Blowback? NFL Ticket Sales Crash 17.9% As Owners Lose Control Of Players

Probably just a coincidence... or just transitory, but The online ticket reseller TickPick told The Washington Examiner that sales have dropped 17.9 percent, far more than the usual Week Three fall...

• 17.9 percent decrease in NFL orders this week compared to the previous week.


• Last year the drop was 10.8 percent in orders on Monday & Tuesday following Week Three games.

"We have seen a massive decrease in NFL ticket purchases this past week in comparison to years past. Week 3 seems to usually have less ticket orders than week 2, but this year ticket purchases are down more than 7 percent from this time last year," said TickPick"s Jack Slingland.

"While we can"t specify if this decrease is due to the president"s comments, player and owner protests, play on the field, or simply the continued division of consumer"s media attention, the conversation around the NFL this week has focused on the president"s comments as well as the players" and owners" reaction. As viewers continue to abandon their NFL Sunday habits, both the number of ticket sales and the purchase price of tickets will drop," he told us.

And despite orders from The NFL that players will stand for the National Anthem this week, The Hill reports that at least three Miami Dolphins players (Julius Thomas, Michael Thomas, & Kenny Stills) took a knee during the playing of the national anthem Sunday.

Saints players took a knee before the anthem began, but then stood as it was played.

But as ESPN reports, NFL owners are struggling to retain control of their players...

"It certainly was my takeaway that the commissioner was looking for a way for the protests to end," DeMaurice Smith (NFL Players Association executive director) said Friday when asked about his 30-minute conversation with Goodell (NFL commissioner), while declining to offer specifics about what was discussed. Goodell declined to comment, but a league source did not dispute Smith"s account.

"Knowing the league the way I know the league, they are first and foremost concerned about the impact on their business," Smith said. "That"s always their first concern. I mean, who are we kidding?"

Nobody was kidding when many of the NFL"s highest-profile owners, including Robert Kraft of the New England Patriots and Jerry Jones of the Dallas Cowboys, expressed concerns last week that the optics of hundreds of players kneeling, sitting or remaining in the locker room during the playing of the national anthem had alienated many fans at a particularly perilous moment for the NFL.

TV ratings for many of this year"s games have continued a slide that began last season; some league sponsors have grown skittish about the backlash; and most surveys have shown that a majority of NFL fans are turned off by the politicization of the game.

To the commissioner"s suggestion that the protests should end, Smith said,

"My only response was, "I don"t have the power to tell our players what to do." ... At the end of the day, this is a group of players who are exercising their freedom.

There is no room for me to snap my fingers and tell our players, "It"s time for you to give up a freedom." Just the idea offends me. It"s almost as if the players are being asked, "What"s it going to take for you to stop asking to be free or to be treated like an American?""

Early on, one of the players pointedly told the assembled owners -- in particular Kraft, who this year gave his longtime friend Trump a Super Bowl 51 champions" ring -- "We know a lot of you are in with Trump. This meeting is going on because the players think that some of the people that they work for are with his overall agenda, and that"s not in the players" favor."

"We can"t just tell them to stop," Goodell said of the players" protests.

Many owners immediately argued otherwise.

"We need to find a way where Trump doesn"t win," one said, and that meant using leverage as employers to end the protests.

Another said, "We"ll get our guys in line."

Political infighting contonues to stink up the place...

Some owners were angry that Joe Lockhart, the NFL"s executive vice president of communications who worked as President Bill Clinton"s press secretary, had told reporters on a Monday conference call that the players" words and actions on the subjects of police brutality and racism were "what real locker room talk is."

It was a brazen shot at Trump, who was captured in a 2005 video talking, in explicit terms, about grabbing women by their vaginas but later dismissed the video"s contents as "locker room banter."

Owners, many of whom had supported Trump and seven of whom had donated at least $1 million to him, felt that Lockhart had unnecessarily politicized the league"s response.

One owner barked angrily at Lockhart, who declined to comment about the matter, echoing a sentiment that most of them -- especially Jones -- shared: Nobody wanted to engage in a political mud fight with the White House, even if "they were all pissed at the president," a league source said.

