job designing the cameras and developing their own technology. Now this may not be true, but nonetheless it is spoken like a true special teams captain. It’s that kind of thinking that will spark partnerships in co-branding products, which will be a new source of revenue and a sure game saver. Simply put, Under Armor is the Craig Kimbrel of the apparel business when it comes to extending the reach of wearable clothing and content creation and the partnerships associated.
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