I Need Help With This One

[David Sklansky]

It seems like a reasonable prediction that the NBA's business will be down this year as people no longer think they are watching far and away the best in the world. So what can I short (or buy for that matter) that would reflect his? The Boston Celtics used to be a stock but aren't anymore I don't think. One idea is Nike or some other shoe company but they are not directly correlated with basketball.

[GeorgeF]

I think you can squeeze alittle more juice from this turnip. You need a pair trade like long Nascar / short Basketball. I figure any money not spent in b-ball will be spent on some other time/money waster (you don't expect sports fans to start reading novels or something.)

Needless to say I have no ideas but this is a stale list of sports stocks:

http://www.sportsfansofamerica.com/Services/Stocks1.htm

Topps is also a possibility.

[Kopefire]

I seriously disagree with your assumption.

Losing in the olympics is embarrassing, but isn't particularly correlated to NBA league play. Teamwork takes time to develop, and fans of the sport are going to know that.

Second, and really more importantly, all professional sports are driven by regional considerations. If the T-Wolves are playing well, then the NBA is going to do well in Minnesota. Given that the big money makers (advertising dollars, box seats, etc) have already been sold for the season, the only real potential impact will be television revenues and cheap seat attendance. Both of those are going to be far more influenced by the question of if it is an interesting season or not.

[Officer Farva]

Ran this buy the manager of the hedge fund I work at...

His advice, stick to poker.

The NBA's business is just as likely to improve. Shaq out east, return to parity, Kobe free, etc.

NKE is footwear, an early cyclical, up 10% in the last three weeks. Good luck tying that to the NBA.

Pair trading with Nascar, wtf?

[David Sklansky]

I don't take advice from irrelevant mediocrities

[Officer Farva]

[ QUOTE ]
I don't take advice from irrelevant mediocrities

[/ QUOTE ]

Ad hominem

[David Sklansky]

Incorrect. That fallacy is constantly misunderstood.

[Officer Farva]

[ QUOTE ]
Incorrect. That fallacy is constantly misunderstood.

[/ QUOTE ]

An ad hominem argument, also known as argumentum ad hominem (Latin, literally "argument to the man"), is a logical fallacy that involves replying to an argument or assertion by addressing the person presenting the argument or assertion rather than the argument itself.

You're right, its commonly misused, but not in this instance.

[FatOtt]

[ QUOTE ]

Ran this buy the manager of the hedge fund I work at...[ QUOTE ]

I don't take advice from irrelevant mediocrities

[/ QUOTE ]


[/ QUOTE ]

Beautiful

You ask for stock-related advice from anonymous people on a predominantly poker-related message board, but won't take it from an anonymous hedge fund manager?

[Officer Farva]

[ QUOTE ]
[ QUOTE ]

Ran this buy the manager of the hedge fund I work at...[ QUOTE ]

I don't take advice from irrelevant mediocrities

[/ QUOTE ]


[/ QUOTE ]

Beautiful

You ask for stock-related advice from anonymous people on a predominantly poker-related message board, but won't take it from an anonymous hedge fund manager?

[/ QUOTE ]

I think it was the "stick to poker" part he didn't like, can't say I blame him. But thanks for the back up.

[FatOtt]

[ QUOTE ]
[ QUOTE ]


[ QUOTE ]


Ran this buy the manager of the hedge fund I work at...


[/ QUOTE ]
[ QUOTE ]


I don't take advice from irrelevant mediocrities



[/ QUOTE ]




Beautiful

You ask for stock-related advice from anonymous people on a predominantly poker-related message board, but won't take it from an anonymous hedge fund manager?


[/ QUOTE ]


I think it was the "stick to poker" part he didn't like, can't say I blame him. But thanks for the back up.

[/ QUOTE ]

Actually, I was giving him [DS] credit and assuming he wasn't engaging in ad hominem attacks. I assumed that he had some basis to claim that the average hedge fund or hedge fund manager does not outperform the market, and that knowledge allowed him to disregard the opinion of one such hedge fund manager. [If he does have some basis to make that claim, I would like a reference.] Of course, this would be a strange comment to make from someone soliciting advice on a message board whose contributors have no track record at all.

