Motley Fool Hidden Gems Investing - Apple, Facebook & the NFL

Episode Date: February 3, 2017

Apple posts a record quarter. Amazon brings the profits. Facebook ramps up spending while Under Armour dials back expectations. We delve into those stories and more of the latest earnings news. Plus, sports business analyst Andrew Brandt discusses the changing economics of the NFL. Learn more about your ad choices. Visit megaphone.fm/adchoices

Support for Motley Fool Money comes from Rocket Mortgage by Quicken Loans. When it comes to the big decision of choosing a mortgage lender, work with one that has your best interests in mind. Use Rocket Mortgage for a transparent, trustworthy home loan process that's completely online at quickenloans.com slash fool. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money.

It's the Motley Fool Money radio show. I'm Chris Hill, and joining me in studio this week, from Motley Fool Explorer, Simon Erickson. From Million Dollar Portfolio, Matt Argersinger. And from Motley Fool One, Ron Gross. Good to see you as always, gentlemen. Hey there, Chris. We've got the latest earnings from financials, gaming, retail, and more.

It's Super Bowl weekend. We will dig into the business of the NFL. And as always, we'll give you an inside look at the stocks on our radar. But we begin with the biggest public company of all, So, Apple's first quarter featured a number of records, including record sales in their services division, Apple Watch, Mac, and, oh yeah, Ron, the iPhone division. Oh yeah, that one, with 78 million iPhones sold, up 5%. So, I do like this report.

I think it's important to note, though, that the growth is largely a result of the fact that there was one extra week this quarter versus last quarter. Without that, it wouldn't look as stellar. Ron, the wet blanket, gross. But, how's a quarter trillion dollars in the bank hit you? $246 billion they've now accumulated. The service business, which includes the app store and music, up 18%. iPhone, as we said, up 5%.

China, a bit soft. Gross margins soft, higher expenses, higher costs in some areas. Some longer life battery charges running through there, which does hit gross margins. So, important, profitability actually was down. down. Better than expected, but down about 2.6%. But nevertheless, investors loved this report, sent the stock higher. We're very close to a 52-week high. Stock's up 34% over the last year. Yeah, I wonder if it's really due to the impressive growth in the services, which is now almost 10% of total revenue. But I think

70% of the revenue is still iPhones. It was good that I think their average selling price was up a little bit, which I think is something important, a key metric to watch. I would just like to see if they can either hit some other product hormones, get a little bit more diversified in the revenue base. Otherwise, great quarter. How about the $230 billion that they've got held overseas in cash right now? And that is providing a ton of optionality, I think, for Apple. As we start talking more and more about repatriation, tax holiday, and other things, keep in mind, Apple's only spending about $20 to $25 billion a year on all of its operating expenses. If they're even bringing

back a fraction of that into the U.S., there's going to be some good opportunities for this company going forward. But this is not a company with a history of doing a lot of acquisitions. And I'm wondering, Ron, if the likeliest scenario for that, as you said, put it that quarter trillion dollars worth of cash, the likeliest scenario is just returning it to shareholders in the form of ongoing dividends or one-time dividends. Or stock buybacks. And that is all good with me as a shareholder. And I think you are correct. That is what we'll see. We have some initiatives here. We're going to start seeing them make a push into India. obviously that's overseas. But there are growth avenues. There are some tuck-in acquisitions

they could do. But this quarter trillion is not needed in any way. And they actually just raised an additional $10 billion via debt, low interest rate debt, because why wouldn't you when it's available? So the money really just keeps pouring in. Amazon's fourth quarter profits came in higher than expected, but overall sales were a bit light and shares down just a little bit on Friday. Matty, for years, we've been hearing analysts on Wall Street pound the table with Amazon and say, where are the profits? Well, here are the profits, and they're not happy. I never understand how the market or why the market reacts the way it does to Amazon's results.

It seems like it changes quarter to quarter. I mean, you look at the operating cash flow alone, up 38% to $16.4 billion. You can't call Amazon a profit-less story anymore. That's totally wrong. And here's this number that really stood out to me. According to Slice Intelligence, which tracks digital transactions online, an interesting firm, according to them, Amazon was responsible for 38% of all holiday spending online this past holiday. The next closest competitor was Best Buy at 3.9%. Just consider that dominance for a second. So, Best Buy got the silver.

