Profit Pregame

This Could Be One of the Biggest Deals or Worst Flops of the Year

A Newly Proposed League has a Huge Financier in its Corner

One of banking’s biggest names is behind a potentially seismic shift in the sports world.

What’s happening?

As we discussed last week, banking stocks have gotten a lot of attention lately, mostly for their profit potential from rising interest rates.

But one bank in particular is in the news for a completely different reason this week.

In what would be one of the biggest shake-ups in the history of sports, twelve of Europe’s biggest soccer teams have announced their intention to form a controversial new Super League.

The potential revenue from such a venture could be massive. The ten highest grossing soccer clubs in Europe averaged more than $671 million in revenue per team for the 2019-2020 season.

To take advantage of the enormous opportunity, one of the banking world’s biggest names has stepped in to help finance the breakaway league.

And some investors are seeing dollar signs.

Where’s the money?

Although the sport has never been as popular here in the U.S., American banker JPMorgan Chase & Co. (JPM) might be the new European Super League’s biggest fan as it works toward securing a deal to provide financing.

The amount of funding, after additional payments and expenses, is estimated to total $4.8 billion at an interest rate of 2% to 3% over a 23-year period. The investment may be offered to investors at a later date, but for now is funded entirely by JPM.

It’s an investment that would provide a stable revenue stream in what would instantly become one of the world’s most lucrative leagues.

The formation of the new league would allow member teams – which boast some of the largest fan bases on the planet – to avoid playing smaller clubs that generate less revenue, and allow the league to set more favorable TV and licensing deals.

To put it in perspective, the UEFA Champions League – the league that currently pits Europe’s biggest clubs against each other – generated more than $3.3 billion in 2019.

But for all of its money-making potential, the new league is far from a sure thing. It has been met with huge backlash from fans, competing European leagues, and soccer’s governing body, FIFA – which has threatened a ban from all FIFA sponsored events, including the World Cup, for any teams and players that participate in the Super League.

So, should you put some of your speculative capital to work in JPM in the hopes of reaching a financing deal?

Here’s what I think…

How do I get some?

I have to say, JPMorgan backing one of the biggest soccer leagues ever is a head-scratcher for me.

Does this make sense? I think the answer is no. Why would a bank back a soccer league?

It seems like so many companies and businesses are getting into businesses that are not their core.

In addition, there’s a strong possibility that the Super League never even comes into existence.

The creation of the new league is facing a massive amount of criticism and resistance from just about just about every other soccer organization in Europe.

I think this news might not result in revenue for JPM for years, if ever. So until then, I would rather focus on deals that make more sense.

You Can Join One of the World’s Best Trading Teams

Sports isn’t the only place where a new era is being ushered in.

The advent of commissions free, easily accessible online trading has attracted a tidal wave of novice investors to the market.

In trading – much like the sports world – if one side is winning, it means another side is losing.

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It’s the trading equivalent of Manchester United playing against your local high school’s soccer team.

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In the Spotlight: A Big Blow to the Future of Automobiles

Self-driving cars are the wave of the future that some of the biggest companies in the auto making industry are feverishly developing.

But one of the most popular names in the business suffered a tragic setback this week.

On Saturday night, two men in Texas died after the Tesla Model S vehicle crashed into a tree. Investigations revealed that no one was present in the driver’s seat, and it is believed the two men were testing the self-driving feature of the vehicle.

The National Highway Traffic Safety Administration has opened a probe into the crash. The NHTSA does not currently regulate self-driving vehicles, but it is believed that it will step in to establish rules in the near future as automated vehicles become more prevalent.

Tesla, Inc. (TSLA) stock fell by as much as 6.4% during yesterday’s trading. I believe the stock has more room to go lower, but I will be keeping my eye out for a bottom and a good buying position.

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