If, on the other hand, he was just being randomly arrogant or pissy about the "stick to poker" comment, I'd say he needs thicker skin.

[yanfu]

Maybe USBL or trading card companies like TOPP, RML Russel owns the Spalding brand which is heavily entrenched in NBA brand gear.

[J.R.]

Wouldn't the looming NHL lockout be perhaps a more significant factor that weighs against a bad business year for the NBA, assuming demand for professional sports entertainment is viewed as relatively constant and the NBA and NHL are regarded as somewhat substitutable goods amongst the typical sports fan. A guy with a sports fix had got to watch something, and with no hockey, doesn't the NBA stand to gain market share in what is not likely to be a shrinking market?

[fnurt]

This is an extremely good point.

[Redsox]

The Celtics were not a stock, but rather they floated a certain amount of their debt into a publicly traded security. Owning an amount of the debt of the Boston Celtics is not akin to equity holdership.

[adios]

Dave wrote:

[ QUOTE ]
The Boston Celtics used to be a stock but aren't anymore I don't think.

[/ QUOTE ]

You responded:

[ QUOTE ]
The Celtics were not a stock, but rather they floated a certain amount of their debt into a publicly traded security. Owning an amount of the debt of the Boston Celtics is not akin to equity holdership.

[/ QUOTE ]

Again not a kneejerk defense of Dave. Dave could have used a better word than "stock" perhaps (I don't remember the nature of the security that was publicly traded, I'll take your word for it though) but you didn't address his point methinks ie unless David's idea would only apply to equity. I don't see why it wouldn't apply to debt.

[BadBoyBenny]

I think J.R. hit the nail on the head here.

If the NHL locks out, it will override any boredom people have over this years NBA season.

[ApolloQuiet]

I don't think there is going to be much of a negative reaction due to the poor Olympic showing. There were enough shakeups in the league in the off season, to still make things interesting. And even if there is any sort of affect upon sales of NBA related merchandise here in the U.S., I would figure it would be more than made up Internationally. Now you have emerging basketball markets in Argentina, Italy, China and Lithuania that weren't as strong prior to this years Olympics.

[pocketdueces81]

I wouldnt recomend betting on a given stock because of the NBA's failure in the Olympics.

Clearly you are an investor who is willing to take the risks of entering into an options contract.

I would suggest opening a position that limits your downside potential but provides a unlimited upside potential like a Long Straddle (where the maximum loss is the premium paid). Entering into a LS position is a bet on high stock volatility.

I would avoid such a highly speculative assumption on the NBA and then trying to decide which company would take a dive from the leagues lack of success in the Olympics. The poker equivalent of this mistake would be the hero calling an all in with AK when you are sure the villain has Aces.

Perhaps you should look into the airline industry with a few firms filing for chapter 11. That is about all the free advice I can give on option contracts.

I personally like the the health care sector. With patents and drugs being approved or deamed harmful, there is much money to be made just by picking stocks, let alone a highly leveraged option position. A wonderful company who specializes in the health care sector is Leerink Swann & Co.

Just my $.02

[ApolloQuiet]

Nike nearing it's all time high today.

[Boris]

[ QUOTE ]
It seems like a reasonable prediction that the NBA's business will be down this year as people no longer think they are watching far and away the best in the world.

[/ QUOTE ]

Stick to poker. Anyone with half a brain knows that even the worst NBA team would have won the gold medal easily.

Additionally, if you want to short the NBA you have to consider the liquidity of your investment. The only stock that comes immediately to mind is NBC. NBC gets their revenue from the advertising dollar so if you want to bet against the NBA your best bet would be to bet against NBC and reduced ad revenue. I don't think you'll see a big drop off as the viewing public is not going to reduce their TV watching time very much due to the NBA. There might be a change in the demographic but that will have only a marginal effect on NBC ad revenue. You also have to take into account that there is a very good chance of an NHL lockout in 2005. Since hockey is a substitute (albeit a weak one) for the NBA, any disinterest due to the USA's lackluster performance will be offset.

If you want to take the private equity route you might try to invest in some sort of European or South American basketball league. Even if that option is available I would avoid it. The best international players go the NBA and that can only benefit the NBA.