Best Buy got the distant silver in this case. But I really don't know. There's so many highlights with this business. I mean, the number of third-party sellers on Amazon that are using Fulfilled by Amazon jumped 70% last year, and there are now 100,000 sellers on Amazon that have annual sales of more than $100,000 each. That's an incredible number. Prime Video is now available in 200 countries. Prime, by the way, it's estimated that, according to one report, there are more Prime members than there are cable subscribers in the U.S. So, consider that for a moment. And then we haven't even talked about Amazon Web Services, which grew almost 50% in the quarter, delivered about a billion dollars in operating profits. This is definitely a profit

story now for Amazon. I think it just gets better and better as the quarters go on. Matty, I'm just wondering how Slice Intelligence cut that data that you just presented there. I just had to ask about that. The other thing I'm watching is the voice assistant, the Alexa for Amazon. Chris and I were talking about this earlier this week, that in one year, they've basically gone from zero-enabled skills to over 7,000 now-enabled skills within Alexa. These are businesses that want to incorporate into this fourth pillar that Amazon's building out. Perhaps I'm not using the Amazon correctly, but a problem I've run into lately is you can overpay for things by a factor of two, three, four times unless you're careful about

who's selling it to you. I feel like there's kind of like an eBay kind of thing going on here, like buyer beware. A simple thing like a bottled water to something like an electronic device, you have to be careful and know what you're supposed to pay. You need to do a little homework first. Am I wrong about this? No, no, no. There's definitely the proliferation of third-party sellers, as we talked about. It means that now, for any given product, you might have five or six ways to get that product, not just from Amazon itself. And so, yes, there's definitely some price variances across the board. This is not an earnings story, but on Friday, we saw shares of Macy's spike almost 10% on buyout rumors, Ron. And when we

think about traditional bricks-and-mortar retailers, I don't think of Macy's as being particularly challenged. So, where is this interest coming from? And if you're a Macy's shareholder, is that what you're looking for? You're hoping that you're going to get a parachute in the form of a buyout? Well, I think they have been struggling lately, clearly. And they've put some things in place, partly because Starboard Value, the activist investor, has been pushing them to monetize their real estate, which is valuable. They're closing 100 stores because in the face of companies like Amazon, they have been truly struggling. But even with that, they're still solidly profitable and cash flow positive. It's an interesting rumor that Hudson

Bay would want to go after Macy's. First of all, Hudson Bay is a fraction of the size of Macy's. perhaps they think they can maybe monetize some of that real estate to help them pay for an acquisition of this size. Part of the rumor also talks about perhaps it's just a joint venture or some type of collaboration where maybe Hudson Bay actually would like some of that real estate. So I think it remains to be seen. If you are a Macy's shareholder, you probably don't want a 10% or 15% pop in the stock as a result of an acquisition. You'd rather they pare their footprint down, monetize the real estate on their own, and move forward that way. Facebook's fourth quarter revenue rose 51%, and there are other numbers, obviously, Simon, but my God, 51%.

Unbelievable. This is a power law of investing where the big just keep getting larger and stronger. Facebook's still an advertising company at its core, Chris, and the number that jumped out to me was the average revenue per user in the U.S. and Canada quarter over quarter going from $15 to over $19, just in one quarter. Behind that even also was the increase in ad impressions up 49% year over year. So Facebook is just putting more and more ads in our news feed. It does not seem to be hindering the user experience. And they also, between Facebook and Google, captured 99% of the growth in digital ad spend last quarter. So, I mean, when I hear a stat like that, I just wonder, is it time for everyone else to just give up?

I think so, unless your name is Alphabet. It's very difficult to make money in targeted advertising. Well, I think, Simon, with the key metric there, which is the average revenue per user, because that's the ultimate test, right? I mean, they have so many users and the ability for the advertisers to make money off that massive network. That's the key number. So, if that number keeps going up, then I think we can say that however they're doing it, with their feed on mobile, it doesn't matter.

