Saturday, November 15, 2014

Investing Strategies around a common Theme: Sports Entertainment

Today I am writing about my favorite investing theme and how I pick the companies that profit from this theme. I'm not writing about looking for specific stocks that fit a category like being just a dividend investor, or income investor, or growth investor. I am simply looking for profitable companies which fit the theme! In past YouTube videos and in past blogs one theme I continue to invest in is finding founders of companies who have built the company and have skin in the game. I have mentioned Berkshire Hathaway (BRK.B) with Warren Buffett, Icahn Enterprises (IEP) with Carl Icahn, and Amazon (AMZN) with Jeff Bezos. Today the theme I will analyze was also analyzed in my premium report on this channel when I covered a few of the companies that fit in this theme. The theme is investing in entertainment through sports from a personal level all the way to the professional level. If you have ever watched an NFL game or UFC fight and thought it would be cool to make some money getting in on a piece of the action. It is easy and I'll show you in my blog today how I do it. I will go through different companies that profit from the popularity of sports. This theme is part of society for the long term and is only growing it is a form of entertainment that has stood the test of time from Gladiators of Rome to the modern day Athletes and professional Sports Franchises.

The U.S. Economy has more Potential now than anytime in History
One argument about our economy that is a pet peeve of mine and I have seen argued over and over in articles and videos is people complaining about technology taking jobs away from people who want to work. They say it is taking away jobs from hard working people giving it to a machine. Ignoring the fact the machine is making the process more efficient. Technology enables labor intensive jobs to leave the USA if it isn't cost efficient to other countries because people will work for less money. I say this is great because as a country we are getting jobs that take more skill which pay better in the development of new technology and we benefit from lower prices and better opportunities. When people are not needed in one industry because of a more efficient process this creates opportunities for others who are creative to create a whole new industry. If you asked someone a 100 years ago or older this question: if they would like to go to the gym to get some exercise. They would of looked at you crazy because they would of been tired from a day of labor or further back maybe tired just trying to make the food needed to eat that day or tired from traveling. Today is totally different, work and transportation for the vast majority is less physically demanding.

The Industry Creates Jobs!
Now back to this new economy! Let's talk about the benefits of the creation of professional sports and sports as a whole as an industry, I hear all the time about players getting overpaid or sports don't mean anything in real life or sports are a waste of time. This is a shortsighted view without taking into account how this industry effects so many lives and it is all for good. My view is totally positive if you haven't noticed. Sports industry is good for young people, gives them a place to learn teamwork and gives them a chance to be part of something they can be proud of. Many charity programs from sports leagues have helped countless people and will continue to do so. Sports industry it is a huge job creator, its not just the athletes, but journalist in every city and state that work in every sport. People work at the facilities and people work to provide all the equipment and clothes to all the players and fans who want these products. The media teams at every venue that are needed to cover all sports at all times. The jobs continue to grow with the sports medicine and injury experts on all levels. From here we go to jobs created to support all these activities. The fact for any industry is that the free market sets price and people vote with their wallet.

Sports and Health at the Personal level
At a personal level people don't even think twice that a gym used to be considered strange. How technology and advances in our standard of living make exercising a must do activity to stay healthy. Now being active has turned into a huge industry with room to grow all around the world so the question becomes how to profit from this. I think the best way is to invest is through the apparel companies like Adidas (ADDYY), Nike (NKE), or Under Armour (UA). Everyone needs equipment and these companies are everywhere they are also coming up with new technology to help with personal and professional workouts. I am invested in Adidas because the company is the most undervalued in my opinion and has the highest dividend yield. Another way to invest is to buy the companies that sell all these company's products like Foot Locker (FL) or Finsh Line Inc. (FINL). Then there are the companies who sell vitamins and supplements like GNC (GNC). You even have companies like Pepsi (PEP) with Gatorade and Coke Cola (KO) with Powerade and Monster (MNST) other beverages for athlete of all stages and sports including extreme sports. One cool part about owning a piece of Adidas is when I wear a product I am advertising for my company.

Professional Sports and the Media
Media is important with content and advertising dollars! Everyone who likes sports watches the games live which is unique to the sporting industry compared to TV shows and movies. Media companies are great for getting advertising dollars. The company that is the number one leader is ESPN which is owned by The Walt Disney Company (DIS). I like Disney for ESPN and its other media content. It is congruent with my theme and also contains a nice dividend and yield.

Food and Beverage side of Sports
Sports entertainment is a place to have fun and enjoy free time. The next set of companies to invest in related to watching and enjoying one's time. The beer companies first to come to mind. The best are Budweiser (BUD), Molson Coors (TAP), and Boston Beer (SAM) just to name a few. My favorite company to take advantage of all these companies is Buffalo Wild Wings (BWLD). It is a perfect place to enjoy the games and the company sells all the beer products above. They have differentiated themselves as the best in the industry. BWLD does have huge competition and to benefit people must choose to dine there. With a market cap of 3 billion it is still small with promising growth. Small gains in market share will lead to massive increases in revenue and profit. Other competitors and ideas are pizza companies like Domino's Pizza (DPZ) and Papa John's International Inc. (PZZA). Domino's is also doing a great job on the technology front. Papa John's with advertising and teaming up with athletes like Peyton Manning who actually owns at last count 21 Papa John's restaurants.

My portfolio holdings under this theme:

Adidas (ADDYY)
The Walt Disney Company (DIS)
Buffalo Wild Wings (BWLD)

If you have any questions or comments feel free. I like to hear others thoughts.


Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.


  1. DSF,

    I am a unit holder in Boston Pizza's Royalty Income Fund. Boston Pizza is known as Canada's number one casual dining restaurant and sports lounge. When you walk into the main doors of the restaurants who make a choice between 2 doors. One door is the lounge area and the other is the restaurant section. In the lounge part there is all the TVs and the bar. In the lounge, you can also order from the same menu as the restaurant as well.
    The franchisees pay a royalty of 7 percent to Boston Pizza's owners. This 7 percent is divided into 3 percent staying with Boston Pizza's owners and 4 percent going to the Boston Pizza Royalties Income Fund. Boston Pizza is the largest unit holder of the fund also with approximately 24 % ownership. I get paid monthly by this income fund and the distribution is safe. New Restaurants are added to the royalty pool on January 1 of each year. Currently, the fund is buying back units and therefore have not raised the distribution payout in about a year and a half.

    1. Hi IP, That is the perfect set-up and sounds like a money printing machine :)


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