Is LIV Golf Screwed?

LIV losing money, Wynn stock booming, FOX is all-in on soccer

Welcome to our new weekly cadence-- to your inbox Monday-Wednesday-Friday morning with news and updates in sports, gambling, and media. On Thursday, takes directly from our text threads.

As you may know, this is the second of what we hope will be a long and successful run of 3x/week newsletters. What we came to realize late in the process of writing this one is how the newsletter, unlike standalone posts, is pretty close to a scorecard. Every time out, there are going to be wins and losses and occasional ties. Our job is to clarify the degree of the outcome, the how and the why. We think we're good at it.

In the email today:

1) Can LIV golf survive?🏌️‍♂️

2) Tilman takes a stake in Wynn 🎰

3) FOX doubles down on soccer rights ⚽️

1) WHAT'S THE STORY WITH LIV GOLF? 🏌️‍♂️

Alan Blinder and Sarah Hurtes for The New York Times reported recently that the upstart golf league funded by Saudi Arabia's Private Investment Fund is further behind schedule than even its most optimistic proponents would have imagined before the league began.

To the surprise of few, though, what LIV Golf really is right now is the purest form of loss leader. The Saudi officials pouring money into inflated purses and perks for LIV players are not all that concerned with making money on this venture. Not now, anyway.

McKinsey and Company, a consulting group which has advised the kingdom's power base for five decades, presented the two ends of the spectrum for LIV based on very specific factors.

Scenario 1: LIV secures "the participation of Tiger Woods, Phil Mickelson and Rory McElroy," and by 2028 the league is making profits in excess of $1.4 billion per year. That figure is comparable to the revenues of the PGA Tour in any given year.

Unfortunately for LIV Golf, only one of those three mega-stars signed on with LIV, and Mickelson's aberrant behavior and poor play in the past year suggests that LIV wildly overpaid him.

Worse yet for LIV, Woods and McIlroy have been repeatedly and fervently against having anything to do with the Saudi league. "I don't know what their end game is," Woods said last month, noting that "an endless pit of money" is not enough to "create legacies."

McIlroy, meanwhile, has engaged in a longstanding public feud with LIV CEO Greg Norman. "I think Greg needs to go," McIlroy said in the context of LIV Golf and the PGA Tour finding any common ground about players being permitted to play on both tours. McIlroy also shaded Norman by saying that LIV needs "an adult in the room," indicating that Norman is not that adult.

With Woods and McIlroy turning their backs on LIV, that leaves the league with McKinsey's Scenario 2: "A league mired in start-up status," the Times piece described," attracting less than half of the world's top 12 players" would most likely lose upwards of $355 million in 2028. 

It isn't like McKinsey didn't warn the Saudis of what a boondoggle this had the chance to be. They did. "McKinsey called the league a high-risk, high-reward endeavor," the Times piece recounted.

And to some degree, it is quite possible that the Saudi Arabia Private Investment Fund does not care about losing money. LIV Golf, it turns out, was just one part of "Crown Prince Mohammed bin Salman's plan to diversity the kingdom's economy...worldwide sports have become a pillar in that plan."

In its first season, the league lost $750 million. The big question is this: How many more years with the Saudis eat losses trending toward a billion dollars before they pull up stakes and try their hands with something else?

That may depend on how LIV Golf's players perform in the major championships in 2023...assuming they are allowed to play them at all.

2) WYNN RESORTS SHARES CONTINUE TO SPIKE FOLLOWING FERTITTA INVESTMENT 🎰

Nearly six months ago, on June 23, 2022, Wynn Resorts stock fell as far as $52 per share.

Everybody loves a comeback story, though. In the past six months, Wynn stock has risen by almost 50%, trading today at over $86 per share. Ten percent of that growth is almost directly attributable to one investor buying in. A notable and deep-pocketed investor whose move to buy a 6% interest in the company has some people excited and some people nervous.

The suspicion of some, of course, is that Fertitta is positioning himself to do more than be a passive investor in Wynn. As Richard N. Velotta of the Las Vegas Review Journal noted last month: "Local gaming industry analyst John DeCree has a few theories ranging from it's just a casual investment to maybe it's the first step toward a corporate takeover."