Advertisers are winning, and therefore, investors in Facebook should keep winning as well. CEO Mark Zuckerberg very clear on the conference call about the amount of money, the amount of increased money that Facebook is going to be spending in 2017. Does that worry you at all, Simon? Not at all for Mark Zuckerberg. I mean, this is a guy that's always been ahead of the game. He's one of the visionary CEOs we actually look for in our Motley Fool investments. And I have a lot of faith that Mark Zuckerberg is ahead of the curve of other tech companies. He's certainly got the talent behind him. He's got the resources behind him. I say, keep going, Facebook.

Shares of Under Armour getting whacked this week after a dismal fourth quarter report. How bad was this, Matty? It was bad. Anytime you take your growth rate and cut it in half, essentially, it's not going to be good news, especially for a stock like Under Armour, which coming into the report was trading about 40 times earnings. The story here, and we talked about it earlier in the week, is this is a retail story. Under Armour is still highly levered to the retail market, department stores, sports retailers, And that's just been a dismal place to be, low customer traffic, anemic sales. And so, Under Armour's brand is sort of in that.

And their ability to grow direct-to-consumer or international, they're growing nicely in those areas, but it's just not enough to offset their dependency on the U.S.-North American retail market. So, until they can break away from that, and Kevin Plank, I think he owned it pretty much on the call and said that we're working hard to diversify our brand, make sure that we're in the best places we need to be, and continue to grow the DTC in international sales. But it's going to take time, and I'd say the stock certainly got hit hard. If you're thinking this is a bargain, I'm not sure, because taking the growth rate down to where they did, the stock today is actually more expensive even after the shellacking.

So, be careful with this one. I'd say the risks are certainly as high as they've ever been for Under Armour. Yeah, you mentioned Kevin Plank. We saw a Kevin Plank on the conference call that I don't think we've ever seen before, and that was a humble Kevin Plank. He's not known for his humility, for sure. And I think that's one of the things we like. He's very confident.

I worry that the CFO leaving is a little bit of a scapegoat. After just one year. After just one year. And so that has me a little worried. But I certainly believe in the company, the quality. I certainly believe in Kevin playing for the long term. Stay with us. Earnings Palooza rolls on right after this break.

This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Simon Erickson, Matt Argersinger, and Ron Gross. Chipotle's sales rose for the first time in over a year, but fourth quarter profits still came in lower than expected. Glass half full, Simon? You tell me. I think so, Chris. If you're investing in Chipotle today, you definitely have to be believing that. Keep in mind, this is a company that's nowhere near its heyday that we saw a couple of years ago after the E. coli outbreak in late 2015. But we are starting to see improvements. The headliner was that comps

were down 4.8%. Of course, that was kind of a skewed comp because the previous fourth quarter was right in the middle of it is when the E. coli broke out. But then we saw in December, comps were up 14.7%. And January's preliminary number was that comps were up 24.6%. So the bar is very low right now. But Chipotle is getting the traffic back into the stores. They're trying to reinvigorate those loyal customers that will continue that repeat traffic. And they've got a a lot of initiatives right now that are focused on that. Yeah, I mean, I think to be a buyer of the stock today, even though, of course, it's been beaten down over the last couple of years, you really have to believe that those comps

get back to sort of the double-digit growth that we were seeing before, and that restaurant profitability gets back to the 20-25% range. That's been almost cut in half. And so, that's a big challenge for Chipotle. They're continuing to open stores at a pretty healthy clip, which I'm surprised at. But the metrics, the store metrics have to get better if you want to be a buyer of the stock. Yeah, I feel like if you have this stock on your watch list, this was a somewhat encouraging quarter, but I don't think this pushes it over into the buy category. I think you want to see one or two more quarters where they really deliver.

