February 10, 2022

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An NBA blockbuster: The Brooklyn Nets are reportedly trading James Harden to the Philadelphia 76ers for Ben Simmons, Seth Curry, Andre Drummond, and two picks — an unprotected 2022 first-round pick and a protected 2027 first-round pick. 🤯

Coca-Cola’s $9.5B Quarter Boosted By BodyArmor

BodyArmor/Design: Alex Brooks

Coca-Cola reported a 10% increase in fourth-quarter revenue to $9.5 billion, boosted by the completion of its $5.6 billion acquisition of BodyArmor, a company that produces sports performance and hydration drinks.

The soda giant’s hydration, sports, coffee, and tea segment grew 12% [[link removed]] for the quarter, with sports drinks leading the pack at 18% growth.

Coke claims that BodyArmor was the No. 2 sports drink in 2021 for measured retail channels in the U.S.

Coke acquired the remaining 85% of the company it didn’t own in November.The sports drink company will be managed as a separate [[link removed]] business within Coca-Cola’s North America operating unit.

Coke’s full-year revenue grew 17% to $38.7 billion, while operating income fell 15%. The company said it was “impacted by the timing of concentrate shipments.”

For 2022, Coca-Cola expects organic revenue growth of 7% to 8% and commodity price inflation to be in the “mid-single-digit percentage [[link removed]].”

Pepsi’s Product

Coca-Cola’s rival Pepsi also posted earnings on Thursday, recording fourth-quarter revenue [[link removed]] of $25.25 billion, beating analysts’ estimates of $24.24 billion. For 2022, it expects 6% revenue growth.

On the company’s investor call, CEO Ramon Laguarta said Pepsi has expanded production capacity for its own sports drink, Gatorade, which has reportedly been hit by supply chain issues related to bottle supply. Laguarta expects [[link removed]] the problem to dissolve soon.

Both Coke and Pepsi attributed [[link removed]] some of their revenue success to price hikes.

Silver Lake Nears Investment in New Zealand’s All Blacks

All Blacks/Design: Alex Brooks

Private equity firm Silver Lake is finalizing an investment in New Zealand’s All Blacks rugby team, despite powerful resistance.

The firm is reportedly likely [[link removed]] to settle for a stake less than the 15% it had initially proposed last year. The deal with national governing body New Zealand Rugby faced opposition from the team and its players, who were wary of opening the door to outside investors.

The investment will be in a new company created to hold All Blacks’ commercial rights, which could be valued at upward of $2 billion.Silver Lake’s stake is likely to be a little over 5%.

The prospective deal comes over a year after Silver Lake initially seemed close to acquiring a larger stake in the holding company. This new pact appears to have the approval of the New Zealand Rugby Players Association.

Silver Lake Keeps Fishing

The California-based private equity firm is on a torrid streak of sports investments. In December 2021, it secured [[link removed]] a 33.3% stake in the Australian Professional Leagues for around $100 million.

That same month, it teamed up with Endeavor to buy nine minor league baseball teams. The pair could eventually purchase up to 40 teams.

In September, Silver Lake invested [[link removed]] a reported $50 million in analytics platform Pro Football Focus.

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Zynga Generates Record $695M In Q4 Revenue

Zynga/Design: Alex Brooks

Zynga, the mobile game developer behind “FarmVille” and “Words with Friends,” reported record fourth-quarter and annual revenue in its latest earnings report.

The San Francisco-based developer generated $695 million in revenue in Q4 2021, an 8% increase year-over-year, beating Wall Street estimates of $675 million in revenue.

The record results were driven by Zynga’s online game division, which generated $534 million during the quarter, a 7% increase year-over-year. Full-year revenue reached $2.8 billion, a 42% uptick compared to FY2020.

Zynga’s impressive Q4 and financial year came on the heels of one of the largest acquisitions in gaming history. Last month, Take-Two Interactive, which owns publishers Rockstar Games and 2K, agreed to buy [[link removed]] Zynga in a deal valuing the company at an enterprise value of $12.7 billion.

The deal will be funded with $2.7 billion in financing from JPMorgan Chase, Take-Two’s balance sheet, and a debt issuance. Zynga and Take-Two combined for $6.1 billion in net bookings for the 12 months preceding Sept. 30, 2021.

In addition to strong earnings, Zynga reported favorable audience metrics. In Q4, the company averaged 184 million monthly active users, a 38% increase year-over-year.

What’s Next

Last June, Zynga CEO Frank Gibeau told [[link removed]] Bloomberg the company could add more than $1 billion in revenue by developing titles for other gaming devices besides mobile. The 52-year-old former Electronic Arts executive said Zynga is “all in” on delivering titles for consoles and PCs.

Conversation Starters In The Leadoff, Disney beats expectations and plans an “NFL Sunday Ticket” bid, a new bidder for the Denver Broncos emerges, Crypto.com inks a naming rights deal to F1’s Miami Grand Prix, and a tech company powering some of the top NFTs reaches a $10.2 billion valuation. Click here to listen [[link removed]]. The Arizona Coyotes will call Arizona State University home [[link removed]] for at least the next two seasons, Front Office Sports has learned. The Coyotes were in search of a new arena after the city of Glendale notified the franchise that it would not renew their lease. The NFL will conduct [[link removed]] an independent inquiry regarding allegations of sexual harassment against Washington Commanders owner Dan Snyder. On Wednesday, the Commanders announced an independent investigation of their own into the allegations, which was met with backlash. It is currently anticipated that $579 million will be spent on NIL deals in the first twelve-month period ending in July 2022. Download our latest white paper [[link removed]] to learn how your brand can leverage NIL.

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Market Movers

U.S. stocks experienced declines across all three major indexes on Thursday. Here’s a look at how sports-related stocks performed:

FWONA [[link removed]]

Formula One Group

[[link removed]]

$58.07

[[link removed]]

+0.89%

[[link removed]] MSGS [[link removed]]

Madison Square Garden Sports Corp

[[link removed]]

$176.37

[[link removed]]

+1.97%

[[link removed]] MANU [[link removed]]

Manchester United Plc.

[[link removed]]

$14.08

[[link removed]]

+2.47%

[[link removed]] NKE [[link removed]]

Nike, Inc.

[[link removed]]

$144.82

[[link removed]]

-1.15%

[[link removed]] LULU [[link removed]]

Lululemon Athletica inc.

[[link removed]]

$334.71

[[link removed]]

-1.45%

[[link removed]] MGM [[link removed]]

MGM Resorts International

[[link removed]]

$47.06

[[link removed]]

-4.79%

[[link removed]] (Note: All as of market close on 2/10/22) What to Watch

The Brooklyn Nets (29-25) face the Washington Wizards (24-29) on Thursday at Capital One Arena.

How to Watch: 7:30 p.m. ET on TNT

Betting Odds: Wizards -2.5 || ML -140 || O/U 218* ( Bet on DraftKings [[link removed]])

Pick: Expect the Nets to bounce back after nine consecutive losses. Take Brooklyn to cover.

*Odds/lines subject to change. T&Cs apply. See draftkings.com/sportsbook [[link removed]] for details.

Written by Abigail Gentrup [[link removed]], Justin Byers [[link removed]], Owen Poindexter [[link removed]]

MORE FROM FOS:

The Leadoff [[link removed]] - Daily Business of Sports Podcast

Front Office Sports Insights [[link removed]] - The most promising opportunities where sports meets industry

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