As ESPN concludes, by the end of their meetings, the players and owners weren"t as unified as they would later publicly state, but as one owner says, "We"ve gotten out of crisis management and into, "How do we do this correctly?" There was a chance that we didn"t deal with it correctly -- and it had passed."

Perhaps after this week"s collapse in ticket sales - and potentially a few more lost advertising dollars - the owners may have some different ideas on how to control their players in their place of work.

"Sunday Night Football" Ratings Slide Following Day Of Player Protests

As it turns out, President Donald Trump may have been on to something when he said NFL players were turning off viewers by kneeling during the National Anthem. As Deadline reports, both the NBC and NFL took a hit during Sunday Night Football last night when ratings dropped, as some Americans appeared to heed Trump’s call to boycott the NFL unless owners agree to fire or suspend players who don’t stand during the anthem.

In metered market numbers, the primetime match-up between the 27-10 winning Washington Redskins and the Oakland Raiders snared an 11.6/20. That’s the worst rating for SNF so far this season, marking an 8% dip from the early numbers of last week’s Atlanta Falcon’s 34-23 win over the Green Bay Packers, and a 10% dip from the same week last year.

The Redskins linked arms last night, while nearly every single Raiders player sat on the bench during the anthem, Deadline says.

Here are the top markets for last night’s SNF:

D.C.- 23.3/40

Richmond – 22.1/33

Norfolk – 19.8/31

Sacramento – 17.5/32

S.F./Oakland – 17.2/35

New Orleans – 17.2/24

Denver – 16.2/27

Buffalo- 15.4/24

Kansas City – 14.8/24

Las Vegas – 14.5/23

However, not every network saw a ratings dip. Bloomberg reports that CBS, whose Sunday night games included a closely fought matchup between the Green Bay Packers and the Cincinnati Bengals, experienced a small ratings bump, probably because the close score drew in more viewers. Fox hasn’t yet released viewership numbers for its NFL games on Sunday. Overnight ratings are subject to change when final numbers are released later Monday. The New York Times and other mainstream media had discounted Trump"s claim, tweeted over the weekend, that the NFL"s ratings had suffered because of the protests, despite a survey showing that many fans reported tuning out last year because of the protests.

Trump criticized the NFL Friday night during a rally in Alabama, where he called players who kneel for the anthem "a son of a b***H" and said any team owner who fired or suspended the protesting players would become "the most popular person in the country - at least for a week." His comments drew rebukes from NFL Commissioner Roger Goodell, as well as Patriots owner Robert Kraft and former Buffalo Bills and New York Jets head coach Rex Ryan.

The trend of kneeling for the anthem started last year when no- unemployed quarterback and then San Francisco 49er Colin Kaepernick refused to stand, saying he refused to honor the US because of institutionalized racism. Since then, a number of NFL players have publicly protested police brutality and racial injustice by not standing for the National Anthem.

Dan Loeb Is Now Nestle's 6th Largest Shareholder; Goes Activist On World's Biggest Food Company

Dan Loeb has returned to his earthshaking activist roots, and in a letter released moments ago, Third Point announced it is now targeting the world’s largest food company, with its biggest bet on a public company in its history, amounting to $3.5 billion.

In the letter, Third Point announced that it currently owns roughly 40 million shares of Nestle, and that its stake, which is held in a special purpose vehicle raised for this opportunity including options, currently amounts to over $3.5 billion. Putting this number in the context of Nestle"s market cap of $264 billion, Loeb may have an uphill battle though that never stopped him before.

Loeb"s stake of 40 million shares makes him the 6th largest holder of Nestle, above Credit Suisse Asset Management with 38 million shares and below Massachusetts Financial Services Company with 56.8 million. The Top 4 holders are BlackRock, CapRe, Norges Bank, and Vanguard.

Third Point writes that "despite having arguably the best positioned portfolio in the consumer packaged goods industry, Nestlé shares have significantly underperformed most of their US and European consumer staples peers on a three year, five year, and ten year total shareholder return basis. One year returns have been driven largely by the market’s anticipation that with a newly appointed CEO, Nestlé will improve."

