February 25, 2022

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Manchester United has terminated its $40 million sponsorship deal with Russia’s national airline, Aeroflot, after the U.K. banned the airliner from operating in the country in response to Russia’s invasion of Ukraine. Aeroflot had been Man U’s official carrier since 2013.

Liberty Media Continues Dominance With Q4 Earnings

Jerome Miron-USA TODAY Sports/Design: Alex Brooks

Liberty Media, the parent company of Formula One Group, Braves Group, and SiriusXM Group, reported fourth-quarter earnings on Friday, one day after Formula 1 announced it would be canceling the Russian Grand Prix following the country’s invasion of Ukraine.

As a $17.2 billion group, the company Forbes dubbed [[link removed]] the world’s largest sports empire last month continues to grow.

Liberty reported $11.4 billion in total revenue across its three divisions.

Formula One Group’s revenue [[link removed]] rocketed 62.3% from $485 million to $787 million, primarily attributed to increased race promotion revenue — the same period the previous year saw limitations on fan attendance.

F1’s media rights revenue was flat, but sponsorship revenue increased during the quarter.Before the cancellation of the Russian Grand Prix, F1 had a record 23 races on its calendar for the year. Domestic Divisions

The Atlanta Braves had a successful quarter, too, with revenue nearly tripling from $35 million to $102 million. It also completed the sale of its minor league teams in January.

Baseball revenue, which includes ballpark operations, local broadcast rights, and shared MLB revenue streams, grew from $23 million in 2020 to $93 million in 2021. Development revenue, derived from the Battery Atlanta mixed-use facilities, fell from $12 million in 2020 to $9 million in 2021.

SiriusXM, which hosts a variety of sports programs covering NASCAR, ESPN, and others, brought in record revenue for the year at $8.7 billion, exceeding all 2021 financial and operating guidance. As of Jan. 28, Liberty Media owns 81.2% of SiriusXM.

Chelsea in $2B Debt to Russian Oligarch Owner

Chelsea FC/Design: Alex Brooks

Chelsea FC suddenly finds itself in the middle of a geopolitical conflict.

The Premier League club is owned by Russian oligarch Roman Abramovich, who could face sanctions from the United Kingdom related to his ties to the Russian government and the invasion of Ukraine.

However, the situation is further complicated [[link removed]] by the club’s balance sheet: Chelsea is $2 billion in debt to Abramovich.

Labour Party parliament member Chris Bryant said “Abramovich should no longer be able to own a [soccer] club in this country.”Bryant criticized [[link removed]] Prime Minister Boris Johnson for mistakenly claiming that Abramovich was already being sanctioned.Bryant has also raised the idea of seizing Abramovich’s $203.7 million home.

Should Abramovich face harsh sanctions or have his ownership of the club challenged, he could call in his loan to Chelsea, potentially bankrupting the club. He has an estimated net worth of $13.3 billion, mostly from the steel and metals industry.

A Top Earner

Despite the hefty loan, Chelsea has been among the sport’s top-earning clubs in the world. It is one of six Premier League clubs expected [[link removed]] to earn a collective $1.3 billion in sponsorships this season — quadruple what the other 14 clubs will make combined.

Chelsea was hit hard by the pandemic, taking [[link removed]] a $196.4 million loss for the fiscal year ending June 30, 2021, compared to a $49 million profit the previous year.

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Foot Locker Posts Record Year, Expects Lower 2022 Results

Design: Alex Brooks

Foot Locker reported a record year in its latest earnings report, but the sportswear and footwear retailer anticipates lowered revenue in the financial year ahead.

The company generated [[link removed]] $2.3 billion in sales in Q4 2021, a 6% increase year-over-year. Total full-year sales reached $9 billion in FY2021, a 19% increase compared to the fiscal year prior.

Foot Locker has diversified its business through acquisitions and mergers over the past year.

Last September, it bought athletic apparel retailer Eurostar for $750 million.It closed its acquisition of Text Trading Company for $360 million last November.The same month, it said it would be merging its Champ Sports and Eastbay brands.

Foot Locker projects revenue to drop in 2022 due to expectations that it will not sell as many products from its top vendor, Nike. The Oregon-based retailer is selling more of its shoes and apparel directly to consumers.

