by Alyssa Oursler | November 9, 2012 12:35 pm
Last month, the National Hockey League offered its players a 50-50 revenue split in hopes of ending this year’s lockout.
Unfortunately, it wasn’t enough. Now, Alex Ovechkin of the Washington Capitals has gone back to Russia to play. The 2013 Winter Classic has been canceled. And hockey fans all over have accepted the most likely truth.
There will be no NHL season.
The news has been met by shrugs from many (“It’s football season anyway,” they say) and disappointment from loyal hockey followers.
But the crazy Philadelphia Flyers fan who lives above you and screams (or used to) after every goal isn’t the only one feeling the pain of this lockout. Hockey is more than a pastime to many companies; it’s a money-maker.
With that in mind, let’s take a look at five stocks wishing pucks were dropping this winter:
Beer sales for brewer Molson Coors (NYSE:TAP) — an NHL sponsor and maker of Coors Light, Molson Canadian and more — have been chilled by the lockout.
The stock lost 4% earlier in the week after the brewer reported a cloudy outlook for the current quarter. Profits in Canada and other markets took a hit in Q3, and the company expects Q4 to be the toughest of the year. As CEO Peter Swilburn explained:
“Whether it’s people not actually physically going to the venues and consuming there, consuming in venues around the outlet before that, or indeed having NHL sort of parties at home, all of those occasions have disappeared off the map and you just can’t replicate them.”
Plus, it’s not just an issue of consumption. The all-but canceled season hurts the company’s marketing reach as well. In fact, Molson is planning to seek financial compensation from the league because of the lockout’s negative impact.
Adidas (PINK:ADDYY) has had a tough year in terms of sports sponsorships. First, Nike (NYSE:NKE) snatched its rival’s jersey deal with the National Football League by signing a five-year contract with the league.
And now, Adidas’ Reebok brand is getting shut out of the pro hockey season. Again, this is a two-pronged problem. It will mean fewer sales of hockey jerseys to fans, for one. But it will also hurt Reebok’s promotional efforts because it sponsors the jerseys and endorses countless popular players.
Yesterday, Adidas pointed to underperformance in its Reebok division and the lockout when it lowered its sales guidance. Adidas was originally expecting a 10% growth rate, but now it sees improvements only in the high single digits.
Shares fell more than 2% on the announcement, despite the fact the sporting goods company posted a growth in profits and revenue in the third quarter.
Madison Square Garden (NYSE:MSG) is another clear loser when it comes to the lockout. It owns the New York Rangers, its venue (duh) and the Madison Square Garden network, which airs the team’s games.
In order to take in revenue from any of those things — whether through ticket sales, advertising, concessions or merchandise — well, some hockey games gotta be played.
Just digest these numbers: Last fiscal year, MSG brought in around $1.3 billion total. In 2011, the Rangers accounted for $169 million of that. And in early October, one analyst predicted that a completely canceled hockey season would cost the company at least $78 million.
That’s not to say Madison Square Garden — and the other companies for that matter — don’t have other avenues for profit, but it would undoubtedly be resting easier if the NHL went about its business as usual.
Back in the spring, NBC — owned, of course, by Comcast (NASDAQ:CMSCA) — signed a 10-year, $1.8 billion deal with the NHL for TV rights to pro hockey, including the always-popular Winter Classic.
Part of that agreement? Comcast will still pay the league about $180 million of rights fees even if no games are played — but would get a free year at the back end of the agreement.
That might be an alright deal for Comcast in the long run, if the price of rights fees increases. But in the immediate future, it’s hardly good news. Both the NHL Sports Network (formally Versus) and NBC are being forced to replace the slated hockey games with other less-popular events, including rebroadcasts of the Olympics.
On top of that, Comcast also has a 63% stake in the parent company of the Philadelphia Flyers, and it owns other smaller businesses related to the hockey team.
When I was in college, my campus didn’t have the NHL Sports Network. So, during hockey season, my friends and I would take a trip to Buffalo Wild Wings (NASDAQ:BWLD) and enjoy the countless TVs and a pile of wings.
This year, the company will get no such customers. Sure, people will still be around to watch other sports, but many hockey fans will probably stay in on wing night.
And additional headwinds aren’t exactly what this onetime momentum stock needs right now. The company took an 11% hit on the heels of its earnings report last month, thanks to rising chicken costs and declining profits. Plus, the fourth quarter isn’t typically very strong for the restaurant as it is.
No hockey games to lure in customers is only going to make matters worse.
As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.
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