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SBJ/June 18 - 24, 2001/Special ReportPrint All
Action Performance Companies Inc.
4707 East Baseline Road
Phoenix, AZ 85040
Phone: (602) 337-3700
Fax: (602) 337-3750
Action Performance hit the wall last year, as the downturn in the collectibles markets hammered its earnings, and in turn its stock, which fell to as low at $2.25.
Once a high flier that mirrored the booming NASCAR, Action Performance appeared for a while that it might not even walk away from the crash that left it with a $75 million loss last year. But like an engine roaring back to life, the stock has sizzled recently and has climbed into the $20s, in part because of a resurgence in NASCAR collectibles.
In a way, Action's performance can be viewed as a proxy for the privately held NASCAR. When the sport struggles, Action gets a cold. If people aren't watching or attending events, they aren't buying replica race cars. And when the sport booms, as it is again today with sky-high TV ratings, business is good for Action.
CEO: Fred Wagenhals
2000 bonus:0 2000 other compensation:$200 Options:236,000 Common shares owned:2,099,599
1999 salary:$591,731 1999 bonus:$250,000
Price as of June 11: $22.60
52-week price range: $2.25-$23.45
IPO date: June 19, 1997
IPO price: $25.63
Underwriters: Banc of America Securities; Advest Inc.; Wachovia Securities
IPO performance: Down 11.8%
Shares outstanding: 16 million
Inside ownership: 2,425,034 shares (15.2%)
No. of employees: 519
Board of directors:
Fred W. Wagenhals — Founded company and is chairman of the board, president and CEO. (Owns 2,099,599 shares, or 13%)
R. David Martin Jr. — Martin has been CFO since August. (Owns 2,414 shares)
Melody L. Volosin — Volosin is executive vice president of sales. (Owns 46,225 shares)
John S. Bickford Sr. — Bickford has been executive vice president of strategic alliances since July 1997. (Owns 62,431 shares)
Paul G. Lang — Lang is managing director of MiniChamps, GmbH. (Owns no shares)
Jack M. Lloyd — Lloyd was president and CEO of Phoenix Restaurant Group Inc. until September. (Owns 40,000 shares)
Robert H. Manschot — Manschot is managing director of Manschot Investment Group LLC and chairman of Silicon Entertainment Inc. (Owns no shares)
Edward J. Bauman — Bauman is the former owner of Richmond International Raceway. (Owns 28,000 shares)
Melody L. Volosin, executive vice president, sales (2000 salary: $165,000; bonus: $30,000; other compensation: $3,800; options: 143,726)
John S. Bickford Sr., executive vice president (2000 salary: $194,125; bonus: $10,000; other compensation: $1,407; options: 75,000)
Tod J. Wagenhals (resigned Aug. 1), executive vice president and secretary (2000 salary: $195,250; bonus: $100,000; other compensation: $1,100; options: 144,700)
Christopher S. Besing, vice president, chief financial officer ($146,395; bonus: 0; other compensation: 0; options: 0)
Largest outside shareholder:
Strong Capital Management Inc. — 2,347,089 (14.7%)Performance Record
In thousands except per-share data;
fiscal years ended June 30200019991998
Apparel and souvenirs$99,322$119,922$106,712 Other$6,339$3,139$8,094 Net sales$254,693$342,445$251,877 Cost of sales$205,690$210,768$157,079 Gross profit$49,003$131,677$94,798 Operating expenses$124,695$78,454$50,686 Income (loss) from operations($75,692)$53,223$44,112 Earnings per share($3.52)$1.69$1.52 Sources: Action Performance's annual reports, proxies and
Boston Celtics LP
151 Merrimac St.
Boston, MA 02114
Phone: (617) 523-6050
Fax: (617) 523-5949
The Boston Celtics used to be known for winning championships. Now their only claim to fame may be as the last truly major public sports team. The Cleveland Indians, Florida Panthers and Vancouver Canucks have all gone private in recent years. Only the Orlando Predators of the Arena Football League are also public.
For the Celtics, there's been no pot of gold at the end of the IPO rainbow. More novelty stock than serious investment, the shares have been a dud. With little earnings growth and no playoff seasons in nearly a decade, shareholders have had little to cheer about.
A complicated restructuring two years ago left a large part of the team in private hands, but still, shares are there for the buying. Buy one, frame it and hang it over your mantel. That's what they have been good for.
For followers of the sport business, though, the Celtics are a treasure trove. Everything from an NBA team's quarterly revenue to insights into the league are laid bare for all to see. So let's hope the Celtics don't follow their brethren into the private world.
Chairman: Paul E. Gaston
2000 bonus:0 2000 other compensation:0 Options:0 Units owned:677,600
1999 salary*:0 1999 bonus:0 1999 other compensation:0 Options:0
Price as of June 11: $9.95
52-week price range: $7.13 to $11.65
IPO date: 1986
IPO price: $18.50**
Underwriter: Smith Barney
Units outstanding: 2,703,664
Subordinated debentures outstanding: 2,703,364
Inside unit ownership: 678,300 (25.1%)
No. of employees: 47 (full time)
* Gaston declined his 1999 compensation package as a way to minimize the partnership's losses due to the NBA lockout.
** In 1998, the Celtics reorganized, allowing unit holders to take debentures instead of units. As a result, the unit price declined to account for the new debentures. Therefore, the current value of the units cannot be compared to the IPO unit price for performance purposes. It is clear, however, that the Celtics' units have dramatically underperformed the market.
Board of directors:
Paul E. Gaston — A director since September 1992, Gaston became chairman of the board in April 1998. (Owns 677,600 units, or 25.1%)
Don F. Gaston — The father of Paul Gaston, Don Gaston has served as a director since his resignation as chairman of the board in December 1992. (Owns 200 units)
Paula B. Gaston — The wife of Don, Paula Gaston became a director in September 1992. (Owns no units)
John B. Marsh III — A director since September 1992, Marsh is managing partner of Corvus Capital LLC, a strategic investment partnership. (Owns 500 units).