Yeah, that's right, Chris, and it's going to be based on that traffic. I mean, if you remember, such a long line was always going out at the Chipotle restaurant just to get your food, and they're really trying to address that. They brought in Chief Information Officer Kurt Garner from Starbucks a couple of years ago. He's working on the loyalty programs but also simplifying the mobile ordering experience, so you don't even have to wait in line. You can just go in and pick up your burrito and walk out of the store and you've already paid. If that pays off, you can continue to see that volume of traffic that Chipotle badly needs. Shares of Visa hit a new all-time high

after first quarter profits came in much higher than expected. Ron, I feel like we've seen this movie before. Yeah, I like this report. They're doing a nice job. The acquisition of Visa Europe, bringing the two companies back together again, was in June, and they are integrating it well, and you're seeing it show up in the numbers. You see payment volumes up 39%, total process transactions up 44%. They were up even 13% if you don't factor in Europe. So the numbers look good. They've got the new deal with Costco, which kicked American Express to the curb, and it was replaced by Visa. So a lot of good things happening at the same time. Alfred Kelly, the new CEO, joined in late October. They're going to be making a push into India.

They're going to start to make a move into China. So a lot of growth avenues ahead there. I think things look good in this quarter as well as for future quarters. What's the stock like on a valuation basis? It's right in line with MasterCard, really. Maybe a tiny bit more expensive. We're around 29 times earnings, 18.5 times cash flow, EBITDA. So I wouldn't call it cheap, but they're putting up nice growth numbers.

Illuminous fourth quarter profits and revenue both came in higher than expected. Turns out there's money to be made in genomic sequencing, Simon. There really is, Chris. There is so much cool stuff going on with this company. I don't even know where to begin. I mean, they just signed a deal with IBM Watson that they're going to be partnering together. They've got a new machine called the NovaSeq, which they think can fully sequence the human DNA for a person for $100, which is a tenth of what it costs today. But the thing that really caught my eye for this earnings report was the 50% revenue growth in China.

China's got a $9 billion precision medicine initiative. They're looking to, over 15 years, sequence 100 million people's genomes. They're doing that on Illumina's machines. It's hard to imagine, like, when you think about maybe 15 years ago, and one of the dominant, maybe the dominant story for a stretch of time was, we're going to sequence the human genome. And Illumina's results are just a wonderful illustration of what we see in a lot of other industries about technology costs just coming down over time. Because 15, 18 years ago, it was unimaginable that someone would be able to knock this out for $100.

Yeah, absolutely. And a lot of people would say, oh, this is a race to the bottom. No one's ever going to make any money in this industry. But in reality, the cheaper that you can get that price point is pushing the volume up incredibly for them. And Illumina's making the majority of their money and their margins from the consumables for all of those tests. So, as more and more people can afford to do this, that's actually very good for the company and for its shareholders. Have any of you guys done this before? I'm sort of wondering if the next time I go in for a checkup, my doctor's going to be like,

you know what we need? We need to sequence with Gino. Chris, I have not, but Ozzy Osbourne has. Well, there you go. And explains a lot about how he's made it. I really think it does. Third quarter revenue for Electronic Arts came in higher than expected, thanks to sales of FIFA 17 and Battlefield 1, which I think is the biggest launch they've ever had. It is, and it's an interesting story, too, because we're used to talking about Call of Duty

as sort of the big first-person shooter video game of the holiday season. Well, Electronic Arts did something interesting with Battlefield. They went back to World War I. It's got great reviews from critics. It was a big seller. And Call of Duty kind of had a really rough period of sales, first time in a while for them. So, I think EA stole kind of a lot of Activision's glory this past holiday season. The big story with electronic arts and really the entire video game industry is this slow but inevitable move to digital transactions, which EA, of course, is participating in.

And so, if you look at EA's gross margin now over 60% compared to where it was below 50% in recent years. And that's just a very compelling story for the whole video game space in terms of getting more profitable, not relying on the retailers and the sale of used games that have driven the industry in the past. So, I like Electronic Arts. I like Activision a little better, but this is certainly a good one as well. Electronic arts really seems dependent to some degree, and I don't know to what degree, but they really seem dependent on professional sports. When you look at FIFA and NBA 2K and NHL and all that sort of thing, is that a cost center for them? Well, yes, it can be. Because those leagues aren't just giving away those rights. Right. Very expensive, and they tend to be one-hit games, whereas a lot of the other games from Activision and elsewhere tend to be recurring revenue games where there's always something going on in the game and it's evolving.

