Sunday, January 04, 2009 10:05:39 PM
Sports Cards in Last Few CCs
I’ve started to go through the last few conference calls to collect statements about different aspects of the company and put them in one place. It’s hard to keep the details straight when there are so many card areas – lotteries, the promotional business, sports, toys and games, gambling, Native American gambling, quiz cards – plus a lot of other things such as management, strategy, distributors, the mobile phone product. This makes it easier to watch areas develop (or not develop).
I don’t know if I will do any more, but here is the info about the sports cards.
SUMMARY
In the Q1 CC
-- I thought Roger Holdom was implying that they had a deal in place with the European Soccer League, a deal they were going to announce before the end of Q2.
-- They described the sports card business as being their traditional model of EGMI providing the cards to the customers.
-- In addition to soccer, they mentioned “the NBA, the NHL, Formula One and NASCAR.”
-- They also imply they will be hiring new management to head the various divisions.
In the Q2 CC
-- RH says they will launch the first sports cards by year-end. Then in the Q&A, Lee Cole says the cards are for next year.
-- They make it clear that they do not yet have a contract (“we continue to work toward sustaining a major contract”).
-- It also sounds like development of the cards is not yet completed and there are a number of different formats (“The sports collectible game card, the sports game cards, or the sports memorabilia game card are all under development”).
-- They’re still talking about the European Soccer League and other sports and add American football, baseball, and golf.
-- They describe the sports card as an example of a Quiz Card.
In the Q3 CC
-- RH says they are making “good progress.”
-- He indicates that they are very concerned about getting out a good product at the right price with the right relationships. He may be implying that it has been harder than they expected.
-- He seems to be implying that they have some distributors lined up.
-- He changed the market size from $300 million to $100 billion.
TRANSCRIPTS
Q1 2008 CC
RH opening remarks:
The sports-card line is a strong market, and we believe this addressable market is in excess of $300 million. The initial product is a game card that incorporates team and individual-player details with an electronic game in an affordable, collectible format, which will retail at around $5 per unit. Again, our margins will be consistent with our current business.
The target markets are sports with large, addressable fan bases, where EGC can sell its collectible, low-cost, handheld, electronic games to groups that are involved in soccer, the NBA, the NHL, Formula One and NASCAR. To succeed in that, we need to build relationships. And our first opportunity is in the European soccer market, and Europe's top 20 soccer teams, including clubs like Manchester United. Manchester United already has over 300 million fans globally, of which 120 million are considered active. We have plans to announce specific details of this product and relationships before the end of this current quarter.
Q&A
Q. Is Q4, typically, going to be the highest quarter in terms of operating expenses, and then the first half of the year is going to be lower? Is that the right way to think about it?
LC: I mean it was a little bit higher last year, but I think, with the new management we've got coming in, and with these new markets, the model, probably, is going to change a little bit -- not significantly, but with the new CEO and with the new heads that we're putting -- that we're getting in for the sports markets and the toy-and-game market -- we're going to have a bit more operating expense.
Q&A
Q: Great. That's terrific. And, then, you mentioned something about the bespoke-type deals you had signed. And -- so that being close to 100% margins, since its basically just a licensing-type deal, do you anticipate these -- anything to do with, maybe, a sports team or anything like that -- to be a similar-type structure? Or is it more of, like, your traditional business of actually providing the cards?
LC: Yes. Now, the sports is our traditional business of providing the cards.
Q2 2008 CC:
RH in opening remarks
During the second half of 2008, EGC expects to see development of additional partnership, distribution, and licensing agreements as well as in the launch of educational toys – in the area there – and by the year-end of sports game cards including the highly-lucrative sports memorabilia sector.
RH later in opening remarks
The sports collectible game card, the sports game cards, or the sports memorabilia game card are all under development. The potential addressable market is over $300 million. Now EGC is already working hard with a number of large sporting franchises to complete an entry into this opportunity. We want to work with teams, say in the European soccer league. Now Europe’s top 20 soccer teams, including clubs like Manchester United, have well over 300 million fans globally of which 120 million are currently active. Plus the other major sports franchises globally, covering all the major sports, from baseball, basketball, soccer, American football, and moving into other areas where we know there is keen interest including motor sports and working on products such as golf.
