During the past week, shares of Centerplate (CVP) dropped 3 1/2 points (20%) on heavy volume in response to a Sports Business Journal article that says the New York Yankees may self-operate the concessions in the new stadium they're opening for the 2009 season.

There is no question about the fact that the Yankees compose 10% of Centerplate's business and that investors were spooked by this potential contract loss -- even if that potential loss is a full two years away!

You'd think it would dawn on investors that, by then, Centerplate could easily replace the Yankees' 10% revenues with new business!

Nevertheless, due to the sell-off in the past couple of days, the company issued a press release after the closing bell yesterday, and here's what it said:

"Centerplate Inc. responded today to inquiries concerning unusual market activity of its income deposit securities (IDSs). The company believes that this activity may have been influenced by a recent article in Sports Business Journal. The article reported unnamed 'industry sources' saying that the Yankees plan to 'sever ties' with Centerplate with respect to the new stadium and to take a more active role in operating concessions at the new stadium. The article also quoted Yankees President Randy Levine as saying, 'We haven't made a decision.' Centerplate reiterated today that its current contract with the New York Yankees covers the existing Yankee Stadium, which is expected to be in operation through 2008.

"'Centerplate has strong momentum across its business,' noted CEO Janet L. Steinmayer. She added, 'We recently reported very good fourth-quarter and 2006 year-end results, with strong sales and earnings growth for the year. Of course, there is always a risk that any contract in our portfolio will not be extended beyond its scheduled expiration. However, we are focused on using our more than 40 years of experience to provide excellent service to all of our clients. At the same time, we are pursuing a broad range of opportunities to partner with clients in increasing sales and continuing to grow our business in new ways. We believe we are taking the steps necessary to best position the company for the future.'"

My take on this is that we have been presented with an excellent buying opportunity in Centerplate at current price levels, thanks to this selling because of a rumor. The fact is that Centerplate is in a business where loss of contracts is a part of normal business operations, so CVP could well lose the Yankee contract. But acquiring new contracts is just as common and Centerplate is the 800-pound gorilla in this business. The shares are up fractionally this morning in the early going, throwing off a current yield of 11%.

Some basic facts:

The long-term fundamentals of Centerplate's business are solid.
The population in the U.S. is growing -- meaning more sporting event tickets and entertainment tickets are being sold at a growing number of venues throughout the country.
The length of the seasons for major sports is longer -- meaning CVP has more events to work.
The various leagues are expanding -- meaning the potential for new stadiums offers the equal potential for new long-term concession contracts, and there's always the likelihood of price increases for what CVP sells to their sporting customers.

These positive points still make me a big fan of Centerplate's business. Use the weakness in shares of CVP to initiate a position (if you haven't established one) or add to your position if you haven't completed your 3% purchase. We've been given a great short-term entry point in an excellent long-term business.

Take advantage of the opportunity.

See you with the 25% Cash Machine Update tomorrow,

Bryan Perry

Editor The 25% Cash Machine