You can't really evolve an NBA game from season to season or an NFL game from season to season without paying a lot more. My question is, how is GameStop still holding on in the age of digital? I mean, is it because of the used games? Is that their primary market at this point in time? It is, but it's shrinking, obviously. They still get a lot of profits from it. But what GameStop's been able to do sort of with online transactions as well, it's helped them a little bit. But you're right. I totally think at some point this is just a dying brand. It's certainly a dying way to buy video games.

You just don't see a lot of people going into stores like GameStop to buy consoles or video games anymore. You've got a teenage boy in your house. Is he playing any of these? Loves them. Loves the games. Loves the first-person shooter. Loves the sports. Absolutely.

Speaking of sports, if you want to drop some knowledge at your Super Bowl party this weekend, good news. Up next, we've got Andrew Brandt to talk about the business of the NFL. Go, Pat. Stay right here. You're listening to Motley Fool Money. All right, before we get to Andrew Brandt, got to say a word about Rocket Mortgage by Quicken Loans. When it comes to the big decision of choosing a mortgage lender, it's important to work with one you can trust and who has your best interests in mind. And with Rocket Mortgage, you'll get a transparent online process that gives you the confidence to make an informed decision. Don't waste time searching through stacks of paperwork. Nobody, nobody likes paperwork.

And with Rocket Mortgage, you can securely share your financial information to get a mortgage approval in minutes. You can even adjust the rate and length of your loan in real time to make sure you get the mortgage solution that's right for you. So, if you're looking to buy a home or you're looking to refinance your existing mortgage, you can lift the burden of getting a home loan with Rocket Mortgage. So, skip the bank, skip the waiting, and go completely online at quickenloans.com slash fool. Equal housing lender, licensed in all 50 states, NMLSconsumeraccess.org number 3030. Welcome back to Motley Fool Money. I'm Chris Hill. It's Super Bowl weekend. Time to talk about the business of football with Andrew Brandt. He is an NFL business analyst for ESPN,

a columnist for Sports Illustrated. He's also worked as an agent and in the front office of the Green Bay Packers. Andrew, welcome back. Yeah, always good to be with you. Talk about the business of the NFL, which reaches a peak this week. I remember being at Super Bowl week and looking around on Friday or Saturday and always thinking, wait, there's a game too? It's always my same feeling every year. I know that the NFL is not hurting for cash. Yeah. But if you just look at the narrative of the business of the NFL over the last five months or so, it's been slightly negative. And I think that's driven primarily by the television ratings. But I'm curious what you look at when you are looking to gauge the health of the NFL. Yeah, I think that's certainly a key metric that you mentioned there, the television ratings. And I think we can deal with that in a question by itself with the election, with Colin Kaepernick, et cetera.

But again, the metrics are the numbers going north, and those numbers obviously include television ratings. But I think from an owner's perspective, from the people that invest in the NFL, are there new and improved stadiums coming online? Is the investment in the product still there from sponsors, from licensing companies, from ticket sales, and maybe even not the average ticket buyer, but premium ticket buyers, premium seating, suite sales? Are these franchise values escalating in value? Is there labor peace among the players, which we're only halfway through a 10-year CBA? And I think to address the negativity quickly, I do think it's interesting because 2014, dominated early in the year by the Ray Rice video, by domestic violence, and big-time players like Adrian Peterson along with Rice and Greg Hardy in the news for all the wrong reasons, yet a very healthy year, and everything seemed to rebound nicely. 2015 dominated the off-season story there was Tom Brady and Deflategate and the minutia around whether he deflated footballs or not leading to court cases

and obfuscation and litigation for months. Yet, 2015 appeared to be a healthy year from all the metrics. 2016, a little bit down on the ratings and, as you said, some negativity with no major scandal from the year like there was with 2014 and 15. It's an interesting angle. Well, let's come back to the TV and stick with the stadiums because that certainly appears, since the playoffs began, that appears to be the dominant business story with teams moving,