No single vendor will represent more than 55% of Foot Locker’s supplier purchases beginning in Q4 2022, compared to 65% in Q4 2021.

Shares of Foot Locker fell nearly 35% on Friday following the news, erasing [[link removed]] roughly $950 million in market value.

New Ventures

In October 2021, Foot Locker announced LCKR, its first [[link removed]] private apparel label since exiting the category three years prior. The line is available online and in more than 800 retail locations.

Last December, Foot Locker unveiled [[link removed]] Cozi, the company’s first proprietary womenswear brand. Cozi will release seasonal collections throughout 2022, with pieces ranging from $35-$50.

Conversation Starters In The Leadoff, MLB owners are threatening to shorten the regular season, Planet Fitness reports a boost in Generation Z memberships, sports betting operators may have lost $200 million in New York, and a DAO seeks to raise $4 billion to buy the Denver Broncos. Click here to listen [[link removed]]. Sinclair Broadcast Group has reportedly secured [[link removed]] a local streaming deal with MLB’s Tampa Bay Rays through Diamond Sports Group, a subsidiary which manages regional sports networks. DSG also has deals with the Kansas City Royals, Milwaukee Brewers, Miami Marlins, and Detroit Tigers. Fox Sports has started negotiations with Sean Payton about becoming its No. 1 NFL game analyst, sources tell [[link removed]] Front Office Sports. The former New Orleans Saints coach would team up with Joe Buck if and when Troy Aikman finalizes his exit to either ESPN or Amazon. Free, ad-supported video on-demand is set to outpace their subscription-based counterparts. According to Tubi’s latest report [[link removed]], in 2021, AVOD viewership grew twice as fast as SVOD.*

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Gaming, Soccer Take Center Stage

Find out exactly what’s happening in the private markets every week with highlights from our Front Office Sports Insights Deal Tracker.

We carefully monitor both public and private market data to capture a picture of what the sports landscape looks like.

This week’s Insights Deal Tracker [[link removed]] highlights:

Grease Monkey Games, the developer and publisher of mobile games and applications that deliver digital property rights to the world’s gamers, was acquired by Animoca Brands for an undisclosed amount. Vasco Da Gama, a Brazilian professional soccer club based in Rio de Janeiro, sold a 70% stake to Miami-based 777 Partners, valuing the franchise at $330 million. Playco, an instant-play gaming platform designed to create multiplayer games without any downloads through an advanced game engine that allows players to stream high-quality games over the web, raised $40 million in venture funding from Meta Platforms. Tagboard, the developer of a cloud production platform designed to create interactive live programming for connected screens, raised $8 million in a Series A funding round led by Grayhawk Capital. Daedalic, the developer and retailer of connected fitness equipment, raised $18.5 million in a Series A funding round led by Stripes. Backbone, the developer of gaming controllers designed to convert iPhones into gaming consoles, raised $40 million in a Series A funding round led by Index Ventures.

Try out the full Insights Deal Tracker. [[link removed]]

Market Movers

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

DIS [[link removed]]

Walt Disney Co (The)

[[link removed]]

$149.47

[[link removed]]

+0.05%

[[link removed]] RCI [[link removed]]

Rogers Communications Inc.

[[link removed]]

$51.83

[[link removed]]

+0.27%

[[link removed]] LYV [[link removed]]

Live Nation Entertainment Inc

[[link removed]]

$126.09

[[link removed]]

+1.12%

[[link removed]] VFC [[link removed]]

VF Corp.

[[link removed]]

$58.94

[[link removed]]

+1.67%

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

Nike, Inc.

[[link removed]]

$138.75

[[link removed]]

+1.68%

[[link removed]] T [[link removed]]

AT&T, Inc.

[[link removed]]

$23.91

[[link removed]]

+3.19%

[[link removed]] (Note: All as of market close on 2/25/22) What to Watch

The Los Angeles Clippers (30-31) face the Los Angeles Lakers (27-31) on Friday at Crypto.com Arena.

How to Watch: 10 p.m. ET on ESPN

Betting Odds: Lakers -2 || ML -130 || O/U 221.5* ( Bet on DraftKings [[link removed]])

Pick: Expect King James to dominate after the All-Star break. Take the Lakers 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

Front Office Sports Scoreboard [[link removed]] - The biggest stories in sports and the numbers behind them

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