As a sport in general I agree that the NBA has reached its peak and is on the downturn but the liquid markets simply aren't there to capitalize on this. The only way you could do it is to buy an NBA franchise at an overly discounted price. Good luck.

[Boris]

I posted my response before reading yours but I agree with you 100%. You get the credit of course.

[ApolloQuiet]

Two things:

GE is the parent company of NBC. Not going to be affected by lack of advertising revenue from NBA.

Second, NBC doesn't broadcast NBA anymore, that would be ABC, whose parent company is Disney, who again, is not going to be affected by lack of advertising revenue.

[Boris]

Shows how much I watch the NBA. Even so my argument is still valid. Just change the names.

[Cazz]

I think the NHL lockout will have an effect on the NBA.
While the fan overlap is not huge, not having a competing league vying for the sport fan's dollar should be a boost to the NBA.

You might look at Tops Trading Cards (TOPP). They missed earning estimates because they didn't print any NHL cards and they should have some NBA exposure.

[David Sklansky]

Anyone with half a brain knows that even the worst NBA team would have won the gold medal easily.

This rebuttal to my point is flawed for two reasons, even if the statement is true.

1. Many fans are not going to realize what you say

2. Even those who do agree with your statement are still somewhat disillusioned because they had been under the impression that NBA players were so far and away better than the rest of the world that the the team we sent was plenty good enough to win.

[CarlSpackler]

Another factor, which no one has mentioned, is the NHL lockout. If the entire NHL season is cancelled, this can only help the NBA, one of its main competitors. There are X number of sports fans who watch both the NBA and NHL, and now the latter may not be an option. There are numerous markets, which have both NBA and NHL franchises, so in theory the NBA should gain market share in these areas. How much they’ll gain, I don’t know.

[FatOtt]

[ QUOTE ]
Anyone with half a brain knows that even the worst NBA team would have won the gold medal easily.

[/ QUOTE ]

David,
Are you forgetting about the fact that "the worst NBA team" isn't the same thing as "the worst NBA team remaining after all foreigners are excluded"?

Your entire issue seems to be based on the idea that the US not winning gold implies that the quality of the NBA is decreasing. An alternative explanation is that the number of foreign participants in the NBA is increasing, allowing NBA quality to stay constant (or even improve), while teams from other countries catch up to the US.

This is one of your weaker ideas.

[David Sklansky]

I can't believe you guys. I'm talking about perception, not necessarily reality. The fact is that our not winning gold shocked the average fan.

[MMMMMM]

Multiply that by at least 40 and it is approximately what adios and I must go through every day on the Other Topics Forum.

[OrangeCat]

[ QUOTE ]
I can't believe you guys. I'm talking about perception, not necessarily reality. The fact is that our not winning gold shocked the average fan.

[/ QUOTE ]
Your misconception here is that the average fan can influence the stock market. They don’t. Many experts estimate that the retail investor accounts for only 10% of the volume on the NASDAQ and NYSE.

A few years ago when everybody had a brokerage account, the fish made a difference, but not now. I guess they all switched from ameritrade to PartyPoker. /images/graemlins/wink.gif

The most effected by disinterest (if there is any, which I doubt) in the NBA will be the TV broadcasters. But their bottom line is influenced by so many other factors that you don’t have a play.

[Kopefire]

David,

The "average" fan isn't going to have an effect on the economies you're talking about.

The box seats all sell for half-a-mil or more, and are already sold.

The season tickets were sold out last year.

The TV contacts are still good.

The average fan is going to still be scrambling for the $15 seats if their team is on a winning streak, or their kid asks to go to a game.

The shock in the USA not winning gold will translate into zero economic loss.

[David Sklansky]

Your misconception here is that the average fan can influence the stock market. They don’t. Many experts estimate that the retail investor accounts for only 10% of the volume on the NASDAQ and NYSE.

Why did you say this? Think.

[ApolloQuiet]

[ QUOTE ]

Your misconception here is that the average fan can influence the stock market. They don’t. Many experts estimate that the retail investor accounts for only 10% of the volume on the NASDAQ and NYSE.


[/ QUOTE ]

What about the average fans who are part of the other 90%?