While the problems are clear, why did Third Point go activist? To maximize value of course, as It explains:

Third Point invested in Nestlé because we recognized a familiar set of conditions that make it ripe for improvement and change: a conglomerate with unrealized potential for margin improvement and innovation in its core businesses, an unoptimized balance sheet, a number of non-core assets, and a recent history of meaningful under-performance versus peers. It is rare to find a business of Nestlé’s quality with so many avenues for improvement.

As to how it could achieve this, Third Point lays out 4 specifics recommendations:

Third Point intends to play a constructive role to encourage management to pursue change with a greater sense of urgency. We have offered our views in productive conversations with management, which we expect will continue. We believe Nestlé is positioned to create enormous value for shareholders over the next several years if the company focuses on: 1) Improving Productivity; 2) Returning Capital to Shareholders; 3) Re-shaping the Portfolio; and, 4) Monetizing its L’Oréal Stake. We discuss each of these in more detail below.

Loeb"s conclusion:

As demonstrated by our significant capital commitment, we are enthusiastic about Nestlé’s prospects. The situation reminds us of similar conditions that existed when we first invested in Baxter in 2015. Some market observers scratched their heads, as they thought the company looked “expensive” and thus underestimated the uplift that is possible when a new leader dedicates himself to better capital allocation, portfolio optimization, and margin improvement with strong shareholder support.

We recognize that even with new leadership and clear options for value creation, change at a company like Nestlé can be complex. It is for this reason that Third Point intends to be an engaged, long-term shareholder and offer our assistance to the management team and Board as they pursue improved performance for all stakeholders. We are confident that by following the path we have outlined, Nestlé will be able to revive its iconic slogan, with a twist: Nestlé makes the very best returns for its shareholders.

For the full breakdown of Loeb"s recommendations, see the full letter below.

As Bloomberg notes, the Third Point move comes as Nestle’s new Chief Executive Officer Mark Schneider aims to boost the company’s health strategy as well as focus on the businesses that are growing fastest, such as coffee and pet food. Food companies are under pressure to reduce costs after Kraft Heinz Co.’s unsuccessful bid for Unilever earlier this year showed that even the largest players could become targets.

Chocolate makers especially are grappling with weak U.S. consumption as Americans increasingly turn their backs on sugar. Nestle said this month it may sell its U.S. sweets unit, which includes brands such as Butterfinger and BabyRuth.

Third Point has targeted European companies before. Vitamin maker Royal DSM NV also attracted the activist, and went on to sell its majority stake in a basic plastics and resins unit to CVC Capital Partners after facing calls to break up.

Full Third Point letter below (pdf link)

SEC Freezes Accounts Of "Highly Suspicious" Traders Who Made $3.6 Million On Fortress Takeover

First, it was the leak of the massive Heinz-Unilever deal that may have scuttled the Warren Buffett-inspired transaction, now it appears that another recent megamerger was leaked 4 days ahead of the announcement. On Wednesday morning, the SEC froze brokerage accounts of several unnamed traders who made more than $3.6 million in profits by trading in the four days before the $3.3 billion takeover of Fortress Investment Group was announced by Japan’s SoftBank.

According to the FT, the traders placed “highly suspicious” orders for shares and contracts for difference, or CFDs, through Singapore-based Maybank Securities and a brokerage in London, R.J. O’Brien. Breaking the second cardinal rule of insider trading, i.e., never to buy stocks in bulk in the day ahead of the announcement (the first such rule is never to buy calls the before a deal is announced although the "insiders" did that too), all the trades through Maybank were made within a 24-hour period before the deal to buy the US-listed private equity firm was announced to the market; meanwhile trade through R.J. O’Brien took place between February 10 and 14, the day the deal was disclosed the SEC reported.

“The timing, size and profitability of these trades are highly suspicious,” the SEC said in a court filing asking for the freeze.

As the FT adds, the SEC is seeking a judgment to force the traders to disgorge the profits and pay a penalty. SoftBank’s offer for Fortress was a 30 per cent premium over the private equity firm’s closing share price that day. Also, as the SEC further notes, it appears that the rookie traders decided to really bring attention on themselves by also breaking Cardinal rule #1: a burst of option buying ahead of the deal. Just like in the case of the Unilever deal, which saw a surge in call option volume for both Unilever and Kraft Heinz ahead of the announcement...