David A. Splaine — A director since January 2000, Splaine is the managing director of Baldwin & Clarke Corporate Finance Inc., an investment banking firm. (Owns no units)
Richard G. Pond, executive vice president, chief operating and financial officer, treasurer and secretary (2000 salary: $360,000; bonus: $250,000; other compensation: 0; options: 0)
Largest outside shareholder:
David R. Murphey III, Murphey Capital Inc. — 244,700 units (9.1%)Performance Record
In millions except per-unit data;
fiscal years ended June 3020001999199819971996
Revenue$81.20$43.10$75.70$63.00$64.80 Ticket sales$39.40$23.30$39.10$31.80$35.30 Television and radio
broadcast rights fees$34.20$14.60$28.00$23.30$22.10
Cost and expense$69.40$41.50$61.90$62.30$48.80 Team expenses$56.70$30.20$40.40$40.90$27.90 Net income (loss)($3.30)($10.10)$12.30$0.42$54.20 Basic earnings per unit($1.23)($2.85)$2.45$0.07$9.18 Sources: Boston Celtics' annual reports, proxies and
Bull Run Corp.
4370 Peachtree Road N.E.
Atlanta, GA 30319
Phone: (404) 266-8333
Fax: (404) 261-9607
Bull Run is one of the few sports marketing companies that is public. Others like Octagon are part of much larger companies and so the results are not broken out. But Bull Run gives us a rare opportunity to see quarterly the results of a sports marketer.
One problem: While Bull Run bought collegiate sports marketer Host Communications in December 1999, last month the company announced accounting problems at a Host sister company. The earnings for the last nine months of 2000 are still in the process of being restated. That means there are only two quarters of pure earnings to look at since the acquisition — the one right after it, and the first three months of this year.
What those quarters do show is Host is not very profitable; in fact, it is losing money. So careful attention should be paid to Bull Run's earnings to get a sense of the direction of sports marketing.
CEO: Robert S. Prather Jr.
2000 bonus:$125,000 2000 other compensation:$10,000 1999 salary:
(six months ended June 30)$176,346
1999 bonus:0 1999 other compensation:$9,600 Common shares owned:3,186,338
Price as of June 11: $1.35
52-week price range: $1.00 to $3.13
IPO date: October 1983
IPO price: N/A
IPO performance: N/A
Shares outstanding: 35 million
Inside ownership: 10,750,000 shares (30.6%)
No. of employees: 621
N/A — Not available or not applicable
Board of directors:
Gerald N. Agranoff — A director since 1990, Agranoff is managing general partner of SES Family Investment & Trading Partnership. (Owns 95,000 shares)
James W. Busby — A director since 1994, Busby is president of Del Mar of Wilmington Corp. and president of Datasouth Computer Corp. (Owns 2,135,206 shares, or 6.1%)
W. James Host — A director since 1999, Host is chief executive officer of Host Communications Inc. (Owns 1,768,325 shares, or 4.9%)
Hilton H. Howell Jr. — A director since 1994, Howell is vice president and secretary of Bull Run. (Owns 2,036,050 shares, or 5.8%)
Robert S. Prather Jr. — A director since 1992, Prather is president and chief executive officer of Bull Run. (Owns 3,186,338 shares, or 9.0%)
J. Mack Robinson — A director since 1992, Robinson is chairman of the board for Bull Run. (Owns 7,435,894 shares, or 21.1%)
Monte Johnson — A director since 2001. (Owns no shares)
Fredrick J. Erickson, vice president-finance, treasurer and chief financial officer (2000 salary: $140,500; bonus: $36,377; options: 0; other compensation: $10,613)
Hilton H. Howell Jr., vice president and secretary
Largest outside shareholder:
Shapiro Capital Management Co. — 3,720,125 shares (10.6%)Performance record:
Fiscal years ended June 302000*1999**1998***1997***1996***
Revenue$46,816,000$609,000$1,618,000$681,000$844,000 Operating costs and expenses$45,671,000$693,000$1,312,000$1,039,000$1,022,000 Net income (loss)($12,786,000)($2,261,000)($2,360,000)($1,773,000)$5,308,000 Net earnings (loss) per share($0.47)($0.10)$0.11($0.08)$0.23 * For the nine months ended March 31, 2000, because Bull Run is
in the process of restating some of its figures for the 2000 fiscal
year as a result of accounting errors.
** For the six months ended June 30, 1999, because Bull Run
changed its fiscal year end from Dec. 31 to June 30.
*** These are figures for the fiscal year ended Dec. 31.
Source: Bull Run Corp.'s annual reports, proxies and
Championship Auto Racing Teams
755 West Big Beaver Road, Suite 800
Troy, MI 48084
Phone: (248) 362-8800
Fax: (248) 362-8810
Championship Auto Racing Teams is a case study in the perils of a sports company going public. Everything seemed rosy in 1998 when the company reaped around $75 million from its IPO and became one of the first leagues ever to go public.
Since then, the reporting requirements for public companies have forced CART to air its dirty laundry.
And whereas before the IPO, CART answered to its race team ownership, shareholders now include some heavy Wall Street hitters. In April 1999, about a year after the IPO, insiders like league executives and race teams owned 32.4 percent of the company. In April this year, that figure stood at 20.6 percent, a 36 percent drop.
Now the rumor mill is swirling with talk that CART may try to go private again.