[FatOtt]

[ QUOTE ]
I can't believe you guys. I'm talking about perception, not necessarily reality. The fact is that our not winning gold shocked the average fan.

[/ QUOTE ]

I'm really having trouble making the leap from:
a) The average fan is shocked that the US did not win the gold.
-to-
b) The shocked fan will therefore feel that the NBA is lower-quality than he previously believed.

Why doesn't the average fan think "wow, maybe those foreigners in the NBA are better than I thought"? How does the average fan not understand that NBA all-stars from foreign countries (studs like Dirk Nowitzki or Yao Ming) can help foreign teams in the Olympics.

A bigger issue that you're missing is that your thesis applies predominantly (only?) to viewers in the US. I would suspect that increased global participation would make the NBA even more valuable, even if they do suffer a drop in US viewers.

As an example:
USA Today article about foreign interest in NBA (http://www.usatoday.com/tech/webguide/internetlife/2003-12-08-yao-web-traffic_x.htm)

[ QUOTE ]

For the first time, more than half the visits to NBA Web sites are coming from outside the United States. The foreign traffic spike is being led by a 3,000% increase in visitors from China in November, the league told Reuters.

During the first month of the NBA season, 51% of Internet traffic to the league's Web sites came from outside the United States, and international traffic nearly doubled to 30 million visits.

"We have a record number of foreign players in the league this year, and many of them are all-stars," said Brenda Spoonemoore, an NBA senior vice president. "As international players come into the league, we see a spike in traffic from those countries."

There are 71 foreign players on NBA rosters this year, up from 68 last year. And increasingly, they're star players who are genuine sports heroes in their home countries. Last season six foreign-born players were named to the All Star team, and six others were named to the all-star rookie team.

The foreign Web traffic is led by China, with 8 million visits in November. Also in the top 10 are Germany, Canada, Spain, and France, all with prominent players in the league. But also in the top 10 are countries and territories with no players in the league, such as Taiwan, Japan, Hong Kong and the Philippines .

[/ QUOTE ]

But maybe I just don't understand the difference between perception and reality.

[David Sklansky]

A bigger issue that you're missing is that your thesis applies predominantly (only?) to viewers in the US. I would suspect that increased global participation would make the NBA even more valuable, even if they do suffer a drop in US viewers.

Now THAT is a good refutation and something I hadn't thought of. See how its done boys?

[arabie]

Simple, sign up for www.intrade.com (http://www.intrade.com), i'm pretty sure they are offering contracts.

[Faro]

Can not think of a correlated stock to the NBA and other NBA teams on Yahoo appear to be private. The Boston Celtics had a return on investment last year of about 1 percent. Below is a statement indicating that in fact the Boston Celtics are indeed now privately held.

"Previously the Celtics was jointly owned by a publicly traded company, Boston Celtics Limited Partnership (BCLP), which owned 48% of the team, and Castle Creek, a private firm that owned the rest. BBP purchased Castle Creek's interest in the Celtics and bought the rest of the publicly traded shares of BCLP in the first quarter of 2003. On the court, the Celtics had struggled mightily in the 1990s, but finally returned to the postseason in 2002-04. "

[tek]

I would think that following casino stocks and stocks like DVD, ISCA and TRK (nascar track operators) would be a way to go.

[js13_tps]

harley davidson. HDI. closest thing to a sport worth considering.

[tek]

WPTE World Poker Tour

[Apathy]

I think you need to be very careful with this prediction becuase I believe that Bball may actually preform better this year with the lockout in hockey you will sell a large amount of new basketball fans, and TV ratings should actually improve with the lack of competition from the NHL.

[Non_Comformist]

Your way off in thinking that NBA revenues will decline because of what happened in the Olympics. Fans could care less. Additionally you have the eastern conference back even with the west and the Kobe - Shaq split.

[staunchdog]

I tend to agree that Mr. Sklansky should stick to poker. He is way out on a limb with this theory. Furthermore, if there were any effect, it is likely it has already been priced into the market for whatever it is that Sklansky haphazardly decides to short. Stick to poker and writing books. "This one is not good for you," as Teddy KGB would say. Wow.