May 5, 2023

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With the Kentucky Derby and Miami Grand Prix this weekend, we’re off to the races on the latest Front Office Sports Today. Senior Writer Mike McCarthy joins us to break down Ian Rapoport’s foray into horse racing and the Churchill Downs experience. Then, Miami Dolphins Chief Revenue Officer Jeremy Walls gives us an inside look at the Grand Prix — what’s new this year, how the city is bringing its own cultural flavor to Formula 1, and the expected economic impact.

Listen and subscribe on Apple [[link removed]], Google [[link removed]], and Spotify [[link removed]].

Adidas Beats Revenue Expectations Despite Costly Yeezy Struggles [[link removed]]

Adidas

Adidas’ Yeezy crisis has hit the company hard — but its first-quarter financials were not as bad as expected.

The sportswear giant reported [[link removed]] $5.82 billion in Q1 2023 revenue — a 1% dip from $5.85 billion a year prior.

Those numbers actually outperformed projections from financial analysts, who expected a 4% drop, according to consensus estimates compiled by the company. Adidas also reported that it had an operating profit of $66.19 million, which beat analyst projections by $16.55 million.

Since cutting [[link removed]] ties with Ye — formerly known as Kanye West — in October due to the rapper’s public antisemitic remarks, Adidas has been struggling to figure out what to do with the mountain of unsold Yeezy sneakers in its inventory.

CEO Bjørn Gulden admitted [[link removed]] that the loss of the Yeezy brand is “of course hurting us.”

Earlier this week, a group of Adidas shareholders filed [[link removed]] a class-action lawsuit against the company, saying it should have known better than to partner with Ye.

With superstar Beyoncé also leaving [[link removed]] the brand in March, the company has turned to its other product lines to lift sales: Adidas has seen “extraordinary demand” for its Samba, Gazelle, and Campus brands and has begun producing them at larger scale.

Formula 1 Continues To Drive Revenue For Liberty Media [[link removed]]

Jerome Miron-USA TODAY Sports

With another strong start to the Formula 1 season, Liberty Media continues to evolve.

In its quarterly financial results, Liberty Media reported that Formula One Group brought in $381 million in total revenue for Q1 2023 — a 6% year-over-year increase from 2022 ($360M).

However, the group’s operating income decreased slightly year-over-year from $19 million to $16 million due to a $4 million increase in corporate expenses.

Liberty execs are focusing on the positives, though.

“The race weekends are drawing huge crowds, with the Australian Grand Prix hosting 445,000 fans and sellouts for the majority of the remaining calendar,” said Formula 1 president and CEO Stefano Domenicali.

Formula 1 is already expanding on its revenue-generating opportunities, recently signing [[link removed]] a licensing deal with PUMA and allowing Brad Pitt to drive a real F1 car alongside drivers while filming [[link removed]] a new movie.

Brave New World

Liberty’s other major sports holding — the Atlanta Braves — also enjoyed success in its leadup to a new season.

Atlanta Braves Holdings, LLC reported $31 million in total revenue for Q1 2023 — a 35% increase from a year prior ($23M).

Liberty reports that the team’s home opener on April 6 drew 42,000 fans — the largest crowd for that specific game in Truist Park history.

The company aims to complete its planned split-off of Braves Holdings and the reclassification of tracking stocks to create Liberty Live Group tracking stock by the end of Q2.

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How Top Brands are Leveraging NIL in 2023

Brand NIL investment is up 300% in 2023. Thousands of advertisers are adding college athletes to their activations, and top companies are leading the charge – 29 of the top 50 Fortune 500s currently use Opendorse [[link removed]] to manage NIL deals.

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Penn Clashes With Barstool After Firing, Earnings Miss [[link removed]]

Paul Kuehnel via Imagn

An earnings miss and a spat with a subsidiary company led to heavy losses for Penn Entertainment.

Penn released its earnings report [[link removed]] shortly after the company overrode Barstool executives to fire host Ben Mintz, who uttered a racial slur while reading song lyrics on a Barstool show.

The firing was announced on Wednesday, and on the following day, Penn’s stock plummeted 13.3%, which Barstool founder Dave Portnoy attributed [[link removed]] to Mintz’s firing. Penn completed its acquisition of Barstool in February for a total of $551 million.

Penn brought in $1.67 billion in the first quarter, up 7% year-over-year, with net income growing from $51.6 million to $514.4 million.

The casino and gaming company’s revenue beat [[link removed]] expectations but missed significantly on earnings per share.

Regulator Watch

It’s possible Penn is being cautious about Barstool’s content after it drew scrutiny [[link removed]] from Massachusetts’ gaming commission for its history of racist and misogynistic content, though regulators ultimately awarded the company permission to operate a sportsbook there.

“I’m having a hard time reconciling branding a sportsbook in Massachusetts … that I have concerns [for] not only responsible gaming, but simply the character and reputation and honesty of [that brand],” said state commissioner Eileen O’Brien.

Penn’s sportsbook began operating in Massachusetts and Ohio in Q1.

Conversation Starters The NBA is “tripling down” on its investment [[link removed]] in girls’ basketball as part of efforts to grow the youth game amid an uptick in broadcast viewership at the college and WNBA levels. “We see that as a huge priority from an equity perspective,” David Krichavsky, NBA SVP and Head of Youth Basketball Development, told FOS Wednesday at the Jr. NBA Conference in New York City. During the 2023-24 season, American schools will try to attract international fans [[link removed]] to NCAA sports through new events outside the U.S.. Notre Dame will host the first NCAA basketball game in Paris between their women’s team and South Carolina’s, while the Big 12 will begin to stage multiple sporting events in Mexico. NFL star receiver Tyler Lockett became a licensed real estate [[link removed]] agent last offseason and sold his first home. Now, his real estate group Liv N Serve is the official realtor of the Seattle Seahawks — the team he’s played with for nearly a decade. SURVEYS

Want a chance to win $250? We want to get to know our audience better and improve our coverage. Fill out our new survey [[link removed]] for a chance to win a $250 VISA gift card or free FOS merch!

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SPONSORED BY SLING TV What to Watch

The Boston Celtics take on the Philadelphia 76ers in the Game 3 of the Eastern Conference Semifinals on Friday night at Wells Fargo Center.

How to watch: 7:30 p.m., ET, ESPN with Sling TV [[link removed]]

Gambling odds: Celtics -2.5 || ML Celtics -142 || O/U 214.5

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