CEO: Joseph Heitzler*
2000 bonus:$100,000 2000 other compensation:0 Options:200,000 Shares owned:0 1999 salary**:$550,000 1999 bonus:$200,000 1999 other compensation:$9,236 Options:0 * Heitzler began on Dec. 4, taking over for Bobby Rahal, who
was CEO from June and November. In that time, Rahal was
paid $166,154, with 50,000 options
** Compensation for 1999 CEO Andrew Craig. Craig received
$600,000 in 2000.
Price as of June 11: $14.72
52-week price range: $14.31 to $28.25
IPO date: March 10, 1998
IPO price: $19
IPO performance: Down 23%
Underwriters: Jefferies & Co., A.G. Edwards & Sons Inc.
Shares outstanding: 15,765,467
Inside ownership: 3,115,100 shares; 166,200 vested options* (20.6%)
No. of employees: 83 full-time and about 203 race officials.
* Vested options were stock options that could have been exercised as of June 5.
Board of directors:
• Joseph Heitzler — Named chairman of the board on June 5. (Owns no shares, 200,000 options)
• Gerald R. Forsythe — Forsythe is president of Forsythe Racing. (Owns 1,183,000 shares, or 7.5%)
• Chip Ganassi — Ganassi is president and owner of Chip Ganassi Racing Teams Inc. (Owns 720,000 shares, or 4.6%)
• Carl A. Haas — Haas is managing partner of Newman Haas Racing. (Owns 650,500 shares, or 4.1%)
• James F. Hardymon — Hardymon retired as chairman and CEO of Textron Inc. (70,000 vested options)
• James Henderson — Henderson is chairman and CEO of Cummins Engine Co. (Owns 1,000 shares and 10,000 vested options)
• Barry Green — Green is the president of Team Green Inc. (Owns 103,500 shares)
• U.E. Patrick — Patrick was a founding member of CART. (Owns 248,100 shares and 7,585 vested options, or 1.6%)
• Derrick Walker — Walker is president and owner of Derrick Walker Racing Inc. (Owns 210,000 shares, or 1.3%)
• Bert Roberts — Roberts is the chairman of MCI WorldCom Inc. (Owns 5,000 shares and 10,000 vested options)
• Frederick Tucker — Tucker is president of Motorola's semiconductor products sector. (10,000 vested options)
Harold A. Whiteford*, president of racing operations (2000 salary: $213,462; bonus: $51,593; options: 15,000; other compensation: $13,699)
Roger Bailey, president of American Racing Series (2000 salary: $240,000; bonus: $28,139; options: 5,000; other compensation: $4,706)
Timothy Mayer, senior vice president of racing operations (2000 salary: $210,848; bonus: $7,000; options: 5,000; other compensation: $5,211)
* CART laid off Whiteford in April.
Largest outside shareholder:
Kern Capital Management — 1,287,400 shares (8.2%)Performance Record
In millions except per-share data;
fiscal years ended Dec. 3120001999199819971996
Revenue$75.1*$68.60$62.50$41.50$41.10 Expenses$58.80$44.30$42.10$62.70$42.00 Operating income$16.20$24.50$20.50($21.30)($0.80) Net income$7.50$18.90$15.10($17.50)($0.30) Long-term debt00$0.31$0.44$0.57 Earnings per share$0.97$1.22$1.06($1.72)($0.04) * Includes $6 million CART maintains ISL Worldwide owes the
company. Each company has sued the other. ISL is in
Swiss bankruptcy proceedings.
Sources: CART's annual reports, proxies and IPO filings
1500 Market St.
Philadelphia, PA 19102-2148
Phone: (215) 665-1700
Fax: (215) 981-7700
Comcast is one of those media titans whose tentacles spread far into sports. It owns the Philadelphia 76ers, Flyers, the First Union Center and First Union Spectrum. It owns three minor league baseball teams and a concessionaire, as well as three regional sports networks, Speedvision and interests in Outdoor Life and The Golf Channel.
Problem is, even though Comcast is public, it's tough to glean much information about these properties from the cable company's securities filing. The bulk of Comcast's revenue still comes from cable, not sports.
But sometimes there are great nuggets. Deep in its annual report, Comcast disclosed it paid $137.8 million to increase its percentage in The Golf Channel, previously disclosed only as an increase from 40.1 percent to 60.5 percent. That would value the whole station at $682 million. It also would mean that Comcast would have paid, based on this valuation, around $211 million to acquire Fox's 30.9 percent interest in the channel, a transaction announced May 22.
CEO*: Ralph J. Roberts
2000 bonus:$551,250 2000 other compensation:$2,669,177 Options:250,000 Class A shares owned:809,120
Class A special shares** owned:5,762,802 1999 salary:$1,050,000 1999 bonus:$525,000 1999 other compensation:$2,279,829 Options:250,000 * Roberts is chairman, but for purposes of proxy reporting
requirements he is considered the CEO.
** Class A special shares have no voting rights.
Class A price as of June 11: $40.27
52-week price range for Class A shares: $30.63 to $46.31
IPO date: June 29, 1972
IPO price: $7
Underwriter: Butcher & Sherrerd
IPO performance: Up 481%
Class A shares outstanding: 21,832,250
Class B* shares outstanding: 9,444,375
Class A special shares outstanding: 913,785,165
Inside ownership Class A shares: 1,333,132 (6.1%)
Inside ownership Class A special shares: 24,550,883 (2.7%)
No. of employees: 35,000
* Class B shares have 1/15 the voting rights of Class A shares.
