The live sports space is likely very undervalued at present, making it a potential prime opportunity for value and speculative minded investors, given the pause in capital flows, and thus valuations, that might be implied by the pandemic health crisis.
Stocks in the space have had to tighten up to brace against the obstacle of circumstance. However, given that major trends will undoubtedly return over time, shares may be cheap and represent an interesting direction for those looking for opportunities.
While the context has been a headwind, the winners will likely take all, given the consolidation now going on in the space. The weak balance sheets are being weeded out, and the companies able to take advantage during the process could present huge upside potential as things normalize in the future.
With that in mind, we take a look here at some of the most interesting and active names in the space, including: Churchill Downs Inc (NASDAQ: CHDN), World Wrestling Entertainment Inc (NYSE: WWE), B2Digital Inc. (OTC: BTDG), and Madison Square Garden Sports Corp (NYSE: MSGS).
Churchill Downs Inc (NASDAQ: CHDN) is a quintessential example of the live sports operational dilemma that has come about as a consequence of the pandemic health crisis. The company bills itself as an industry-leading racing, online wagering, and gaming entertainment company anchored by our iconic flagship event – The Kentucky Derby. The company owns and operates Derby City Gaming, a historical racing machine facility in Louisville, Kentucky.
It also owns and operates the largest online horse racing wagering platform in the U.S., TwinSpires.com, and sports betting and iGaming through its BetAmerica platform in multiple states. CHDN is also a leader in brick-and-mortar casino gaming with approximately 11,000 slot machines and video lottery terminals and 200 table games in eight states.
Churchill Downs Inc (NASDAQ: CHDN) most recently announced the grand opening of its BetAmerica Sportsbook at Bronco Billy’s Casino in Cripple Creek, Colorado. BetAmerica, the Company’s sports betting and iGaming platform, partnered with Full House Resorts to open the retail sportsbook in the Colorado market on Thursday, September 24. BetAmerica plans to launch its online sportsbook and iGaming platform throughout the state of Colorado in the future, subject to regulatory approvals.
“Colorado is home to some of the most enthusiastic sports fans in professional and college sports and we are pleased to offer BetAmerica’s state-of-the-art sportsbook experience there,” said Bill Mudd, COO.
It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.
Churchill Downs Inc (NASDAQ: CHDN) pulled in sales of $185.1M in its last reported quarterly financials, representing top line growth of -61.2%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($699M against $488.2M).
World Wrestling Entertainment Inc (NYSE: WWE) is an integrated media and entertainment outfit that engages in the sports entertainment business in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. It operates through three segments: Media, Live Events, and Consumer Products.
The Media segment engages in the production and monetization of long-form and short-form media content across various platforms, including WWE Network, pay television, and digital and social media, as well as filmed entertainment. The Live Events segment is involved in the sale of tickets, including primary and secondary distribution; provision of event services; and sale of travel packages related to its live events.
World Wrestling Entertainment Inc (NYSE: WWE) recently announced that Steve Pamon, President and Chief Operating Officer of Parkwood Entertainment has been elected to its Board of Directors. “Steve brings an extraordinary track record from the media and entertainment industry and is an accomplished senior executive,” said Vince McMahon, WWE Chairman & CEO. “I am confident his experience and insights will add tremendous value to our company.”
According to the release, as the President & Chief Operating Officer of Parkwood Entertainment founded by global entertainer Beyoncé in 2010, Pamon oversees an extensive global media portfolio, including artist management, music production, concert tours, motion pictures, television specials and consumer products. Throughout his tenure, he has achieved critical and commercial success as evident in the Super Bowl 50 Halftime Show, Lemonade visual album, The Formation World Tour, Netflix’s Homecoming documentary and the Disney+ film, Black Is King, among many others.
The stock has suffered a bit of late, with shares of WWE taking a hit in recent action, down about -4% over the past week.
World Wrestling Entertainment, Inc. (NYSE: WWE) generated sales of $223.4M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -23.2% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($547.9M against $544.3M).
B2Digital Inc (OTC: BTDG) is a growing player in the mixed martial arts (MMA) space. The company styles itself as effectively the farm league for the UFC, which is the big pro league in MMA. The company operates live events, pay-per-view media, gyms, and other resources to maximize the development of future stars in the MMA sport.
BTDG has been showing off a strong run of late, with a series of innovations and very successful live events, suggesting this more speculative name may have more potential for upside than others named here.
B2Digital Inc (OTC: BTDG) most recently announced that it has entered into a Common Stock Purchase Agreement with Triton Funds, the nation’s largest student venture investment fund, for an investment by Triton in the Company’s common equity of as much as $5 million.
According to the release, Triton has agreed to invest up to $2.5 million in common stock of B2Digital through the purchase of shares the Company has agreed to sell to Triton, subject to the terms and conditions set forth in the CSPA. In addition, in connection with the CSPA, Triton may invest up to an additional $2.5 million pursuant to warrant agreements. Triton is primarily focused on investments that will have a lasting positive impact on the Millennial generation with a portfolio of both private and public companies.
Ashkan Mapar, Principal and Portfolio Manager at Triton Funds, reflected the bullish outlook, commenting: “After speaking with management, running due diligence on their business model, and watching their live events, we feel confident that B2Digital is merely at the ground level with vast potential for growth over the next couple of years. It’s not often when you see a publicly traded company in the lower middle market constantly putting on professional live events weekend after weekend for a sport that is expected to rapidly grow, but with BTDG you have exactly that. This is one of the most exciting investments for Triton Funds this year and we are happy to be one of the company’s financial and strategic partners.”
B2Digital Inc (OTC: BTDG) pulled in sales strong sales in its last reported quarterly financials, with top line growth of 155%. In addition, the company holds strong cash on hand in liquid cash assets, which will now be powerfully augmented by its recent agreement with Triton, granting BTDG even more resources with which to position itself in a dominant tier in one of the fastest growing segments of the live sports space (MMA) over the past few years and into the future.
Madison Square Garden Sports Corp (NYSE: MSGS) is a professional sports company with a collection of assets that includes the New York Knicks (NBA) and the New York Rangers (NHL); two development league teams, including the Westchester Knicks (NBAGL) and the Hartford Wolf Pack (AHL); and esports teams.
The company also owns two professional sports team performance centers, including the MSG training center in Greenburgh, New York and the CLG performance center in Los Angeles, California. Madison Square Garden Sports Corp. was formerly known as The Madison Square Garden Company.
Madison Square Garden Sports Corp (NYSE: MSGS) recently announced that David Hopkinson – an accomplished executive with more than 25 years of diverse sports industry experience – has been named Executive Vice President MSG Sports, President Team Business Operations.
According to the release, in his role, Mr. Hopkinson will lead the commercial strategy for MSG Sports’ portfolio of assets, which includes: the New York Knicks (NBA) and New York Rangers (NHL); two development league teams – the Westchester Knicks (NBAGL) and Hartford Wolf Pack (AHL); and esports teams through Counter Logic Gaming, a North American esports organization, and Knicks Gaming, an NBA 2K League franchise.
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 6% in that timeframe.
Madison Square Garden Sports Corp (NYSE: MSGS) managed to rope in revenues totaling $-7M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -102.6%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($90.7M against $290.3M, respectively).
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