FR: Spending Money to Make Money With the NFL

Article: Spending Money to Make Money With the NFL

Like many of the previous articles in this series, the next article in my “Fool Revisited” series was sector piece. And like my first article, it was inspired by the NFL, though this time it was more a reaction to a season in full swing and not the resolution of that year’s lockout. The focus in this article was media companies, and I tried to point to all the media partners that the NFL had and how those companies were earning more than their astronomical rights fees from advertising.

Whether this argument would hold up these days remains to be seen, and with new “partners” joining the fray – Amazon broadcast numerous Thursday Night Football games this year and Verizon’s Yahoo! Sports streamed some postseason games – the money the NFL receives for its broadcasting rights might be more lucrative for both them and their partners. However, NFL viewership seems to be down, and while some people have pointed to “flag” protests or concussion and injury concerns, it could just simply be a change in our television viewing habits that have driven the change.

I was hoping that the NFL angle of the article would resonate, so I decided to share the article with the world via this ancient tweet:

One of the things I have noticed about some of my earlier articles at the Fool was the overuse (and abuse) of stock tickers. This article was no exception. When I first started writing, we could have up to seven companies mentioned in an article, and we would ticker each one, which would in turn send the article to show up in the Yahoo! Finance feed for the stock. This would change later, but this article may have been the most egregious early example of this. Later, Yahoo! would change its rules to prevent this from happening so that an article that was really about Company X didn’t feed through to Company Y’s ticker feed and aggravate people seeking news for Company Y, but it was a different world back in the fall of 2011 apparently.

I’m not going to chart up the returns of all eight companies mentioned in the article, but I will highlight the stocks that have performed exceedingly well, including the best performing stock thus far in this series (that company – Take-Two Interactive (Nasdaq: TTWO) – was mentioned as not being able to capitalize from the NFL after having been shutout from making a football video game). Using the compound annual growth rate (CAGR) and total growth, here’s how some of the highlighted companies fared versus the S&P 500 from article publication (September 29, 2011) through January 26, 2018:

Stock Start Price End Price CAGR Total Growth Value of $10,000
Walt Disney (NYSE: DIS) $27.75 $112.19 24.69% 304.29% $40,429
Comcast (Nasdaq: CMCSA) $9.39 $42.80 27.07% 355.80% $45,580
Twenty-First Century Fox (Nasdaq: FOXA) $13.29 $38.81 18.44% 192.02% $29,202
Electronic Arts (Nasdaq: EA) $20.62 $115.20 31.22% 458.68% $55,868
Take-Two Interactive $13.16 $119.37 41.66% 807.07% $90,707
S&P 500 $1,160.40 $2,872.87 15.39% 147.58% $24,758

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

Granted, the performance of these companies wasn’t driven solely by the NFL, but being involved with what some consider the most popular league has been very beneficial for all involved. Whether or not this continues going forward remains to be seen, but it shouldn’t be the only reason you would invest in these companies, but rather just one data point to consider when taking a deeper dive into each of the companies. I currently think that Disney is one of the better investment options out there due to its diverse holdings in entertainment, but I don’t know if I would invest new money into the company if given the chance.

Until next time…

Disclaimer: I do not personally own shares of the companies mentioned here, but I have purchased and currently own shares of Disney within my mother’s investment portfolio which I manage. However, I have no plans to purchase shares of any company mentioned within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.

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