If the season is canceled then these related businesses will suffer, too
If the current labor impasse between NFL owners and players continues into the 2011 football season, players, coaches and fans won’t be the only losers. Companies whose business interests and revenues are closely tied to the league could take a hit as well — especially if the season is canceled.
As of Thursday, federal judges in two separate rulings have ordered NFL owners to cancel the lockout and get back to work. The owners are now seeking a temporary stay of the order to end the lockout, but the legal battle will continue regardless of that outcome.
So what does this standoff between NFL owners and players mean for stocks? When it comes to companies that depend on pro football for a big chunk of their revenue, the impact on earnings is potentially huge. Here are five companies that could take a really big hit:
1.DirectTV (Nasdaq:DTV) brought in $600 million-$750 million last year in subscription revenue from its Sunday Ticket service, which televises live broadcasts of every NFL game. Advertising revenue from those games adds another $100 million, all of which could be at risk if the 2011 season is canceled. Loss of a full NFL season would slice $1 a share off DirecTV’s third quarter revenue, according to Barclay’s analysts.
2. Electronic Arts (Nasdaq:ERTS), which is going ahead with the launch of a Madden NFL 12video game despite the lockout, could lose up to half its projected 2011 sales of the product – more than $150 million. Madden NFL was one of only five EA titles that sold more than four million games last year.
3. Anheuser-Busch InBev (NYSE:BUD). If the season is cancelled, the company could lose $12 billion in lost revenue from missed advertising, sponsorships, canceled fantasy football leagues, empty sports bars and out-of-work stadium personnel, Advertising Age says. The company already has ponied up $1.2 billion over six years to make Bud Light the NFL’s official beer sponsor starting with the 2011 season.
4. MGM (NYSE:MGM), Wynn Las Vegas (Nasdaq:WYNN) and other Las Vegas sports books could lose a combined $850 million from a lost NFL season, says John Avello, Wynn’s sports book and race director. “It would be absolutely devastating to us,” American Wagering senior VP John English said. “We get 40-50% of our earnings from football.”
5. Broadcast networks with major NFL exposure such as CBS (NYSE:CBS), News Corp.’s(NYSE:NWS) Fox and Comcast’s (NYSE:CMCSA) NBC Universal could lose “hundreds of millions in revenues as they replace NFL games with programs that will most certainly attract fewer viewers,” Moody’s Neil Begley said.
It’s easy to see why the loss of NFL games can have a huge impact on broadcasters’ revenues: CBS brought in $170 million in ad money last year for the Super Bowl XLV.