We believe that it is an incredibly positive outlook and we continue to work toward sustaining a major contract in this area. Now as everyone, when I use the word “contract” I know you’d like me to tell you more about the products and more about the companies involved. But I must say these franchises are incredibly keen on confidentially. Not even when we sign a product contract but also until the actual product is ready for launch. They’re also very keen that they should get the maximum publicity for this particular product especially the distributors and retailers of it, so they’re very keen at the moment. All I can say is that we see a major opportunity that is being reflected in the marketplace and we are working with major teams and major distributors to ensure that we maximize the opportunity with the Quiz Cards in this particular format. So we’re very excited about the educational games.
Q&A
Q. Sure. In terms of those new initiatives can you give us a sense for what your guidance assumes maybe for each of those new growth areas, when it’s going to hit. You know, is it all your existing business for the remainder of this year and then maybe sports and education comes in in the first half of ’09? Maybe just kind of broadly speaking what...
LC. Yes. It’s our existing initiatives for this year and then next year we expect much more influence on the gaming side obviously with again with Lord Steinberg running the company. And that’s when we see the educational and the sports initiatives which we’ve probably got down for 15% of next year’s revenue.
Q&A
LC. Yeah, I mean, again this is subject to change but for the moment, the 14 cents for next year is roughly 50% promotional, 15% lotteries, 15% gaming, and 15% education and sports, and then 5% other.
Q3 2008 CC
RH early in opening remarks
“EGC is in the process of developing additional partnerships for distribution and licensing agreements and further progressing our global sports division as well as the educational toy card, all of which are expected to support further growth and revenue growth.”
RH later in opening remarks
We're also making good progress with our sports products. We continue to build distribution and find the right partners to market these to the various global sports bodies that are so prevalent around the world. Our sports division is targeting a $100 billion market and establishing a good product at the right price with our global partners. Getting sporting relationships correct and ensuring that we deliver the right product is a major part of our activity towards 2008 and into 2009, ensuring that those franchises and also the regulatory bodies that control these sports see that our game cards continue to meet their standards for both customer value but also generating the right licensing revenue. Again we hope to announce more news about how we intend to structure, build and develop this division within 2008 and 2009.
LC Q&A
Yes, sure. For 2009, you know we're expecting the revenue to come from probably about 10% lotteries, these are all approximate, about 15% gaming, somewhere in the region of 15% sports, and approximately on the promotions side that should be about 40% to 50% next year.
I’ve started to go through the last few conference calls to collect statements about different aspects of the company and put them in one place. It’s hard to keep the details straight when there are so many card areas – lotteries, the promotional business, sports, toys and games, gambling, Native American gambling, quiz cards – plus a lot of other things such as management, strategy, distributors, the mobile phone product. This makes it easier to watch areas develop (or not develop).
I don’t know if I will do any more, but here is the info about the sports cards.
SUMMARY
In the Q1 CC
-- I thought Roger Holdom was implying that they had a deal in place with the European Soccer League, a deal they were going to announce before the end of Q2.
-- They described the sports card business as being their traditional model of EGMI providing the cards to the customers.
-- In addition to soccer, they mentioned “the NBA, the NHL, Formula One and NASCAR.”
-- They also imply they will be hiring new management to head the various divisions.
In the Q2 CC
-- RH says they will launch the first sports cards by year-end. Then in the Q&A, Lee Cole says the cards are for next year.
-- They make it clear that they do not yet have a contract (“we continue to work toward sustaining a major contract”).
-- It also sounds like development of the cards is not yet completed and there are a number of different formats (“The sports collectible game card, the sports game cards, or the sports memorabilia game card are all under development”).
-- They’re still talking about the European Soccer League and other sports and add American football, baseball, and golf.
-- They describe the sports card as an example of a Quiz Card.
In the Q3 CC
-- RH says they are making “good progress.”
-- He indicates that they are very concerned about getting out a good product at the right price with the right relationships. He may be implying that it has been harder than they expected.
-- He seems to be implying that they have some distributors lined up.
-- He changed the market size from $300 million to $100 billion.
TRANSCRIPTS
Q1 2008 CC
RH opening remarks:
The sports-card line is a strong market, and we believe this addressable market is in excess of $300 million. The initial product is a game card that incorporates team and individual-player details with an electronic game in an affordable, collectible format, which will retail at around $5 per unit. Again, our margins will be consistent with our current business.
