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Sunday, November 25, 2012

Finke: FOX Sports may pay $7 billion over 25 years for Dodgers

The previous agreement expires at the end of next season, and saw Fox Sports paying only about $40 million per season for the Dodgers TV rights. There was speculation the final price would just go north tof $150 million per season. This new deal soars to $280 million per season (the average for the life of the contract). The huge outlay by News Corp demonstrates the increasing value of sports to its bottom line, while the huge payday for Guggenheim offsets the record-setting $2.15 billion price paid for the Dodgers.

Gold Star - just Gold Star Posted: November 25, 2012 at 01:36 AM | 116 comment(s) Login to Bookmark
  Tags: business, dodger stadium, dodgers, fox, los angeles, media, television, television rights

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   101. Joe Kehoskie Posted: November 28, 2012 at 12:07 PM (#4311445)
Steinbrenner was no genius. He wasn't some guy who saw what the future was going to be and planned accordingly. He was rich, Yankees were cheap, and he bought them. Ta-da.

You've got to be kidding.

George Steinbrenner bought majority control of the Yankees for ~$5 million. It was a latter-day version of buying Manhattan for wampum.
   102. Cris E Posted: November 28, 2012 at 12:26 PM (#4311465)
It was a no-brainer, but it's still possible to screw it up. Look at Autry's Angels to see a rich guy in a huge market for a long time where it didn't result in a billion dollar valuation and a shoebox full of rings.
   103. Tripon Posted: November 28, 2012 at 12:34 PM (#4311477)
Autry intentionally limited his market to Southern California. They didn't get big until Arte Moreno and the Angels decided to market to the entire Southern California market including Riverside, San Bernadino, and L.A. country. Basically expanded his market by ten fold.
   104. McCoy Posted: November 28, 2012 at 12:38 PM (#4311487)
He made a great investment and deserves credit for that.

I did give him credit for that but having 12 million lying around doesn't make one a genius.

But he was driven to put a great team on the field, more so than just about every other owner.

And I wonder what that drive would have resulted in if he had gotten the Indians.
   105. McCoy Posted: November 28, 2012 at 12:42 PM (#4311490)
Lil Georgie Steinbrenner didn't see the 90's and 00's coming when he bought the Yankees. His business plan wasn't buy the Yankees and then turn that 12 million dollar investment into a multibillion dollar empire. Nobody in baseball in the early 1970's saw that coming nor did Steinbrenner for the first 15 years or so of ownership saw that coming. Like I said before, the biggest difference between him and other individual owners is that he lived long enough to get in at the ground floor and stay for the boom. The Tribune company was basically in the same boat as George except Dallas Green couldn't bring them the titles.
   106. Tripon Posted: November 28, 2012 at 12:42 PM (#4311491)

I did give him credit for that but having 12 million lying around doesn't make one a genius.

If there is a genius part, its the part where he drives all of his co-owners out of the business so he can take the lion share of the revenue for himself.

But that makes him a Sociopath, not a genius.
   107. McCoy Posted: November 28, 2012 at 12:43 PM (#4311496)
Meant to say, "and Andy MacPhail" which would sort of be similar to Steinbrenner's 1970's setup and then rebirth in the 90's under Cashman.
   108. DL from MN Posted: November 28, 2012 at 12:58 PM (#4311513)
Autry intentionally limited his market

That doesn't jibe with calling them the "California" Angels. Disney were the ones marketing "Anaheim".
   109. Joe Kehoskie Posted: November 28, 2012 at 01:07 PM (#4311526)
I did give him credit for that but having 12 million lying around doesn't make one a genius.

He didn't have $12 million lying around, or if he did, he didn't spend it on the Yankees all by himself. Steinbrenner assembled a group of investors and managed to secure majority control of the Yankees for substantially less than the $10M purchase price. He also immediately flipped two parking garages back to CBS for ~$2M, which lowered the group's exposure to around $8M and Steinbrenner's to substantially less.* It was a brilliant business deal, by any definition.

(* There have been claims that Steinbrenner got majority control of the Yankees without putting up a majority of the money, but Google isn't helping much to confirm this.)
   110. You Know Nothing JT Snow (YR) Posted: November 28, 2012 at 01:16 PM (#4311539)
don't shoot the messenger.

It's easier than defending welfare for plutocrats.

YR, i'm not convinced that the system needs to be overhauled -- bottom feeders like loria show that there is a downside to any arrangement.