the San Diego Chargers moving to Los Angeles. The Oakland Raiders were set to move to Las Vegas, And as of this taping, the funding for the new stadium appears to have fallen through. So that's up in the air, at least for the moment. But it does seem like the shiny new toy that the owners all want is a brand new stadium. And I'm just wondering, how long can this continue? Well, you know, for 20 years, my first NFL owners meeting as a vice president of the Green Bay Packers was in 1999. top of the agenda item was how do we get a team back in la so that was four or five years removed

from being in la but as we know 17 years removed from now so a year ago the rams won the three team race for relocation la second place chargers had an option for a year to move used every single day of that year and finally did take that option one year later after the rams did now two teams in la and then a lingering situation with oakland trying to move unlike san diego the raiders have been very vocal very out front flirting with san antonio and then vegas then a deal with vegas that even if the other parts are not secure is secure with 750 million coming from the state Nevada, which is a stunning deal. So yes, here's my feeling. Owners have used LA as a stalking horse for 20 years. In other words, going to their local city state officials, if we don't get what

we want, hey, implicitly or explicitly letting them know that LA is sitting out there. That's gone. There's no more stalking horses. And I can't even think of cities that would be next in line. I mean, we've talked about Toronto hosted some Bills games, but limited mixed results there. I don't think San Antonio's viable. So where do we go now? And there isn't that negotiating leverage that owners have. Relocation has reappeared this year in a big way, and it's all about the deal. It's all about what's the deal.

And Stan Kroenke is building this $2.6 billion Shangri-La in L.A. that now is going to house two teams. I'm not sure the marketplace, from a fan's point of view, will support one, let alone two teams, especially if they're not doing well. But in this world of big business, I'm not sure that even matters, because they have many more premium product buyers. Sponsors in L.A. cost a lot more than sponsors in San Diego or St. Louis. And the ancillary revenue opportunities for this building are going to be enormous. Well, and that's sort of the disconnect, I think, for the average person who's watching a game and seeing a stadium that is half full or half empty.

Or to your point about Los Angeles, I mean, yes, it's a huge market, but even when they had a team there, they weren't necessarily filling the stadium. But this is something you had written about recently for Sports Illustrated about how, and I'm sorry if anyone thinks this is callous, but the fans themselves just aren't a business priority. Yeah, it is callous, and I admit that. And I apologize for it as well. It's the harsh reality that it's bigger business. I always say this. This is not your father's NFL. Your father's NFL ticket revenue mattered.

It was one of the highest sources of revenue. now broadcast revenue, dwarfs ticket revenue, and premium ticket revenue, dwarfs, what should we call it, average fan ticket revenue, club seats, suites, you know, all the, I was responsible for the renovation of Lambeau Field. We realized we had to get revenue from that building more than 10 days a year. Restaurants, Hall of Fame, tours, bar mitzvahs, corporate meetings, All of that goes into these buildings now. And if, yeah, if it doesn't sell a lot of average fan tickets, I guess that's okay. It doesn't look great on TV.

I think the biggest example of that is the San Diego Chargers. For the next two years, before they enter the new Shangri-La being built in Englewood, California, they're going to play in a stadium that holds 27,000 seats. That tells you how much ticket revenue matters. The people that you talk to at the various executive levels in the NFL, I'm sure, and you indicated this when we talked about the television ratings for this most recent season. Yes, there were, you know, we had a presidential election that garnered a lot of attention, and we did see a bump up in the ratings after the election was over. But I'm assuming that the people you talk to are fully aware of the fact that we're only going to need one more season to figure out which way this trend is going. We don't have a presidential election in the fall of 2017, and obviously we can't anticipate what off-the-field distractions there may be.

But right now, I'm wondering if some of the people you talked to are sort of crossing their fingers in the hopes that what they saw in the fall of 2016 was a blip and the ratings go back up right at the outset of the start of the new season. Well, there's concern, but I think the real concern where they're now wiping their brow and exhaling is if, and this was the if that had them sleepless at night, every owner, every executive. If they did not rebound the ratings from the first half of the 2016 season, the election half, to the second half, and thank God for everyone involved there that it did, as you suggested, it did, down 16% first half of the year. They wanted to, and still do, chalk it up to the election, the most divisive election ever. Trump was ratings gold. He attracted viewers away from all programming, not just NFL programming. And two night games, a Sunday nighter and a Monday nighter, went against debates. So that was the party line.