Board of directors:
Ralph J. Roberts — Owns 809,120 Class A shares, or 3.7%, and 5,762,802 class A special shares
Julian A. Brodsky — Owns 234,146 Class A shares, or 1.1%, and 3,137,366 Class A special shares
Brian L. Roberts — Owns 138,269 Class A shares; 12,390,861 Class A special shares, or 1.4%; and 9,444,375 Class B shares, or 100%
Decker Anstrom — Owns no shares
Sheldon M. Bonovitz — Owns 12,080 Class A shares and 212,334 Class A special shares
Joseph L. Castle II — Owns 375 Class A shares and 32,369 Class A special shares
Felix G. Rohatyn — Owns 809,120 Class A shares, or 3.7%, and 5,762,802 Class A special shares
Bernard C. Watson — Owns 37,800 Class A special shares
Irving A. Wechsler — Owns 98,581 Class A shares and 592,427 Class A special shares
Anne Wexler — Owns 39,300 Class A special shares
Julian A. Brodsky, vice chairman (2000 salary: $759,692; bonus: $379,846; other compensation: $27,358; options: 60,000)
Brian L. Roberts, president (2000 salary: $1,050,000; bonus: $1,737,000; other compensation: $310,474; options: 4,000,000)
Lawrence S. Smith, executive vice president (2000 salary: $759,692; bonus: $449,962; other compensation: $2,403; options: 800,000)
John R. Alchin, treasurer (2000 salary: $639,141; bonus: $348,071; other compensation: $40,319; options: 600,000)Performance Record
In millions except per-share data;
fiscal years ended Dec. 3120001999199819971996
Revenue$8,218.60$6,529.20$5,419.00$4,700.40$3,813.80 Net income$2,021.50$1,065.70$972.10($238.70)($53.50) Operating income($161.00)$664.00$557.10$466.60$465.90 Earnings per share$2.24$1.38$1.29($0.37)($0.11) Long-term debt$10,517.40$8,707.20$5,464.20$5,334.10$5,998.30 Sources: Comcast's annual reports, proxies and IPO filings
Global Sports Inc.
1075 First Ave.
King of Prussia, PA 19406
Phone: (610) 265-3229
Fax: (610) 265-2866
A year ago, it seemed unlikely Global Sports would be one of the last large sports Internet survivors. Names like Quokka, Total Sports, Fogdog, Chipshot.com and MVP.com were all the rage, with their sexy plans ranging from broadcasting on the Internet to e-commerce. Now they are history.
Boring Global Sports, which operates sporting-goods Web sites for 16 major retail operations, ranging from Kmart's Bluelight.com to sports giant The Sports Authority, has no brand it is trying to tout. While MVP.com, for example, was out spending millions of dollars touting its affiliation with Michael Jordan and John Elway, Global Sports was busy doing the dirty work of putting together a realistic business model.
It keeps roughly 92 percent of every transaction it handles on partners' behalf and fulfills almost all of its orders from its Louisville, Ky., warehouse.
Now it is one of only two public independent sports Internet companies, the other being SportsLine.com. It's just the one you have never heard of.
CEO: Michael G. Rubin
2000 bonus:0 2000 other compensation:$510 Options:0 1999 salary:$450,000 1999 bonus:0 1999 other compensation:$510 Options:0 Shares owned:8,067,096
Price as of June 11: $5.91
52-week price range: $2.38 to $11.13
IPO date: Dec. 22, 1997*
IPO price: $3.13*
IPO performance: Up 89%*
Shares outstanding: 31,427,752
Inside ownership: 19,982,577 (59.2%)
Number of employees: 370
* First day of trading after merger with publicly held shoemaker Rykä.
Board of directors:
Kenneth J. Adelberg — A director since July 1995, Adelberg is president and CEO of The HiFi House Group of Cos. (Owns 45,650 shares)
Ronald D. Fisher — A director since March 2000, Fisher is vice chairman of Softbank Inc. (Owns no shares)
Harvey Lamm — A director since March 1998, Lamm is a director and CEO of Vintek Corp., a privately held company specializing in automated title and risk management for automotive finance institutions. (Owns 12,260 shares)
Mark Menell — A director since April 2000, Menell is a partner in Rustic Canyon Group, formerly TMCT Ventures, a $550 million venture capital fund focused on growth companies. (Owns no shares)
Mike Perlis — A director since May, Perlis is a venture partner at Softbank Capital Partners. (Owns no shares)
Dr. Jeffrey F. Rayport — A director since May 1999, Rayport is executive director of the Monitor Marketspace Center, the technology and e-commerce media unit of Monitor Co. (Owns no shares)
Jordan M. Copland, executive vice president and CFO (2000 salary: $125,769; bonus: $47,500; other compensation: $23,358; options: 200,000)
Robert W. Liewald, executive vice president, merchandising (2000 salary: $200,000; bonus: $100,000; other compensation: $4,318; options: 25,000)
Arthur H. Miller, executive vice president and general counsel (2000 salary: $200,000; bonus: $100,000; other compensation: $3,846; options: 50,000)
Michael R. Conn, senior vice president of business development (2000 salary: $162,500; bonus: $24,375; other compensation: $498; options: 70,000)
Largest outside shareholders:
Interactive Technology Holdings LLC (a joint venture company formed by Comcast Corp. and QVC Inc.) — 9.5 million shares (26.4%)
Softbank Affiliates — 9.9 million shares (30.3%)Performance Record
Fiscal years ended Dec. 3120001999
Revenue$42,808,000$5,511,000 Gross margin (loss)$13,241,000$1,694,000 Operating expenses$66,809,000$30,839,000 Net income (loss)($58,010,000)($43,247,000) Net earnings (loss) per share($2.64)($2.91) Long-term debt$5,750,000$2,040,000 Sources: Global Sports' annual reports, proxies and IPO filings
The nation's top executives have this in common with many of the marquee athletes who play for the teams that their companies own: guaranteed salaries.
Even as the stock market swooned at the close of 2000, the top brass at companies that dabble in sports continued to collect gargantuan paychecks, based on SportsBusiness Journal's annual look at executive compensation — which includes everything from salary and stock awards to country club fees and expense accounts (see list).
