A winning subway ride?
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October 20, 2000: 3:16 p.m. ET
Few public companies are in good position with Subway World Series
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - This year's Subway World Series is sure to produce a winner for New York, and for a number of companies that sell everything from merchandise to food and beer to the city's rabid baseball fans.
But investors trying to find sure winners might have as tough a time as fans in the other 27 major league cities. Many of the companies best positioned to benefit from the series are privately-held, like Volume Services America Inc., which has the concession contract at Yankee Stadium, or Aramark, which has the same contract at the Mets' Shea Stadium.
The companies with the most at stake are Fox Entertainment Group Inc. (FOX: Research, Estimates), which is carrying the series, and News Corp. (NWS: Research, Estimates), which owns 83 percent of Fox stock, as well as the New York Post.
While many speculated that viewers outside the New York will be turned off by a Subway Series, the ratings will probably have less to do with the match-up as with how long the series goes and how close and compelling the games are, according to both the company and analysts.
"Fox never really wanted a Subway Series," said David Miller, analyst with Sutro & Co. "There are plenty of transplanted New Yorkers in Kansas City, San Francisco, Los Angeles who will take an interest. There are some juicy story lines. I don't think the ratings will come in as badly as people are predicting."
A Fox spokesman said it really doesn't matter what match-up Fox would have picked; the series can be a good on or bad one for television, depending on how it plays out on the field.
"A series needs to get legs and build drama," said Lou D'Ermilio, vice president of media relations for Fox. "It's tough to do that if one team jumps out and never looks back."
The Yanks have swept the last two World Series, depressing TV ratings. But few are predicting a sweep for either team this time.
Fox gets some additional benefit because it owns the network's New York affiliate, which should see phenomenal ratings throughout the series. Also due to the late start of the fall television season because to the Olympics, Fox will debut most of its new shows after the World Series, and thus will be able to hype the programs for the next week.
Fans snapping up team apparel
There are some other public companies in position to benefit. Russell Corp. (RML: Research, Estimates), and VF Corp. (VF: Research, Estimates), which make and sell licensed baseball apparel, will see a jump in sales of those product from typical World Series, due to the intenseness of the rivalry and the size of the New York market.
"I'm hard-pressed to think of a World Series that would be such a tight rivalry and, absolutely, rivalries are good for our sales," said Rod McGeachy, director of marketing for Russell Athletic team sports. He said that while most of the sales are coming from the New York area, both teams have significant national fan bases.
"This is a superbly hot market in metro New York, but we will see a pick-up on a nationwide scale," he said. "In my opinion, the Yankees are really the only baseball team with true national appeal."
Impact on bottom line tough to measure
But Russell Athletic makes up only about 25 percent of Russell Corp. sales, and the licensed major league apparel only part of that. It also sells to uniforms to other sports and baseball teams from the Little League to the Olympics to the majors.
The Lee unit of VF Corp. is an even smaller part of that company, and the sales by Lee won't even be material, said Noelle Grainger, analyst with JP Morgan.
"It's not going to hurt. That's good news, because the knitwear business is a pretty tough one," said Grainger. "Russell, they could see a little more benefit. But it's not a reason to be buying or selling these stocks."
The company that could see the best impact on the bottom line is Majestic Athletic, a privately held company that says it is the biggest seller of licensed baseball apparel. The company is seeing sales of that product, that makes up a significant portion of its business, at levels four-to-five times normal sales levels.
"We always figured it would be phenomenal," said Faust Capobianco IV, the company's senior vice president. "But it's even better than we expected. We're going around the clock, seven days a week, to meet demand."
The sporting goods store with the strongest position in the New York market is privately-held, locally-based Modell's Sporting Goods. A national sporting goods chain like Sports Authority Inc. (TSA: Research, Estimates) will see benefits as well.
"This match up is the biggest match up you could have in any of the team sports," said James Tener, chief operating officer of Sports Authority.
But Tener said he couldn't predict this will change earnings estimates for the company for the fourth quarter, despite the strong sales.
"This will last for two-to-three weeks," he said. "We're still having a good quarter, with or without this. This is icing on the cake, and clearly, it's thick icing."
One company with lost sales from the match-up is Internet auction site eBay (EBAY: Research, Estimates), which makes sure bidding on tickets complies with the scalping laws of the state where the event takes place. Seattle allows tickets to be resold; New York limits sales to $5 above cost or 10 percent of face value, so anyone trying to sell World Series tickets likely won't be able to do so on eBay, according to Kevin Pursglove, spokesman for the company.
-- Click here to send e-mail to Chris Isidore
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