But, jeez, if that didn't rebound, and it did. So it went from 16% down first half to, I believe, four or maybe even static compared to 2015 in the second half, resulting in 8% overall down. So I think they're optimistic because one thing about 2015, and again, I talked about how Deflategate might have been even good for ratings. 2015 was a record year for all networks, for Monday night, for Sunday night, and for Sunday afternoon. So they look at it as, hey, when there was no election, we almost, I think they're down 1%, we basically hit 2015 levels. But you're absolutely right. What's going to happen with no election? Of course, we have a polarizing president, but he's not taking viewers away like he did during that incredibly polarizing election process.

The NFL really emphasizes the teams as opposed to the individual players. And yet, the rules of the game have been modified over the past decade to emphasize offense and, in particular, quarterbacks. Peyton Manning, one of the all-time greats, just retired a year ago. Tom Brady turned 40 years old later this year. In terms of marquee quarterbacks, how is the league feeling right now? We've got to get a few more, and there's going to be a lot of play about promoting some of these younger players. Now, from a football point of view, you can see some real talent developing with players like Jameis Winston, Marcus Mariota, Carson Wentz, a few others.

But those, from the general fan standpoint, are not household names. They may well be, and yes, we can all think back perhaps when Brady, Manning, Aaron Rodgers weren't household names. just coming up. But they need them, because as you mentioned, Manning's gone, Brady's hitting 40, and there aren't a lot of names up there that really draw the fans. But you also bring up the issue of the first half of the season. Brady was suspended, Manning was gone, Cam Newton missed the key game. So all those things conspired with the election to bring the ratings down. But yes, I think as much as you say it's going to be team first, they realize fans come for the stars. It's a star-driven league.

They have to create more stars. And every time you hear, you know, join Monday night for Aaron Rodgers and the Packers against Matt Ryan and the Falcons, they know, you know, those are the headliners. Concussions in the NFL were actually down in 2016 relative to the year before. Or where do we stand with the concussion issue and the long-term future of the NFL? I'm mixed, you know, because one side of me says, that's great. You know, these debilitating head injuries are down. The other side of me says, well, what really counts?

Are we having enough self-reporting? And they say, yes, we're getting self-reporting. But who really knows? Because as I know well from being an agent and on the team side, players without any security to their contracts, knowing the short careers, will do anything to stay in the game. Because once they're out, they can be replaced and never play again. And concussions or silent injuries is not like a knee or a shoulder where you have to remove yourself. So this is something always a concern. Is the self-reporting enough?

Because we've seen a couple instances, Cam Newton in the opening game, a guy named Matt Moore, the quarterback for the Dolphins, in a playoff game where they were seriously hit, violent, and only removed from play for a series of a minute at most. So you wonder, those don't count as reported concussions. You just hope the self-reporting is there. I want to touch back on the stadium size issue that we discussed earlier and taking it to the next level. Which do you think is more likely 10 years from now, that we have more NFL teams than the 32 we have right now or that we have fewer? that's a great question i'm always still bullish on the nfl and i just think the appetite continues to be as strong as for any sports property in america i think it's going to continue to grow here's my concern for the nfl as millennials as all of us have increasing options are we going to allow 200 minutes of our lives for 12 minutes of action. I just think they have to

figure a way to package this in smaller amounts. I know advertising is so important to make the nut for the huge rights fees, but soccer is able to do it, in-game advertising, skin advertising. Something has to happen to make this a shorter product. I think consumers won't stand for three and a half hour products for 12 minutes of action. All right, let's wrap up with a round of buy, sell, or hold. This is something that's been talked about for a few years now. Buy, sell, or hold, the possibility of the NFL putting a team in Europe. I'm saying sell.