The target markets are sports with large, addressable fan bases, where EGC can sell its collectible, low-cost, handheld, electronic games to groups that are involved in soccer, the NBA, the NHL, Formula One and NASCAR. To succeed in that, we need to build relationships. And our first opportunity is in the European soccer market, and Europe's top 20 soccer teams, including clubs like Manchester United. Manchester United already has over 300 million fans globally, of which 120 million are considered active. We have plans to announce specific details of this product and relationships before the end of this current quarter.
Q&A
Q. Is Q4, typically, going to be the highest quarter in terms of operating expenses, and then the first half of the year is going to be lower? Is that the right way to think about it?
LC: I mean it was a little bit higher last year, but I think, with the new management we've got coming in, and with these new markets, the model, probably, is going to change a little bit -- not significantly, but with the new CEO and with the new heads that we're putting -- that we're getting in for the sports markets and the toy-and-game market -- we're going to have a bit more operating expense.
Q&A
Q: Great. That's terrific. And, then, you mentioned something about the bespoke-type deals you had signed. And -- so that being close to 100% margins, since its basically just a licensing-type deal, do you anticipate these -- anything to do with, maybe, a sports team or anything like that -- to be a similar-type structure? Or is it more of, like, your traditional business of actually providing the cards?
LC: Yes. Now, the sports is our traditional business of providing the cards.
Q2 2008 CC:
RH in opening remarks
During the second half of 2008, EGC expects to see development of additional partnership, distribution, and licensing agreements as well as in the launch of educational toys – in the area there – and by the year-end of sports game cards including the highly-lucrative sports memorabilia sector.
RH later in opening remarks
The sports collectible game card, the sports game cards, or the sports memorabilia game card are all under development. The potential addressable market is over $300 million. Now EGC is already working hard with a number of large sporting franchises to complete an entry into this opportunity. We want to work with teams, say in the European soccer league. Now Europe’s top 20 soccer teams, including clubs like Manchester United, have well over 300 million fans globally of which 120 million are currently active. Plus the other major sports franchises globally, covering all the major sports, from baseball, basketball, soccer, American football, and moving into other areas where we know there is keen interest including motor sports and working on products such as golf.
We believe that it is an incredibly positive outlook and we continue to work toward sustaining a major contract in this area. Now as everyone, when I use the word “contract” I know you’d like me to tell you more about the products and more about the companies involved. But I must say these franchises are incredibly keen on confidentially. Not even when we sign a product contract but also until the actual product is ready for launch. They’re also very keen that they should get the maximum publicity for this particular product especially the distributors and retailers of it, so they’re very keen at the moment. All I can say is that we see a major opportunity that is being reflected in the marketplace and we are working with major teams and major distributors to ensure that we maximize the opportunity with the Quiz Cards in this particular format. So we’re very excited about the educational games.
Q&A
Q. Sure. In terms of those new initiatives can you give us a sense for what your guidance assumes maybe for each of those new growth areas, when it’s going to hit. You know, is it all your existing business for the remainder of this year and then maybe sports and education comes in in the first half of ’09? Maybe just kind of broadly speaking what...
LC. Yes. It’s our existing initiatives for this year and then next year we expect much more influence on the gaming side obviously with again with Lord Steinberg running the company. And that’s when we see the educational and the sports initiatives which we’ve probably got down for 15% of next year’s revenue.
Q&A
LC. Yeah, I mean, again this is subject to change but for the moment, the 14 cents for next year is roughly 50% promotional, 15% lotteries, 15% gaming, and 15% education and sports, and then 5% other.
Q3 2008 CC
RH early in opening remarks
“EGC is in the process of developing additional partnerships for distribution and licensing agreements and further progressing our global sports division as well as the educational toy card, all of which are expected to support further growth and revenue growth.”
RH later in opening remarks
We're also making good progress with our sports products. We continue to build distribution and find the right partners to market these to the various global sports bodies that are so prevalent around the world. Our sports division is targeting a $100 billion market and establishing a good product at the right price with our global partners. Getting sporting relationships correct and ensuring that we deliver the right product is a major part of our activity towards 2008 and into 2009, ensuring that those franchises and also the regulatory bodies that control these sports see that our game cards continue to meet their standards for both customer value but also generating the right licensing revenue. Again we hope to announce more news about how we intend to structure, build and develop this division within 2008 and 2009.
LC Q&A
Yes, sure. For 2009, you know we're expecting the revenue to come from probably about 10% lotteries, these are all approximate, about 15% gaming, somewhere in the region of 15% sports, and approximately on the promotions side that should be about 40% to 50% next year.
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