Well let's discuss. Loria only demonstrates the obnoxious degree to which the system devised by Selig can be exploited for person gain - if he were only a bit more subtle in his shamelessness this issue wouldn't be so stark.

what's the consensus about how other owners are using the revenue sharing spoils? are they all just pocketing the money?

Well I see a couple of general niggles with your questions: 1, I can't address any "consensus", nobody in the media is willing to risk the ire of a punitive Budshovik regime by raising the question and even someone as heavily vested in the system as Young Master Hank came under public rebuke for simply mentioning the obvious. 2, are they all pocketing the money? Well that's hard to determine, as the redistributionist scheme operates in complete secrecy on both sides of the transfer.

There is no doubt that many, if not most, of the most egregious welfare teams are using these unearned payments to fund personal profit and remuneration. Consider this NYT article on the Minnesota Twins for example: "In the last five years, the Twins have received an average of $20 million a year in revenue sharing, but their payroll has not increased proportionately. The aggregate increase in those five years has been $16 million." Articles like these, pointing out the obvious susceptibility of the system to overt graft are, in my opinion, a very large part of the reason why the Selig regime no longer releases any information on the program after having done so (to a very small degree) for several years after its inception.

Beyond uncertainty, "are they all just pocketing the money" bypasses the greater concern regarding the free dispensing of unearned monies to ownerships. Imagine you're David Glass, former WalMart CEO and hero of capitalism. Your team toils away in a smaller media market and while hugely profitable, cannot yet directly generate revenues to the degree that a team in, say, Los Angeles can. Based on your review of the ledger you determine that your franchise can afford to commit $40 million to payroll and still turn a profit, but additional expenditures carry significant risk.

Suddenly like a desiccated angel with a bad toupee, Santa Selig swoops down with a Sack of Holding containing $40 million, all for your team! He warns however, that there is one string attached - the money MUST be spend on the team! It's can't be deposited in your numerous offshore accounts or used to purchase more third world sweatshops! Santa Selig then grabs a cookie, spits in your glass of milk, and rides away in his sleigh pulled by 8 tiny weasels.

So Mr. Glass, what do you do? Raise payroll to $80 million? Or spend $45 million on payroll and pocket the $35 million of your own money you'd have spent on the team in the absence of your windfall? I'm fairly confident I know how the story has ended for many, many owners.

the game seems healthy

The game is healthy. It was healthy before, too, but the ownerships who backed Selig when he pushed for his redistributionst schemes all cried to the heavens they were losing money hand-over-first, and no, you can't see the books, then or now, you can only take them at their word.

Baseball is great. All it needs to stay healthy is exposure.

and an assortment of teams compete most years, don't they

That's really not new though, is it? We've had 15 years of redistribution under the Selig scheme. Tell me, were you a fan of Kansas City or Pittsburgh, would have have preferred the 15 years prior to revenue sharing, or the 15 years since, during which your ownerships had received several hundred million dollars confiscated from other teams? More perversely, imagine you were the ownership. Which would you prefer - success on the field, or well-paid failure?

Further, if more teams appear to be competing for postseason play, isn't that just a very obvious and predictable consequence of Selig's additional meddling in the playoff format, allowing nearly a dozen teams the chance to compete for World Series riches each year?

it's been my impression for quite some time that bud prefers leveraged ownership groups because they can't fight a war on two fronts. that is, they have to get the teams to turn a profit before they can start throwing their weight around when it comes to running MLB.

Bud is a fairly obvious crony capitalist and likes his fellow owners to share this mutual back-scratching agreement. Twins owner Carl Pohlad, for example, gave Selig a secret under-the-table personal loan while Selig was actually acting as Commissioner of Baseball, and Selig lavished Pohlad with enormous annual windfalls in revenue sharing. A huge part of my distaste for the revenue stealing scheme is Selig's obviously untrustworthy and dishonest nature, and his increasing level of secrecy regarding how the program is administered should be a huge red flag to anyone not emotionally vested in his awesomeness.

as joe pointed out, the dodgers are going nuts with (mostly) other people's money. so, they have to find a way to win pennants and get fans in the seats. that's where they are concentrating their energy.

But that's the way it should be - owners should be incentivised to win ballgames, increase attendance, and compete for postseason slots because these are the things that are known to generate revenue. But by providing free money each and every year without regard for anything other than zip code and how loudly an owner can cry poor, you've neatly decoupled "trying to win" from "making more money". The results are obvious and manifest - as pointed out in numerous places, the Marlins, post-fire sale, will most likely be even MORE profitable even if their attendance plunges, because in the absence of paying the traded players, their revenue sharing windfall well-outstrips any hit from ticket sales. That's a perverse inventive, and stands in stark contrast to how the Dodgers have to operate, as no windfalls are due to them, and in fact they are forced to subsidize the Marlins' business model to their own detriment.