...  the size of bets in the options market prior to the deal raised eyebrows in the US, leading several market experts to believe that information had been leaked ahead of the deal.

The volume of options trading in Fortress was more than eight times the normal level ahead of the deal’s public announcement. Specifically, customers of Maybank bought 950,000 shares in Fortress hours before the announcement, selling them the next morning for $1.7 million. R.J. O’Brien’s customers bought CFDs and shares in Fortress, which they sold on February 15 for $1.9 million, according to the SEC’s complaint seeking the freeze.

Also notable is how quickly the leak appears to have emerged: the Maybank clients began placing the trades on February 14, building up a $5 million position, 33 minutes after Fortress’s board of directors received an email with draft resolutions approving the deal, according to the SEC. Only two days before, there was “serious doubt” as to whether the deal would even go through, the SEC complaint said.

Discussions between SoftBank and Fortress had begun in December, and the two companies initially planned to finalise the deal over the weekend of February 10-12, putting it to a board vote at Fortress on February 12.  The R.J. O’Brien clients began buying CFDs on February 10, through an account with Merrill Lynch, just before that weekend. The only other time Maybank bought any Fortress stock through its account at UBS was in February 2016, when 10,000 shares were bought and later sold in April.

As the FT notes, the emergency court order obtained by the SEC on February 24 will prevent the traders from accessing any of those gains. As yet, the SEC said they do not know the identities of the traders, but said in the complaint they are “believed to be foreign traders trading through foreign accounts”.

In recent years, suspicious trading before deals has been under increased scrutiny by the SEC and regulators around the world after insider trading prosecutions in New York over the past decade exposed the extent of the crime. The SEC has yet to launch a probe into the far larger Unilever leak(s).

Fake News for Fake People in an Engineered Fake Culture

America really is the land of the dreams.  Dreams, take many forms; hallucinations, nightmares, delusions, bad trips.

Fake News is really descriptive; how about Fake culture, fake people, fake life.  Is America real?  You wouldn"t think there are people living here if you walk down most streets, all you see is cars, the occasional dog walkers, and the radiant glow of the TV screen.  Just forget it all!

You know, nothing captures the fake culture better than music - music is the backbone of mainstream American culture (unfortunately) - in other cultures the backbone can be science, socialization, or in primal societies, dancing around a fire at night wearing masks and costumes.

There"s no better characterization of fake news than the famous "Dirty Laundry" by Don Henly.

I make my living off the evening news

Just give me something-something I can use

People love it when you lose,

They love dirty laundry

Well, I coulda been an actor, but I wound up here

I just have to look good, I don"t have to be clear

Come and whisper in my ear

Give us dirty laundry

We got the bubble-headed-bleach-blond

Who comes on at five

She can tell you "bout the plane crash with a gleam in her eye

It"s interesting when people die

Give us dirty laundry

Can we film the operation?

Is the head dead yet?

You know, the boys in the newsroom got a running bet

Get the widow on the set!

We need dirty laundry

You don"t really need to find out what"s going on

You don"t really want to know just how far it"s gone

Just leave well enough alone

Eat your dirty laundry

Kick "em when they"re up

Kick "em when they"re down

Kick "em when they"re stiff

Kick "em all around

Dirty little secrets

Dirty little lies

We got our dirty little fingers in everybody"s pie

We love to cut you down to size

We love dirty laundry

We can do "The Innuendo"

We can dance and sing

When it"s said and done we haven"t told you a thing

We all know that Kraft is king

Give us dirty laundry!

American culture has been bought and sold to the Corporation generations ago.  This recent meme about Fake News really captures the "reality moment" America is having, and isn"t it fitting, a "reality TV star" is President of the United States of America.  "Reality" TV is the same ironic oxi-moron metaphor as Fake News - Reality TV - isn"t real.  On the surface, it means - it"s not a scripted "program" but the hidden innuendo - is that it"s REAL, as in REAL LIFE, which IT"S NOT!

Fake News is for Fake people (being from Boca Raton, FL author can attest there really is such a thing as a "fake" person!) 

But, what is real anyway?  

fs

People are real.  Objects are real.  

Money is not real.  Ideas are not real.  Concepts, are abstractions.