Ralph J. Roberts, chairman of Comcast Corp., which owns the Philadelphia 76ers and Flyers, saw his compensation package increase from $12.9 million in 1999 to $13.9 million in 2000, even though Comcast's stock ended 2000 at $41, down 19 percent from where it started the year.
L. Lowry Mays, chairman and CEO of Clear Channel Communications, the parent company of SFX Sports, collected $4.1 million in salary and bonuses in a year in which Clear Channel stock fell 45 percent.
AOL Time Warner's duo of Gerald Levin and Ted Turner both got raises, as did the bulk of top executives across the U.S.
Granted, the fates of the Braves, Flyers and SFX Sports have little bearing on the bottom lines of their larger parent companies. But it's still something to think about the next time somebody carps about a slumping center fielder who's making $7 million a year but not putting up the numbers to justify it.
As part of our special report on sports finance, Street & Smith's SportsBusiness Journal takes an in-depth look at eight public sports companies, starting on page 26. Included are revenues, staffing levels, directors, shareholders and who owns how many shares. The information was gathered almost exclusively from securities filings made with the Securities and Exchange Commission.
To access securities filings electronically through EDGAR, or Electronic Data Gathering, Analysis and Retrieval system, go to www.sec.gov on the World Wide Web. Chose "EDGAR Database" from the menu, and then choose on the next screen "Search the EDGAR Database." Then choose "Search the EDGAR Archives," which will bring you to a keyword box, where you can enter the public company name and hit "enter" to find a wealth of public information.
When the season-old XFL kicked the bucket in May, the eulogies were varied, from those that critiqued the poor play to one that blamed the constant media glare. But one cause that was rarely, if ever, examined was the league's ownership by two public companies, whose shareholders did not appreciate losses or negative publicity.
Not only is the XFL's final loss expected to be in the $80 million neighborhood, which will be split between General Electric Co.'s NBC and WWF Entertainment, but both companies came under withering criticism for the boorish league and its plummeting TV ratings. This proved simply untenable for public companies.
And so the XFL became the latest example of a disturbing trend in sports: The public stock markets don't seem to like professional sports. This is alarming because public markets have for years provided the fuel for other industries to grow, and now sports may have that avenue closed.
"I am coming to the conclusion that the professional sports industry does not seem well-suited for the public markets," said Robert Caporale, chairman of Game Plan LLC, which advises teams and leagues. "We have seen too many indications of that."
For the XFL, that disturbing fact helped spark its death. Wall Street analysts pounded WWF for its football strategy, even though losing tens of millions of dollars on a start-up league is hardly surprising. The privately owned Major League Soccer has by some estimates lost $250 million in its first five seasons, yet there is little hue and cry for the organization to shut its doors.
"The time frame that shareholders are willing to tolerate for a developmental stage is much shorter for sports companies," said Tim Conder, an analyst with A.G. Edwards & Sons, where he covers companies like Championship Auto Racing Teams Inc. and Callaway Golf Co. "Some sports companies would be better serviced continuing on in a private manner."
The problem with sports, Conder added, is earnings and revenue growth is not as strong as in other businesses. Conder compares sports to biotechnology, which also has tremendous start-up costs. But there the returns are much higher if a product succeeds, he explained, so investors are willing to sustain initial losses.
Even motorsports, the one sector of sports with relative success in the public markets, has come under pressure in the last year. Track operators International Speedway Corp. and Speedway Motorsports Inc., which used their stock bounty to fuel their growth in the mid- to late 1990s, have stumbled. While a lucrative new TV contract was supposed to fuel their stocks, a faltering economy, poorly planned growth and tragedies such as the death of Dale Earnhardt have hurt them instead.
And CART, one of the first leagues to go public, in 1998, has been a basket case of missteps and poor results. The stock now trades below its IPO price, and the company had three CEOs in a six-month period last year.
"When you are a public company, you are subjected to the quarterly expectations of Wall Street," said Tony George, founder of CART rival Indy Racing League. "Sometimes you need to act quickly and decisively, and that is a difficult challenge when you are a public company."
How opposed is George to public ownership? If CART had been a private company, he said, there is a good chance the IRL and CART would have successfully re-merged.
"If public company ownership was a good idea, NASCAR would have done it," he said.
The story line gets even worse when the tale turns to public ownership of individual teams. Less than two weeks ago, Boca Resorts Inc. announced it had agreed to sell the Florida Panthers ice hockey team. The Panthers went public in 1997 amid great fanfare, but with hockey unprofitable, the company quickly branched into hotels and resorts (the name of the holding company was Florida Panthers until last year). By the time of the sale announcement, ice hockey represented a sliver of Boca's revenue.
Gone, too, from the public markets this year were the Seattle SuperSonics, formerly owned by The Ackerley Group Inc., a radio company and billboard operator. Ackerley dumped the Sonics when the company ran into debt problems. Unloading the money-losing Sonics gave an immediate boost to cash flow.
"Teams shouldn't be public" on their own, maintained David Moross, managing partner of Sports Capital Partners, an investment fund that buys and invests in sports companies but has ruled out buying teams. "I really believe that many of these [teams] need to be acquired by strategic investors, like a Time Warner." Time Warner already owns three Atlanta sports teams.
Even in Europe, where nearly two dozen soccer clubs are publicly owned, Moross said, only a handful trade above their IPO prices.
In the United States, only two teams remain publicly traded: the Boston Celtics and the Orlando Predators of the Arena Football League. Both are poor stock performers and are more novelty buys for fans as opposed to serious investments.
Nonetheless, the search continues for the profitable public sports venture. The recently hatched Team Racing Auto Circuit is already public through a company called Team Sports Entertainment. And some eyes are on YankeeNets, which owns three professional sports teams and may launch a regional sports network, as a possible winner.
