As a huge baseball fan, I’m beyond thrilled that the Major League season has begun again. For me, spring truly begins with the crack of a bat and the thud of a ball hitting a glove. And for a few brief weeks in April, I can pretend my beloved Toronto Blue Jays have a shot at the playoffs.
Professional sports are a huge business. Players are paid millions of dollars, and franchises are worth many times more than that. Cities roll out the red carpet to attract and keep teams, giving them sweetheart deals on facility rentals. Municipalities will even go as far as building the hometown team a brand new stadium, with the team only picking up a small portion of the tab.
Since buying a team is out of reach for most of us mere mortals, we have to figure out different ways to invest in professional sports. It’s difficult, because a pure play on sports doesn’t exist. Investors are left with companies that get a part of their profits from pro sports. Here are four with some exposure to the games we all love to watch.
Rogers Communications (TSX: RCI.B)(NYSE: RCI) is the sole owner of the Toronto Blue Jays and part-owner of both the Toronto Maple Leafs and Toronto Raptors. Rogers uses the Blue Jays as cheap content for its sports channels and as a platform to promote its other services. Anyone who has watched a Blue Jays game in person can attest to all the Rogers TV and wireless ads plastered around the home park.
The sports part of Rogers Communications pales in comparison to its other businesses. Investors in Rogers have to look at the sports and media divisions as a fun diversion from its main businesses — wireless, cable, home phone, and internet.
The owner of the other half of the Toronto Maple Leafs and Raptors is BCE (TSX: BCE)(NYSE: BCE). Like Rogers, BCE’s strategy with owning these teams is cheap content for its television networks. If BCE owns half the team, it greatly reduces the fees paid to the team for the rights to broadcast the games. And like Rogers, BCE uses its sports broadcasts to promote its other services. Since viewers are more likely to watch commercials during live sports coverage, it also gains by getting higher prices for commercials.
Like with Rogers, BCE’s sports division is a small part of a much larger business. You’d buy BCE because it’s a world-class telecom with a dividend yield of more than 5.1%. The sports teams are a fun bonus.
Up next is manufacturing company Canam (TSX: CAM), which makes customized products and comes up with specialized solutions to construction problems. How exactly is it exposed to sports?
Canam is very active in the construction of sports stadiums. It made and installed the retractable roof over B.C. Place in Vancouver. It also got the contract for the retractable roof in Miami for the new Marlins ballpark. Its steel subsidiary provided the steel beams for Metlife Stadium, the site of the Super Bowl in February.
It has provided specialized products for dozens of stadiums in its lifetime, from college stadiums to the biggest in North America, and is well known for its niche in sports stadiums. Its success is closely intertwined with new stadium growth in the future.
If you were looking to buy a piece of autographed sports memorabilia but weren’t sure if the signature was authentic, chances are you’d use one of Collector’s Universe’s (NASDAQ: CLCT) autograph authenticators to ensure the piece wasn’t forged. The company also grades the condition of other collectables, like stamps and coins.
It currently pays a generous 6.5% dividend yield and trades at 22x trailing earnings, which is a little expensive. However it is the leader in its field, and as sports memorabilia prices continue to rise, it will benefit from people spending a little extra to ensure signatures are real.
Foolish bottom line
Short of buying a professional team, there’s little hope of investors finding a pure-play on professional sports. There are plenty of businesses out there that are exposed to the growth of professional sports, and that also have interesting underlying businesses. Any sports fan should at least consider some of these companies for their portfolio.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Nelson Smith has no position in any stock mentioned in this article.