It’s my favorite time of year.
Yes, I live in Scottsdale, Arizona.
It’s August. The heat is unbearable. The town grounds to a halt when it passed 110 degrees.
The only way to get things done outside is when it’s in the low 80s well before 6:00 AM.
But that’s not why you’ll see me popping out of bed at 5:00 AM on a Saturday morning.
The real reason is your editor is caught up in one of the fastest growing sectors in the world, one that has attracted dozens of billionaire investors, and that may be poised for its biggest run yet.
The Best Time Of Year
August is the start of the English Premier League season.
You know those soccer games that are on at 5:00 A.M. and attract on average about 600,000 viewers in the U.S. (about 1/50th the NFL).
Your editor has been watching for nearly 20 years now.
It’s changed dramatically over the years.
If you go to a game, you know how blazing fast it all is.
The players today don’t really drink any alcohol.
They eat near perfect diets. One top manager just outlawed pizza for his players.
It’s much bigger than it ever was too.
The Premier League is now available in every country in the world except Albania and North Korea.
Hundreds of millions of viewers tune in around the world every weekend to watch until it’s all over in May.
With the speed, excitement, and viewership increases, the money has followed.
TV broadcasting rights are now billions of dollars every year.
This year’s deal is 4000% bigger than they were when the Premier League was created in 1992.
Every team to bring in a $150 million+ every year before a ball is even kicked.
Big dollars like that has brought in big money investors too.
In the last 15 years the Premier League has become the playground of billionaire owners.
Are they in it for the money?
Probably. You’ve got to believe so.
But should you join them?
That’s what one friend of mine is considering doing. And he thought he would get some encouragement from me being a stock and a soccer guy.
However, I had much different advice for him than he expected.
Big Money vs. Smart Money
My friend is a big Manchester United supporter.
Man U is like the New York Yankees of the english soccer.
They’ve got more money and more fans around the world than any other team.
He’s especially excited this year because for the first time in five years Man U may be back on top.
They’ve got a real shot at winning it all this year.
However, that came at a cost.
Man U spent more than $500 million in the past three years on player acquisitions.
Now, this is international soccer, so you don’t trade for players. Usually you just buy them from smaller teams for cash.
That cash is just for the player to sign. It does not include the salary which is often almost as much as the transfer fee to buy the player to begin with.
It’s a huge money business. But it’s also not a profitable business.
Manchester United (MANU) is a publicly traded company so we can see how little the team makes.
For example, last year Man U generated $621 million in revenues.
It’s costs ran up to $622 million.
So the net return was an actual loss of $1.4 million.
Even with Man U turning around, the best-case scenario will result in a small profit.
It’s P/E ratio will basically go from infinity down to maybe 100 or so.
In the end, I told him to look beyond what you and most others see.
The average NFL watcher consumes 10+ hours of games and related programming every week.
Even that disproportionate amount of time only resulted in $13 billion in revenues for the league.
That’s about 1/10th of the total revenues of Verizon which has a far greater impact on people’s lives, provides essential services, and is something you probably rarely think about, yet it’s where you’ll make much better money over the long run.
Spend your time watching and playing sports if you enjoy it.
Spend your investment dollars on the opportunities which will generate steady growth and returns over time.