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Play These 6 Sports Stocks and You Just May Win Big


For investors aiming to swing for the fences with single equity plays, check out these sports-related names -- including Nike and Madison Square Garden Co.

So please, be tolerant of those who describe a sporting moment as their best ever. We do not lack imagination, nor have we had sad and barren lives; it is just that real life is paler, duller, and contains less potential for unexpected delirium.

-- Nick Hornby, Fever Pitch

Sports have an unsurpassed ability to make otherwise sensible people lose their minds. I speak from firsthand experience, having once flown 11,000 miles to a country that borders Iran, Iraq, and Syria to watch a two-hour soccer match I would have had an infinitely better view of from the comfort of my couch. Head-scratching friends were given even more cause to question my sanity when Liverpool, the lifelong object of my obsession, swiftly found themselves facing an irretrievable 0-3 deficit at the cultured feet of an immensely talented AC Milan team in Europe's championship decider. Many of my tearful fellow fans exited early in abject misery. For some masochistic reason, I opted to stick it out, and thus was there for a subsequent comeback so surreal history now knows it as "The Miracle of Istanbul."

Wall Street, its parlance replete with sports lingo, offers the same thrilling divide between victory and defeat on a daily basis. The New York Times Company (NYSE:NYT), playing to an obvious audience overlap, tellingly opted to embed its business and sports sections in the same part of the paper some years ago. Diehard fans are statistically more likely to switch spouses than ditch teams, yet loyalty to sports stocks has historically been a spectacularly awful investment. In no other business is success subject to the whims of an erroneous refereeing decision or the snap of a star player's Achilles tendon. At various times, the Boston Celtics, Cleveland Indians, and Florida Panthers have all gone public; none still trade. The community-owned Green Bay Packers once had President Obama erupting in fits of laughter when presenting him with an honorary share certificate. Presumably he found it funny that anyone other than a committed Cheesehead would want a sentimental souvenir stock that doesn't actually trade on any exchange.

Ironically, we free-enterprise Americans arguably lag far behind our more collectivist European cousins in the business of sports. It won't be until next season that the National Basketball Association grudgingly agrees to turn over 2.5 tiny inches of its team jerseys to sponsors' logos. Contrast this with the situation overseas, where players' shirts have long been walking billboards bringing in untold millions for the outfitted organization. (In 2012, a financially stricken fútbol side in Greece even had the enterprising idea of advertising a brothel on their outfits in return for cash.)

While fans looking to get rich quick from buying a hot initial public offering of their hometown heroes are invariably out of luck, across the Atlantic, a more measured business plan may yet prove more profitable. I spoke recently with Ron Scott, a Wall Street veteran and now Commissioner of the British Basketball Association. His league has an initial pool of eight franchised teams, drawn from an array of different geographic areas across a media-savvy country Scott says is in a "sweet spot" to further grow what is already the world's second most popular sport. The BBA's relatively stable grassroots and ground-up approach, a single-entity model in which the league owns all teams, ultimately aims to provide investors whose time horizon is roughly five years with a potentially lucrative piece of the overall portfolio.

For less-patient types aiming to swing for the fences with single equity plays, let us examine six sports-related names. All surely offer far better bang for the buck than aging Alex Rodriguez, the lavishly compensated and currently convalescing New York Yankee.

Stock in The Madison Square Garden Co (NASDAQ:MSG), owner of "The World's Most Famous Arena," has surged some 65% in the past year. If not quite a Miracle on 34th Street, that still leaves both the Dow Jones Industrial Average (INDEXDJX:DJI) and the S&P 500 (INDEXSP:.INX) trailing in its dust during the same period. Its hallowed halls hosted the "Fight of the Century" between Joe Frazier and Muhammad Ali in 1971, not to mention Marilyn Monroe memorably cooing "Happy Birthday" to JFK a decade earlier.

MSG owns the New York Knicks, New York Rangers, New York Liberty, and Hartford Wolfpack. For good measure, it's also an entertainment empire that buys you a ticket to Radio City Music Hall and its world-renowned Rockettes, with the Fuse music channel thrown in for good measure. Boosted by ticket price hikes at its core basketball and ice hockey assets, the company recently reported a 24% increase in third-quarter profit. This performance was especially impressive as it came amid challenging NBA comparisons and a since-resolved National Hockey League work stoppage. Media-related revenue also showed strength. Risks include the fickle nature of sports, as evidenced when about $100 million was instantly wiped off its market capitalization after the abrupt end of last year's "Linsanity." Operating permit issues for its marquis Manhattan property, and ever-escalating cable network costs, also loom as thorns in the Garden.

Its feet-of-clay spokesmen - from a disgraced cyclist to an Olympian accused of murder - keep on stumbling, yet nothing it seems can trip up Nike, Inc. (NYSE:NKE). Shares have returned roughly 22% in the past year, having hit an historic high in May. Named after the Greek goddess of victory, this Oregon outfit is the biggest athletic footwear and apparel firm on Earth. Its "swoosh" logo is arguably the most instantly recognizable in all sports and adorns such soccer superstars as the boys from Brazil, whose hosting of next year's World Cup will provide the firm with priceless sponsorship publicity. Nike, along with wholly-owned subsidiary Converse, benefits enormously from its economic heft at retailers including Foot Locker, Inc. (NYSE:FL). China, which filled company coffers to the tune of $2.14 billion in 2012, represents an obvious growth engine, and $5 billion in upcoming share repurchases is another long-term catalyst. The stock sports a dividend of approximately 1.35% to boot. Can Nike just keep doing it? Inventory control is a constant concern, as is any increase in import costs with over half of all sales coming from outside the US. Investors, however, will still expect the stock to score when it reports fiscal fourth-quarter earnings on June 27.
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