To a large degree, though, anyone holding Wynn stock at present should be delighted either way. The stock keeps going up, and the forecast for 2023 is pretty good, too.

Per Clark Schultz's Sunday piece for seekingalpha.com, "Deutsche Bank selected Wynn Resorts and Las Vegas Sands as its top two picks for 2023 in the gaming sector on the expectations for profitable growth."

Schultz cited to the gaming analyst DeCree's reasoning for seeing more good things for Wynn in the coming year.

"DeCree thinks the real story on the Strip in the surge in group and convention business, which was up 32% year-over-year at the end of October and 20% higher than the 2019 tally." In other words, there has been a post-COVID springboard effect that could continue into 2023.

Bottom line, there might well be even more growth to grab in Wynn stock in the near term.

3) FOX RENEWS BROADCAST AGREEMENT WITH MAJOR LEAGUE SOCCER, ORIGINAL PARTNERS ESPN, ABC ARE OUT ⚽️

We noted on Monday that Fox's World Cup broadcast has been on the whole very uneven and recently touched by tragedy. It would be understandable if everyone working on the World Cup for Fox is ticking days off the calendar until they can get home safely (hopefully).

Apparently, though, the occasionally arduous World Cup experience has not soured Fox on soccer. Far from it.

Joe Reedy has the details on the new Fox/MLS deal for the Associated Press. "Fox Sports will keep on broadcasting Major League Soccer games in the U.S. as part of a four-year agreement, ending the run of ESPN and ABC, which had carried matches since the league launched in 1996."

Reedy added that MLS chose to go only with Fox "due to its 10-year partnership with Apple" which begins in 2023.

Fox will carry 34 (perhaps more) regular season matches, eight playoff matches and the league's title game. Fox Sports and FS1 will each be outlets for these broadcasts.

The deal is believed to be in the neighborhood of $7 million per season.

WHAT ELSE IS GOING ON 👓

  • Maryland turned out to be quite the early adopter where legalized sports gambling was concerned. Per XLMedia's Robert Linnehan:

  • Speaking of avid gamblers, Mattress Mack is at it again. According to Monday's businessreport.com post, Jim McIngvale drove from his home in Houston to Westlake, Louisiana to christen the renovated Horseshoe Casino with a $1 million bet on the Houston Cougars to win the 2023 NCAA Men's Basketball Championship. That, friends, is commitment to the bit.💰

  • Former CNN president Jeff Zucker has apparently sat in the cultural penalty box long enough after resigning in disgrace:

  • PointsBet's recent Drew Brees stunt ad where the former New Orleans Saints quarterback appeared to be struck by lightning drew a fair amount of negative notice. But PointsBet brand director Josh Powell seems to think bad press is better than none at all. ⚡️

  • The most interesting thing Fanatics CEO Michael Rubin has had to say about his sportsbook plans is found in this Matthew Waters post for legalsportsreport.com: "People that think licensing is a problem — to be clear, it's 30% to 40% cheaper today than it was a year ago. So our patience saved us money." 😎

WHAT TO KEEP AN EYE OUT FOR BEFORE THE NEXT SEND 👁️

  • We reported on Monday that Encore Boston Harbor snared the first Massachusetts sports betting license and that its competitors were in the chasing pack. According to Christina Hager for CBS News Boston, it's not as dire as all that, as this week "the Massachusetts Gaming Commission is considering whether to allow MGM Springfield and Plainridge Park to run sportsbooks." ⚖️

  • This Yahoo! Finance post recites that Roth Capital downgraded DraftKings stock from "buy" to "neutral...citing Fanatics' anticipated launch" which could "disrupt the profitability narrative for DraftKings."🏴‍☠️

  • Pay-per-view buys may trend slightly higher in the short term as Homeland Security Investigations works with the United States Attorney's Office to shut down web domains that have until recently carried illegal streams of sporting events including the World Cup. 🇺🇸

This emailed was compiled today by the Raising Stake staff. Jason and Kyle contributed. Images from Getty.

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