"There are clearly people out there both domestically and internationally who are still searching for the right formula," said Jim Nash, who runs sports finance for Bank of America Corp.
The solution? For Nash, the successful public sports company has to establish, like any business, a solid brand. He pointed to Manchester United, which has been a stock market sensation on the London Stock Exchange. Manchester United, commonly seen as the most recognizable sports team outside the United States, lends its valuable logo to products and markets its name across the world, not just in its city.
"The sports team ownership is not the end but the means to a greater end, whether that be media or some other branded product," Nash said. "It is difficult, will prove challenging, but people are still searching."
Reebok International Ltd.
1895 J.W. Foster Blvd.
Canton, MA 02021
Phone: (781) 401-5000
Fax: (781) 401-7159
In the world of sports, Reebok is a powerhouse. A global leader in athletic shoes and apparel, the company counts Venus Williams and Allen Iverson as endorsers, and recently signed a merchandise pact with the NFL.
But gleaning information about Reebok's financial commitments to the sports world can be tough. Terms of endorsement contracts and money spent on sponsorships are consistently omitted from Reebok's annual and quarterly reports. Even last December's five-year, nearly $40 million contract signed with Williams, what would appear to be a material event, was not cited in any Reebok securities document. In this way, Reebok is no different from its other major public company competitor in the United States, Nike.
The last 12 months have been a banner year for the company, with its stock price more than tripling since early 2000. A look at its results shows how far the company had fallen, though. It earned $135 million in 1997; two years later that was down to $11 million. In 2000, that jumped to $81 million, but not because of sales, which were flat. Instead, falling expenses, in part because of slashed endorsement rosters, helped fuel the Reebok fire.
CEO: Paul Fireman
2000 bonus:$2,100,000 Other compensation:$55,251 Options:2,000,000 1999 salary:$1,000,012 1999 bonus:0 Other compensation:$81,539 Options:500,000
Price as of June 11: $28.81
52-week price range: $12.31 to $31.80
IPO date: July 26, 1985
IPO price: $17
IPO performance: Up 69%
Shares outstanding: 58,491,275
Inside ownership: 8,408,140 (14.0%)
No. of employees: 6,000
Board of directors:
Norman Axelrod — Axelrod is CEO and president of Linens 'N Things. (*)
Paul R. Duncan — Duncan is an executive vice president. (Owns 214,214 shares)
Richard G. Lesser — Lesser is executive vice president and director of TJX Cos. Inc. (Owns 74,707 shares)
Deval L. Patrick — Patrick is executive vice president and general counsel of the Coca-Cola Co. (*)
Paul B. Fireman — Fireman is CEO and chairman of Reebok. (Owns 7,058,782 shares, or 11.9%)
Thomas M. Ryan — Ryan is CEO of CVS Corp. (Owns 40,373 shares)
Dorothy E. Puhy — Puhy is CFO of Dana-Farber Cancer Institute. (Owns 119 shares)
Mannie L. Jackson — Jackson is CEO and majority owner of Harlem Globetrotters International Inc. (Owns 53,752 shares)
Geoffrey Nunes — Nunes is a retired senior vice president and general counsel for Millipore Corp.
* Shareholdings for Patrick and Axelrod were not provided in the 2000 proxy because they were up for nomination to the board at the time the proxy was issued. They were voted onto the board on May 1.
• Angel R. Martinez*, chief marketing officer (2000 salary: $550,004; bonus: $514,800; options: 100,000; other compensation: $32,962)
• Kenneth I. Watchmaker, chief financial officer (2000 salary: $592,310; bonus: $980,866; restricted stock award: $393,750; options: 100,000; other compensation: $44,865)
• David A. Perdue, CEO Reebok division (2000 salary: $434,624; bonus: $604,597; restricted stock award: $393,750; options: 100,000; other compensation: $9,962)
• Terry R. Pillow, CEO Rockport division (2000 salary: $353,431; bonus: $302,062; restricted stock award: $393,750; options: 100,000; other compensation: $51,118)
* Martinez resigned on April 10.
Largest outside shareholder:
Investors Group Trust Co. Ltd. — 4,773,900 shares (8.2%)Performance Record
In thousands except per-share data;
fiscal years ended Dec. 3120001999199819971996
Revenue$95,887$60,278$30,551$12,014$3,058 Gross margin (loss)$54,886$26,200$13,320$1,583($1,175) Operating expenses$131,711$83,908$53,157$36,554$15,197 Net income
Net earnings (loss) per share($4.04)($0.74)($1.94)($3.08)($2.31) Long-term debt$19,608$19,608$207$458$685 Sources: SportsLine.com's annual reports, proxies and
2200 W. Cypress Creek Road
Fort Lauderdale, FL 33309
Phone: (954) 351-2120
Fax: (954) 776-4745
The granddaddy of sports Internet sites, SportsLine.com has survived the rise and fall of the Internet sector. For how much longer is a question, however.
Its stock is near all-time lows and its loss topped $100 million last year. Partially owned by Viacom's CBS, the company theoretically could be swallowed up by that conglomerate. Sports-Line's two main competitors, cnnsi.com and espn.com, are already owned by two media conglomerates.
For now, though, SportsLine provides the sports world with a wealth of financial information about the last independent, publicly owned sports content site on the Internet. And not just revenue and cash flow, but items such as how many options, for example, it has paid its celebrity endorsers. (Michael Jordan got 64,000 shares, while Joe Namath got 100,000.)
If a company like Viacom does swallow up SportsLine, the sports world will lose an invaluable source of information about the health of the sports Internet business.