So there you go - we"ve taken you down the rabbit hole far enough.  If you want to know what"s at the end of the hole, pay, and you will see!

"This Is Simply Abnormal" - RBC Explains The "Current Insanity Of Single-Stock Behavior"

After 8 consecutive days of declines in the S&P - a losing streak that however will likely end today absent a big surprise toward the end of trading today - traders are rightfully asking themselves, what"s going on, and why is the widely promised "election rally" not here? One attempt to answer what may be taking place in a suddenly very strange market is courtesy of RBC"s head of X-asset strategy, Charlie McElligott, who points out that some of the moves seen in recent days are "simply abnormal" and more concerningly warns that what we are seeing now is reminiscent of what took place in the market almost exactly one year ago:

Interestingly, it’s starting to rhyme a bit with late last year—longs being built in banks on higher rates expectations against a desire to underweight the bond proxies (as we see desire to short USTs again on inflation expectations / rate hike / curve steepening talk from CB’s all conspiring against them), and despite this recent risk drawdown, we have seen tech and high-beta flying of late.  Something to be mindful of, as the last three Januarys have seen CRUSHING contrarian moves (stocks sharply lower, USTs massively ‘bid’).

If McElligott is right, then any relief rally to follow the Tuesday election will likely be faded. Of course, if the market does crash on Wednesday morning in a "Brexit rerun", then it will be up to the Fed to reinvigorate animal spirits, which however will certainly not happen with a rate hike just one month later.

From RBC"s Charlie McElliggott:

RBC Big Picture: Stranger Things

THE CURRENT INSANITY OF SINGLE-STOCK BEHAVIOR: Apologies to pure macro readers for so much stocks focus of late, but it continues to be accurate to say that all of the action is taking place in equities right now…and stick with me, because there is  some good macro thought-below.  Man was yesterday a bizarre one in US equities….and even stranger, it’s happening in a relative vacuum, as the rest of the macro / cross-asset universe is lulled to sleep with much tighter ranges on the day.

The behavior in equity vol is one thing (as tails were massively bid yesterday—SPX 1m 80% moneyness was +10.2% on the session, while ‘vol of vol’ is now +34 vols / +40.1% over the past 8 sessions)…but the price-action in single-stock was the stuff we haven’t seen since the Q1 market-neutral factor unwinds ripping through the pod-shops…where for a stretch in late Jan / early Feb, teams / books were being blown-out on daily basis around the Street.

Back then, it was ‘bad-positioning’ from the buyside based on macro impact on style factors. 

1. Everybody came into January ‘16 long growth & momentum (and thus, “high beta”), aka “story stocks” in tech and discretionary, along with major healthcare sector overweights (biotech / spec pharma / generic drug makers).  Similarly, there was a huge belief in “short bonds” to start the year too--as seemingly the Fed’s long-awaited rate-hiking cycle had just begun the month prior--as such,


2. there was a massive long in financials / banks on expectations of higher rates.  And to put the cherry on top,


3. there was a major quant / stat arb long in energy, anticipating a January ‘mean reversion’ (a tried-and-true back-tested phenomenon). 

In hindsight, it is absolute insanity how ‘bad’ that all was—you couldn’t construct it any worse.  As such, the pain trade “went to 11,” as risk-assets were purged under the weight of the deflation scare: China came out of the gates with further Yuan devaluation, crude was -10% on the month, and UST 10Y yields were absolutely obliterated, moving from 2.30 the last day of Dec ’15 to 1.65 by Feb ’16. With all of this, growth and momentum came unglued, the move lower in rates not only crushed bank longs but also too saw a massive rotation into the (dreaded) ‘bond proxies’—‘low vol’ factor, dividend yield, defensive sectors.  You know the rest…

So fast-forward to now: what’s so incredible about the behavior witnessed over the past few days ‘under the hood’ is that relative to all of our recent drawdowns being so clearly macro-driven (deflation / reflation events of the past two years—Yuan deval, crude spasms, Yellen “weak USD policy pivot” / “Shanghai accord,” CB coordinated messaging on “curve steepening” intent, the inflation impulse bond-beatdown etc)…is that this equities move started as simple “de-risking in front of a ‘fluorescent swan’ of a binary US Presidential election”…that has now crescendo’d into a really bad VaR outbreak. 

