INDIVIDUAL INVESTOR Magazine Article - FEB. ISSUE!!!!
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Off the radar
Hoop Dreams
Baseball may be America's pastime, but basketball is the most popular American sport. From college hoops to the WNBA, the game's popularity has reached an all-time high. Investors who share that enthusiasm - or just want to reap its profits-can own part of the U.S.Basketball League(OTC-BB:USBL).
Although the USBL is not sanctioned by the National Basketball Association, it is the minor leagues of pro basketball. The play is less pulse-pounding, but tickets are cheaper and the action runs during summer, the NBA's off-season. More than 100 players have graduated to the NBA, including Mario Elie(Houston Rockets), Anthony Mason (Charlotte Hornets), and Charlie Ward (New York Knicks). The USBL's 12 teams are based on the East Coast, but a planned expansion will include West Coast franchises. President Daniel Meisenheimer III says the expansion objective is to have 30 teams within the next three years.
Like other sports leagues, the USBL profits from franchise fees, royalties, television deals, and merchandising. Franchise fees start at $300,000, up from $100,000 several years ago, and they will rise as new teams come on board and attendance grows. With royalties, merchandising licenses, and television deals thrown in, profits grew from $0.01 a share in 1995 to $0.07 in 1996.
The only competition is the Continental Basketball Association, whose franchises dominate the Midwest and run on a fall and winter schedule.
One risk is the tiny stock's float. Management holds 85% fo shares, leaving only 500,000 on the open market, but the company is planning a secondary offering. For now, like many of the league's players, the stock remains largely undiscovered. It trades at $2.50, 16 times expected earnings fo 1998. - Giles Roblyer
(c) Individual Investor, February 1998 |