CEO: Michael Levy
ÿ$385,000 ÿ2000 bonus: ÿ$192,500 ÿ2000 other compensation: ÿ$19,747 ÿOptions: ÿ345,000 ÿ1999 salary: ÿ $330,000 ÿ1999 bonus: ÿ 0 ÿ1999 other compensation: ÿ $17,420 ÿOptions: ÿ435,000 ÿ ÿShares owned: ÿ1,542,374 (5.5%)
n Price as of June 11: $3.10
n 52-week price range: $2.30 to $19.50
n IPO date: Nov. 13, 1997
n IPO price: $8
n Underwriters: Robertson, Stephens & Co.; SG Cowen Securities; Banc of America Securities
n IPO performance: Down 61%
n Shares outstanding: 27,363,776
n Inside ownership: 3,170,727 shares (11%)
n No. of employees: 400 in the U.S.; 200 in Europe
Board of directors:
• Michael Levy — Levy has been chairman, president and CEO since the company's inception in February 1994. (Owns 1,542,374 shares, or 5.5%)
• Thomas Cullen — Cullen is managing partner of LoneTree Capital. (Owns 17,187 shares)
• Gerry Hogan — Hogan is a private investor. (Owns 57,187 shares)
• Richard B. Horrow — Horrow is president of Horrow Sports Ventures Inc. (Owns 44,437 shares)
• Joseph Lacob — Lacob is general partner of Kleiner Perkins Caufield & Byers. (Owns 203,574 shares)
• Sean McManus — McManus is president of CBS Sports. (Owns no shares)
• Andrew Nibley — Nibley is president and chief executive officer of GetMusic LLC. (Owns 17,187 shares)
• Russell I. Pillar — Pillar is president and CEO of Viacom Interactive Ventures and its predecessor company, CBS Internet Group. (Owns no shares)
• Michael P. Schulhof — Schulhof is a private investor. (Owns 34,520 shares)
• James C. Walsh — Walsh is president of Namanco Productions Inc., a sports marketing and management firm. (Owns 168,187 shares)
• Daniel L. Leichtenschlag, senior vice president of operations (2000 salary: $210,000; bonus: $120,000; other compensation: 0; options: 110,000)
• Mark J. Mariani, president, sales and marketing (2000 salary: $270,000; bonus: $160,000; other: 0; options: 145,000)
• Kenneth W. Sanders, senior vice president and CFO (2000 salary: $315,000; bonus: $157,500; other compensation: $1,716; options: 145,000)
• Andrew S. Sturner, president, corporate and business development (2000 salary: $270,000; bonus: $135,000; other compensation: 0; options: 145,000)
Largest outside shareholders:
CBS Broadcasting Inc. — 5,220,000 shares (18.6%)
Massachusetts Financial Services Co. — 3,502,744 shares (12.8%)Top sports executive salaries
The top 40 salaries in 2000 of executives at sports public companies
RankNameTitleCompany2000 total compensation (a)Securities underlying
options/SARs (b)Beneficial stock
ownership (c)Stock price
on June 11Value of traded shares on
1 John J. Dooner Jr. Chairman of the board, president and CEO Interpublic Group
$17,680,471 568,000 1,495,702 $36.35 $54,368,768 2 Ralph J. Roberts Chairman Comcast Corp. $13,934,675 250,000 Class A: 809,120 (3.7%) Class A Special: 5,762,802 Class A: $40.27;
Class A Special: $40.64
$266,783,535 3 Michael D. Eisner CEO and chairman Walt Disney Co. $12,317,482 DIG (d): 2,000,000 DIS: 13,329,990; DIG: 550,000 (1.2%) DIS: $31.51; DIG: $5.37 $422,981,484 4 Philip H. Geier Chairman of the board and CEO (e) Interpublic Group
$12,102,139 300,000 1,588,449 $36.35 $57,740,121 5 Gerald M. Levin CEO AOL Time Warner Inc. $11,797,897 750,000 2,654,536 $51.79 $137,478,419 6 R.E. "Ted" Turner Vice chairman and senior adviser AOL Time Warner Inc. $9,270,986 637,500 155,081,921 (3.8%) $51.79 $8,031,692,689 7 Robert A. Iger President and COO Walt Disney Co. $9,219,743 DIG (d): 100,000 DIS: 1,742,320; DIG: 125,000 DIS: $31.51; DIG: $5.37 $55,571,753 8 Richard D. Parsons Co-COO AOL Time Warner Inc. $7,373,470 525,000 38,020 $51.79 $1,969,056 9 Thomas E. Clarke President, new business ventures Nike Inc. $4,390,782 506,038 Class B: 583,419 $41.19 $24,031,029 10 L. Lowry Mays Chairman and CEO Clear Channel Communications Inc. $4,179,441 375,000 31,032,838 (5.3%) $61.65 $1,913,174,463 11 Brian L. Roberts President Comcast Corp. $4,015,744 4,000,000 Class A: 138,269; Class A Special: 12,390,861 (1.4%) Class A: $40.27; Class A Special $40.64 $509,132,684 12 John W. Madigan Chairman, president and CEO Tribune Co. $3,991,540 421,500 Common: 1,383,352; Preferred: 728 Common: $41.76 $57,768,780 13 Philip H. Knight Chairman, CEO and president Nike Inc. $3,502,616 None Class A: 94,653,192 (95.4%); Class B: 95,656,297 (36.1%) Class B: $41.19 $3,940,082,873 14 James R. Heekin III Chairman of McCann Erickson WorldGroup and director of Interpublic Interpublic Group
