Want to play in the NFL? Try these winning stocks
To invest in the $8.8 billion business of professional football, consider the league's key sponsors and partners.
By Karen Riccio, Traders Reserve
The last time the Green Bay Packers' organization made team stock available in 2012, football fans gobbled up 263,000 shares at $250 apiece faster than you could say Wisconsin cheddar-eating "Cheeseheads."
Known for wearing cheese-shaped hats, Cheesehead Packers fans raised some $65.75 million for the team that year. Shares of the non-stock stock offered holders no benefits from earnings, paid no dividends, and couldn't be traded. The stock didn't even give buyers any special privileges for snagging playoff tickets or drinking free refreshments. Relegated to collectors' items at best, this exercise by the Green Bay Packers clearly demonstrated fanaticism at its craziest.
So, being a long-time fan of the Buffalo Bills (no wide right jokes, please), I always wondered how to legitimately invest in the NFL. Just to be clear, I'm not referring to betting in office football pools, coin flips in Las Vegas or Fantasy Football.
Think about it. The NFL is an $8.8 billion industry, bigger than the NBA, NHL and MLB. The majority of revenue comes from television advertising, any gadget or piece of clothing with a team or NFL logo on it, and ticket sales and stadium concessions. The league makes money whether we watch the games on our 72-inch screens, or tailgate in the parking lot before consuming mass amounts of in-stadium hot dogs and "refreshments."
A good way to invest in the NFL is to invest in the investors of the NFL, the sponsors that have a whole lot of money riding on it. Here are three of the best bets:
I'll just let Nike's numbers speak for themselves.
The NFL's licensing arm generated a record $46.4 million in revenue in 2012, a $10 million bump over the first three quarters of the last fiscal year. That's the same year Nike replaced Reebok as the official supplier of NFL uniforms and fan apparel, paying $1.1 billion for the 5-year deal. It didn't take long for the investment to begin paying off for Nike.
For the first nine months of the fiscal year ended Feb. 29, 2012, Nike's apparel sales jumped 16% to $4.74 billion. By the third quarter of 2013, it climbed by another 20%.
Nike shares are selling near all-time highs, up nearly 40% year-to-date. From what it told investors Wednesday at a meeting at its Beaverton, Ore., headquarters, there's more upside to come.
Nike said it expects revenue to grow to $30 billion by fiscal 2015 and $36 billion by 2017 with North American apparel sales holding up its end of the bargain. The company has now posted 14 consecutive quarters of double-digit same-store sales growth in North America.
On Super Bowl Sunday in February 2012, Americans consumed an estimated 50 million cases of beer, with Bud Light as the top seller. It's no wonder that Anheuser-Busch intercepted a six-year, $1.2 billion deal from Coors Light in 2010 to become the official beer of the NFL.
Despite inking the deal, domestic sales fell 3.4% in the fourth quarter 2011 versus the prior year. However, the Belgium-based company saw signs of a comeback in the second half of 2012, supported by its new NFL sponsorship. Profits rose to $1.85 billion compared with $968 million a year earlier. Revenue meanwhile rose 5.7% to $9.87 billion.
While its market share in the U.S. is slowly declining (21% in 2012), the company's global shipments of Budweiser rose 6.2% in the third quarter 2012 year-to-date. BUD has also extended its sponsorship of soccer's World Cup through 2018 in Russia and the 2022 event in Qatar.
As long as it keeps seeking out new markets and keeps the Bud brand name in front of NFL fans, BUD should continue quenching the thirsts of investors.
This potential "NFL" investment is a little tricky. DirecTV currently owns the rights to NFL Sunday Ticket, a subscription-based service that shows the full allotment of NFL games. Considered a DirecTV mainstay, it's been around since 1994. Well, the $1 billion per season contract with the NFL ends following the 2014-2015 season. Some folks have been kicking around the idea that Google might be interested.
For now, NFL Sunday Ticket generates around $450 million per year in subscriber fees through DirecTV's 2 million subscribers, plus additional fees collected through mobile applications. DTV's stock price has doubled since the deal, while revenues have grown more than 37% since fiscal 2009. Net income has soared more than 200% to nearly $3 billion.
However, DirecTV might not in a financial position to renew its NFL deal beyond its final season -- and others are said to be interested, including Google. Considering it has been a winning proposition for DirecTV, the contract could attract lucrative bids from heavy hitters. Google, which topped $50 billion in sales last year, would have little trouble footing the bill for NFL Sunday Ticket. Stay tuned.
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