While on the benchmark index level we saw a “barely a paper-cut” 9-handle move in SPX yesterday(-0.4%)…we saw 29 US Composite names with market caps north of $25B dollars which traded -1.5% or (much) greater on the day—heavy-hitters like Kellogg, Apple, AbbVie, Humana, Liberty Global, Intel, Kraft Heinz, Charter Comm, Constellation Brands, HCA Holdings, Starbucks, Target, Anthem, Pfizer, Estee Lauder, Amgen, Lockheed Martin, CVS Health, Kroger (-3.7%), AIG (-4.0%), Allergan (-4.0%), McKesson (-4.6%) and index mega-weight Facebook (5th largest weighting in SPX, -5.6% on day).  Other popular longs like CHD (-6.6%) and THS (-19.5%!) got smoked too, while more idiosyncratic political drama crushed the generic drug maker space, with PUNISHING capitulation in MYL (-7.0%), ENDP (-19.5%) and TEVA (-9.5%) amongst others. 

The tech sector has been “THE” hiding place recently for investors, on account of folks getting increasingly nervous about riding their cyclical longs much further here after the run they’ve been on (and crude rolling over sharply -9% on the WTD as the OPEC “deal” looks like anything but)--but also being hyper-cognizant of the inflation base-effect’s lagging-impact on bond prices (higher yields) and purportedly a Fed still committed to a Dec hike (with a steady-state world of course) makes putting back on the ultra-expensive ‘bond proxy’ / ‘low vol’ factor / defensive trade look quite unattractive as well.  So despite tech being such a ‘stud’ recently (XLK +10.2% in Q3), it’s received the ‘rented mule’ treatment as effectively an “ATM” of late (with ‘FANG’ -4.4% over the past 5 sessions, XLK -2.6% over past 5 sessions). 
 
But maybe the strangest thing experienced was seen amongst seemingly popular and thus theoretically winning short positions, where we saw huge outlier downside moves—BW (-10.3%), FSLR (-15.0%), FIT (-33.6%) and DPLO (-42.1%).  This is simply abnormal.  How do I rationalize this?  Well in ‘max pain trade’ fashion, I think that sadly many had actually given-up on these shorts over the outrageous daily-grind higher period in Q3—remember, SPX was +3.3% on the qtr, Russell 2k was +8.7% and (drumroll please….) the GS Most Shorted Basket was +14.5% on the quarter.  So what we’re seeing this week is that the right ideas that folks once had on in their short books—but were forced to capitulate on during the face-ripping rally in Q3—actually saw their short theses play-out to a tee.  The companies reported terrible quarters, and as such, were promptly hammered and punished / re-deployed by guys who originally had the trade right…but had sadly ‘tapped out!!!’  Just gutting stuff…

Ironically though this time around, we see equity market neutral funds performing very well relatively speaking to long-short or long-only.  Take a look at one widely followed quant’s open-end market neutral fund against the HFR Equity Long / Short Index, ‘High HF Concentration basket’ and ‘Mutual Fund Overweights’ baskets over the past two months:

Ironically though this time around, we see equity market neutral funds performing very well relatively speaking to long-short or long-only.  take a look at one widely followed quant’s open-end market neutral fund against the HFR Equity Long / Short Index, ‘High HF Concentration basket’ and ‘Mutual Fund Overweights’ baskets over the past two months:

Broken-record, but another ‘strike’ for active managers…as not for nuthin,’ we see equity mutual funds registering another $3.5B of net outflows last week per last night’s AMG data.  This is the 34th consecutive week of outflows this year, and makes only 3 inflow weeks YTD against a total of 44 weeks. 
 
Interestingly, it’s starting to rhyme a bit with late last year—longs being built in banks on higher rates expectations against a desire to underweight the bond proxies (as we see desire to short USTs again on inflation expectations / rate hike / curve steepening talk from CB’s all conspiring against them), and despite this recent risk drawdown, we have seen tech and high-beta flying of late.  Something to be mindful of, as the last three Januarys have seen CRUSHING contrarian moves (stocks sharply lower, USTs massively ‘bid’).