$3,451,230 80,000 342,171 $36.35 $12,437,916 15 Charles F. Dolan Chairman and director Cablevision Systems Corp. $3,295,743 None CVC Class A: 787,601; CVC Class B: 22,853,274 (54.2%); RMG (f) Class A: 393,800; RMG Class B: 11,426,637 (54.2%) CVC Class A: $58.10; RMG Class A: $25.50 $55,801,518 16 Frank B. Lowe Chairman of the Lowe Group and director of Interpublic Interpublic Group of Cos. $3,222,894 None 1,030,838 $36.35 $37,470,961 17 James L. Dolan President, CEO and director Cablevision Systems Corp. $3,165,201 None CVC Class A: 237,000; CVC Class B: 1,326,464 (3.1%); RMG (f) Class A: 118,500; RMG Class B: 663,232 (3.1%) CVC Class A: $58.10; RMG Class A: $25.50 $16,791,450 18 Paul Fireman Chariman, president and CEO Reebok International Ltd. $3,155,263 2,000,000 7,058,782 (11.9%) $28.81 $203,363,509 19 Andrew H. Craig President and CEO (e) Championship Auto Racing Teams Inc. $3,061,740 None None $14.72 0 20 J. Tim Dubois President, creative content group (e) Gaylord Entertainment Co. $3,054,006 200,000 None $27.80 0 21 Andrew B. Rosengard Executive vice president of finance and controller Cablevision Systems Corp. $3,039,346 None CVC Class A: 60,275; RMG (f) Class A: 30,137 CVC Class A: $58.10; RMG Class A: $25.50 $4,270,472 22 George W. Buckley Chairman and CEO Brunswick Corp. $2,967,777 300,000 101,355 $24.18 $2,450,764 23 Matthew D. Serra President and CEO Venator Group Inc. $2,963,192 250,000 528,985 $13.75 $7,273,544 24 Mark G. Parker Vice president, global footwear Nike Inc. $2,938,427 345,877 Class B: 395,176 $41.19 $16,277,299 25 Randy Michaels President, radio Clear Channel Communications Inc. $2,807,212 50,000 973,077 $61.65 $59,990,197 26 Sanford M. Litvack Vice chairman (e) Walt Disney Co. $2,791,520 DIS: 400,000 DIS: 1,164,435 $31.51 $36,691,347 27 Dale W. Hilpert Chairman of the board and CEO (e) Venator Group Inc. $2,693,496 None 987,114 $13.75 $13,572,818 28 Peter N. Larson Chairman and CEO (e) Brunswick Corp. $2,643,925 None 1,681,367 (1.9%) $24.18 $40,655,454 29 William J. Bell Vice chairman and director Cablevision Systems Corp. $2,473,244 None CVC Class A: 117,862; RMG (f) Class A: 58,631 CVC Class A: $58.10; RMG Class A: $25.50 $8,342,873 30 Vincent K. McMahon Chairman World Wrestling Federation Entertainment Inc. $2,250,073 None Class B: 56,100,330 (99%) (g) $12.26 $687,790,046 31 Peter E. Murphy Senior executive vice president and chief strategic officer Walt Disney Co. $2,204,020 DIS: 1,100,000; DIG (d): 140,000 DIS: 523,734; DIG: 38,000 DIS: $31.51; DIG: $5.37 $16,706,918 32 Thomas O. Staggs Senior executive vice president and chief financial officer Walt Disney Co. $2,204,020 DIS: 1,100,000; DIG (d): 140,000 DIS: 613,978; DIG: 42,500 DIS: $31.51; DIG: $5.37 $19,574,672 33 Timothy P. Boyle President, CEO and secretary Columbia Sportswear Co. $2,195,288 None 10,358,379 (41%) $48.20 $499,273,868 34 Ian T. Todd Vice president, sports marketing Nike Inc. $2,183,993 56,250 Class B: 57,803 $41.19 $2,380,906 35 Mark P. Mays President and COO Clear Channel Communications Inc. $2,160,300 76,500 1,034,100 $61.65 $63,752,265 36 Randall T. Mays Executive vice president and CFO Clear Channel Communications Inc. $2,157,800 76,500 656,816 $61.65 $40,492,706 37 Peter B. Hamilton Vice chairman and president, Brunswick Bowling and Billiards Brunswick Corp. $2,022,691 182,000 241,865 $24.18 $5,848,296 38 Kenneth I. Watchmaker Executive vice president, CFO and treasurer Reebok International Ltd. $2,011,791 100,000 174,651 $28.81 $5,031,695 39 Robert S. Lemle Vice chairman, general counsel, secretary and director Cablevision Systems Corp. $1,995,168 130,000 CVC Class A: 341,483; RMG (f) Class A: 170,741 CVC Class A: $58.10; RMG Class A: $25.50 $24,194,057 40 J.M. Robinson Chairman, CEO and president Footstar Inc. $1,982,059 200,000 511,152 (2.5%) $33.64 $17,195,153 Note: When it represents more than 1 percent, the percentage of the company's overall stock ownership is listed in parentheses.
(a) Includes salary, bonus, the value of restricted stock and all other compensation such as insurance premiums paid by the company, company contributions to retirement plans, signing bonuses,
transportation allowances, relocation expenses and country club fees.
(b) SAR means stock appreciation rights
(c) May include options to purchase shares within 60 days of filing and/or shares to which the executive disclaims beneficial ownership, such as shares held by a spouse, in trust or a foundation.
(d) Disney Internet Group is one of five business units of the Walt Disney Co. and manages espn.com, soccernet.com, nfl.com and numerous non-sports properties.
(e) No longer with the company
(f) Rainbow Media Group (Rainbow Media Holdings Inc.) is a subsidiary of Cablevision Systems Corp. (NYSE:CVC) and NBC, is a 50 percent partner in Fox Sports Net and operates Rainbow Sports
as well as numerous non-sports properties.
(g) The Class B common stock is fully convertible into Class A common stock, on a one-to-one basis, at any time.
Sources: Street & Smith's SportsBusiness Journal research, proxy statements filed with the SEC