August 26, 2022

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The business of sports is always changing, and The Leadoff has you covered.

In today’s edition, Ted Leonsis and David Rubenstein are interested in buying the Orioles if they hit the market, Roger Federer is the top-earning tennis player despite not making a cent on the court this year, Peloton has another rough quarter, and Li-Ning bites into Nike’s market share in China. Click here to listen [[link removed]]. 🎧

Reports of Amazon’s Takeover of EA Refuted [[link removed]]

FIFA 23

Amazon could be interested in buying one of the world’s biggest video game publishers.

The tech giant was expected to make an official offer to acquire Electronic Arts on Friday, according to a USA Today report. CNBC has since refuted [[link removed]] the rumor, but the idea isn’t far-fetched.

Earlier this year, several outlets reported [[link removed]] that Electronic Arts, known for titles like “Madden NFL” and “Apex Legends,” met with NBCUniversal about a takeover, but talks fell through. EA was also said to have held discussions with Amazon at the time, as well as other giants like Apple and Disney.

Following reports of a possible takeover, shares of EA surged [[link removed]] more than 14% in pre-market trading. After CNBC’s update, shares fell back down.

Amazon, which already owns streaming service Twitch and recently launched cloud gaming service Luna, wouldn’t be the first technology company interested in expanding its gaming segment this year.

In January, Microsoft entered [[link removed]] a $69 billion agreement to acquire “Call of Duty” publisher Activision Blizzard. The acquisition is currently under review by the Federal Trade Commission. In May, Take-Two Interactive completed [[link removed]] its $12.7 billion acquisition of Zynga. EA’s Evolution

The takeover rumors come as EA undergoes some major changes and a little tension with its customers.

EA ended its 30-year partnership with FIFA in May, but announced [[link removed]] an extension of its deal with MLS on Tuesday.

Earlier this year, Electronic Arts CEO Andrew Wilson stated [[link removed]] developer DICE will be “rethinking the development process from the ground up” for “Battlefield 2042” after the initial launch contained bugs and glitches that prevented players from advancing.

EA reported [[link removed]] $1.8 billion in Q1 revenue.

Audi Revs Up for 2026 Formula 1 Entrance [[link removed]]

F1

Upcoming changes to Formula 1 are luring at least one big name in auto manufacturing.

Audi announced [[link removed]] Friday it is joining the global racing series in 2026 as a power unit constructor. The Volkswagen-owned company will join an existing team rather than start a new one.

Audi said that F1’s push toward sustainability — with a goal of being fully carbon neutral by 2030 — was key to its decision.F1’s new regulations will include a switch to fully sustainable fuels and nearly triple the electric power.F1 is introducing a cost cap for power unit manufacturers next year.

The German manufacturer’s entrance is “a big recognition that our move to sustainably fueled hybrid engines in 2026 is a future solution for the automotive sector,” said F1 CEO Stefano Domenicali.

Audi noted it hasn’t yet decided on a chassis partner, but would make an announcement by the end of the year. Previous reports connected it to Sauber, which races under the Alfa Romeo name. Alfa Romeo will end [[link removed]] its title sponsorship of Sauber after the 2023 season.

Porsche Next?

Another Volkswagen brand is also looking to enter the fray in 2026.

Legal documents published [[link removed]] in Morocco showed that Porsche plans to purchase half of the Red Bull F1 team. Audi has said that it will operate separately from Porsche in any F1 endeavors.

Porsche is preparing [[link removed]] for what could be one of Europe’s largest initial public offerings in history next month, which could place a value of up to $85.1 billion on the company.

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Callaway Changes Name to Emphasize Topgolf [[link removed]]

Topgolf

Callaway sees Topgolf as key to its strategy going forward — and now has a new name to reflect its priorities.

The golf brand is changing its name to Topgolf Callaway Brands Corp. Its stock ticker will change from ELY, after its founder Ely Callaway Jr., to MODG, which refers to “modern golf.”

The new name “better acknowledges our long-term strategic path forward,” said CEO Chip Brewer, and will also “build important awareness for our strategic shift towards exciting new ventures in the Modern Golf and active lifestyle segments.”

Callaway bought Topgolf for $2.6 billion in a deal that closed in March 2021.Topgolf has around 70 venues, with plans to open 11 per year for the next five years.Callaway’s strategy focuses on making golf accessible to a broader population that may not have the time or money to take up traditional golf.

“Topgolf is the keystone of our modern golf thesis,” Brewer said [[link removed]] on a May earnings call.

Birdie on Q2

Callaway had a record second quarter, with revenues growing 22.1% year-over-year to $1.1 billion.

Topgolf grew revenues 24.1% to $403.7 million and showed 8% growth in same-venue sales compared to 2019.

Golf equipment remained the company’s top segment, with $451.9 million in revenue, while its active lifestyle segment, which includes brands like TravisMathew and Jack Wolfskin, brought in $260.1 million.

Callaway estimates that Topgolf will account for half its EBITDA by 2025.

Conversation Starters The NCAA’s Division I women’s basketball committee is planning [[link removed]] to host a tournament similar to the men’s National Invitational Tournament — a secondary event to March Madness. On its careers page, Apple currently has 60 jobs [[link removed]] with the word “sports” in the title or description, with more than 50 posted since May. Major League Baseball and Korean Baseball Organization players will participate [[link removed]] in the 2022 Korea Series — a set of four exhibition games and other activities to be held from Nov. 9-16.

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Market Movers

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

T [[link removed]]

AT&T, Inc.

[[link removed]]

$17.89

[[link removed]]

-0.58%

[[link removed]] CMCSA [[link removed]]

Comcast Corp

[[link removed]]

$36.89

[[link removed]]

-2.12%

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

Live Nation Entertainment Inc

[[link removed]]

$92.05

[[link removed]]

-2.50%

[[link removed]] CWH [[link removed]]

Camping World Holdings Inc

[[link removed]]

$31.45

[[link removed]]

-2.84%

[[link removed]] ELY [[link removed]]

Callaway Golf Co.

[[link removed]]

$22.67

[[link removed]]

-3.90%

[[link removed]] (Note: All as of market close on 8/26/22) What to Watch

The New York Yankees (77-48) face the Oakland Athletics (46-80) on Friday night at RingCentral Coliseum.

How to Watch: 9:40 p.m. ET on ESPN+

Betting Odds: Yankees -1.5 || ML -240 || O/U 6.5

Pick: Expect a strong performance from Gerrit Cole on the mound. Take New York to cover.

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Written by Abigail Gentrup [[link removed]], Owen Poindexter [[link removed]] Edited by Matthew Tabeek [[link removed]], Brian Krikorian [[link removed]]

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