I do think London will have a home schedule eventually, not a team. But they've gone from two, three, now four games, I think, in the next decade, eight games, 16 teams. Every other team plays there every other year. competitively balanced, an eight-game home schedule between three stadiums in London, but no team. He was one of the most celebrated quarterbacks until he got injured and lost his job to a rookie by seller hold,

the Dallas Cowboys trading Tony Romo. I'm going to hold there. I don't know if they're going to get a lot of takers. How do you go into a season next year not being the Cowboys and make Tony Romo your starter? He's had injury history the past three years. It's going to be tough to get what they want trade-wise out of Tony Romo. My guess is he's still where he's always been in Dallas.

And finally, her halftime performance at this year's Super Bowl may include singing from the roof of Houston's NRG Stadium. Buy, sell, or hold Lady Gaga. I'm going to say buy. The more over the top, the better. Every year's got to top the year before. She may be on the roof, below the stadium, outside the stadium, in the Houston Rodeo, all of the above for Lady Gaga.

The ESPN Sports Illustrated Twitter. Andrew Brandt is everywhere, and if you're interested in the business of sports, he is one of the people you need to be reading. Andrew, always great to talk to you. Always enjoy it. Ra-ra-a-a-a-a, Roma, Roma, Gaga, ooh-la-la, what's your barrel mask? As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against,

so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio once again with Simon Erickson, Matt Argersinger, and Ron Gross. You can check out past episodes of Motley Fool Money and all of our shows by going to podcast.fool.com. You can also subscribe on iTunes, Stitcher, Spotify, Google Play. Just click the subscribe button. That's all it takes. That's all. Come on. Just click the subscribe button. You've got Motley Fool podcast on demand wherever you want, whenever you want. All right, let's get to the stocks on our radar. Our man, Steve

Broido, not behind the glass this week. He's on a well-deserved vacation. Of course. Ron Gross, you're up first. What are you looking at? Well, because Steve is not here, I'm taking the opportunity, since he can't ask me a tough question, to go out of my comfort zone. And I'm going to hit you with Magellan Midstream Partners LP, ticker MMP. It's a best-by-now recommendation from our friends over at Motley full income investor. It's a master limited partnership. What is that? It's a company that has the tax benefits of a partnership, but it is publicly traded. Might not be right for all

retirement accounts, so be aware of that. But they're an operator of long haul oil pipelines and storage terminals in the Central Eastern US. They basically act as a toll. They get a little paid by the volume of oil and gas that goes through their pipelines and through their storage terminals, cash flows, make it really secure dividend. It's a 4.3% yield right now. Simon Erickson, what are you looking at? Chris, I'm going with iRobot, ticker IRBT, a longtime rule-breaker's wreck that's also hitting new all-time highs. But I think that there's still room to grow with this one. My colleague David Kretzmann and I were talking with some gentlemen yesterday about how robotics

is developing as a field. It's now becoming a foundational technology that's getting a lot smarter and enabling new applications. So you probably already know of iRobot as the maker of the lovable Roomba that goes around and vacuums your house. It was a good movie, too, wasn't it? With Will Smith? That's right. That one, too, Ron.

I think they're getting a lot smarter, and they're going to actually be doing a lot more tasks, especially as the costs start coming down and more people can afford these. All right, Matt Argersinger, what are you looking at? Nothing nearly as exciting as robots or pipelines, but I'm going with Starbucks. If you like a nice 10% return from here and forever, I think you can do a lot worse than Starbucks. It's just the stock sold off a little bit. Comps came in at 3%, kind of below where they've been trending over the past few years. But just the growth in China.

I mean, they're opening a new store every 15 hours. It's amazing. They're going to have over 5,000 stores in the next few years there in China. And it's a very exciting story with a lot of growth left in it. So, just buy Starbucks. Just do it. Just do it. And that's a different cup.

One of our listeners hit me up on Twitter this week. He said, you know, you talk about Starbucks, but in your profile picture on Twitter, you actually have a Dunkin' Donuts cup. Well, that's understandable. And I said, you know, you don't invest with your taste buds. There you go. There you go. Nice. All right.

Ron Gross, Simon Erickson, Matt Argersinger, guys, thanks for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. Our engineer this week is Rick Engdahl. Special help from Dan Boyd. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening.

We'll see you next week.