There are so many aspects of the Selig economic model that are flawed, and so much subterfuge regarding its conception and implementation, that it's no wonder nobody wants to talk about it in any depth. On this very thread people who know more about baseball than entire sections at some major league parks learned for the first time that the "territorial rights" used to determine how much money Selig confiscates or awards aren't based on geography at all - the Yankees' New York is much bigger than the Mets' New York, so much so that the Mets' New York is smaller than Boston. How many people think the redistribution is based on even-handed geography and not the intentional punishing of popular and successful teams? Lord knows it was never presented to the public as such.

not a lot left to be bothering bud about his little schemes.

We don't know the extent to which Bud's schemes affect the team, due to the absolute secrecy surrounding the program. Consider this - the Boston/LA trade sending a cadre of high-priced players to the Dodgers included only a token bit of cash traveling from Boston to LA. However, let's say that Bud, a cronyist with little shame, thinks this resetting is in the best long-term interests of the Red Sox and their owner John Henry, hand-picked by Bud himself to take control of the team, but the Dodgers have reservations about their financial commitment. Were Selig to say to them, "Let's say I cut a few million off your revenue sharing for the next 3 years, just to sweeten the pot?" would there be any way of knowing?

I'll be frank - I don't like the revenue sharing program simply based on concept, for several reasons, but additionally I do not, under any circumstance, trust Bud Selig to operate in anything resembling impartial honesty and fair dealing. He's done nothing to prove me misguided.
   111. Cris E Posted: November 28, 2012 at 01:42 PM (#4311573)
Autry intentionally limited his market to Southern California. They didn't get big until Arte Moreno and the Angels decided to market to the entire Southern California market including Riverside, San Bernadino, and L.A. country. Basically expanded his market by ten fold.

That's my point: Autry had the money to think big and be Yankees West and chose not to. Both the Cowboy and Big Stein had a pile of cash and bought baseball teams in good markets, but George stomped on the gas and Gene never really put together the full package. There were a couple good stretches in there, but no dominance (or even repeat division titles.)
   112. Stevey Posted: November 28, 2012 at 02:41 PM (#4311671)
I'm supposed to believe they could waltz into a much more expensive market with a degree of competition for entertainment dollars unlike anything they've ever competed with

Some could. Every day, plenty of people come into NYC to take advantage of the market with the most disposable income available to spend on entertainment. Sure, its a bigger risk than anyone trying to get involved in a Broadway performance, but the reward is a helluva lot bigger too.

What annoys me most about YR is not that he thinks the Yankees are so put upon (as if the Yankees might be willing to give up the extra $279 million a year in revenue and $1.5 billion in franchise value, which is certainly understated as the Dodgers showed, so they can make up that $4.6 million difference in operating income they are behind the A's). It's that you flyover yokels could never have any idea what it takes to make it here.
   113. Nasty Nate Posted: November 28, 2012 at 03:00 PM (#4311689)
Some could. Every day, plenty of people come into NYC to take advantage of the market with the most disposable income available to spend on entertainment. Sure, its a bigger risk than anyone trying to get involved in a Broadway performance, but the reward is a helluva lot bigger too.

Another way to think about it is this: If a new franchise had the choice of being the 3rd team in NY or the 2nd team in the Tampa area, which would they choose? If you answer Tampa, I will gladly sell you the Sunshine Skyway Bridge for a low price.
   114. Tripon Posted: November 28, 2012 at 03:03 PM (#4311691)
It doesn't even have to be Tampa. If you told a potential owner that they had the entire Dotoka's as their region and nobody could ever enter your territoriality, even teams from other sports, or be the 10th or 11th pro sports team in the NY/LA region, they'd pick the big city in a heartbeat.
   115. Nasty Nate Posted: November 28, 2012 at 03:09 PM (#4311698)
And it's also nonsensical to use the infeasibility of starting a pro franchise in NYC now as somehow evidence to refute the notion that the Yankees (and Mets) have benefited greatly from the protection of their territory for the past 60 years.
   116. Biscuit_pants Posted: November 28, 2012 at 04:10 PM (#4311767)
It's that you flyover yokels could never have any idea what it takes to make it here.
I love working with New Yorkers who think the answer to every question is "I know the answer, I'm from NY". It is especially pleasing when you get two of them in the same room that have opposite views and yet insist that their New Yorkness makes them right.
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