Archive for Business of Baseball
Via Donnie Collins: The Triple-A Scranton/Wilkes-Barre franchise has officially changed its nickname from Yankees to RailRiders (one word). The new name and uniforms were unveiled at an event tonight. Here’s the new primary logo.
The Yankees reportedly asked their minor league affiliates to drop the “Yankees” nickname around this time last year, but so far only the Triple-A squad has obliged. Fans were able to vote for the team’s new nickname, and Collins says RailRiders easily won out over Blast, Black Diamond Bears, Porcupines, Trolley Frogs, and Fireflies. Porcupines came in second, hence their inclusion in the logo. Trolley Frogs got hosed, man.
Via Richard Sandomir: The Yankees are looking for investors to buy out their YES Network ownership partners. The team is not selling its stake — Yankee Global Enterprises owns about one-third of the network — but is looking for purchasers to buy stakes currently held by Goldman Sachs, Providence Equity, and others.
“We want to keep our options open and see what the marketplace is … It’s important to find out what the price would be out in the marketplace and if there is someone comfortable with paying it,” said team president Randy Levine, who recently met with FOX executives along with Hal Steinbrenner and Goldman Sachs partner Gerald Cardinale. Investors like Goldman usually flip their stakes in companies after a few years, but they’ve stuck with YES because the network is a money-making machine. The Yankees went through a similar process back in 2007.
Oct. 3rd: MLB announced both agreements, which take effect in 2014. For us fans, the biggest piece of news is that the blackout rules for nationally broadcast FOX Saturday games will be lifted. If you live outside of the Tri-State area, you’ll now be able to click on MLB.tv to watch the Yankees on Saturdays regardless of who FOX is broadcasting locally. That’s awesome. Richard Sandomir has some more details as well.
Sept. 20th, 7:05pm: Maury Brown has the actual figures. Each club currently gets $23.72M annually in nationally television money, and that will increase to $50M with the new deals. So the revenue more than doubled just like that. Wow.
5:30pm: Via the AP, MLB is nearing new eight-year broadcasting contracts with FOX and TBS that will run through 2021. The new deals are expected to approximately double the revenue the league receives from the networks to about $800M. FOX gets to keep exclusive World Series rights while the two stations split the other postseason rounds.
At the moment, each of the 30 clubs gets something like $10-15M annually from the league’s broadcasting deals, but that figures to go up considerably with the new contracts. Not all $800M goes to the teams, but a huge chunk of it does. The Yankees already have more money than everyone else, so the extra revenue doesn’t really help them, but it will help direct competitors like the Rays, Blue Jays, and Orioles.
Via Bill Shaikin, Derek Jeter tops the list of jersey sales since the All-Star break. That’s nothing new, the Cap’n has topped the list for three years running now. New Yankee Ichiro Suzuki ranks third behind Jeter and Josh Hamilton while Robinson Cano is further down at number ten. Click the link for the full top 20. Since merchandise sales are split evenly among the 30 clubs (unless purchased at the ballpark), it’s nice to the Yankees help keep everyone else in business.
The Yankees and the Trenton Thunder announced an eight-year extension of their player development contract at a press conference this afternoon. The current agreement runs through 2014, so the new deal will keep the two clubs together through 2022.
Trenton has been home to the Yankees’ Double-A affiliate since 2002, and by all indications the marriage has worked exceedingly well. The Thunder draw well at Waterfront Park and they’re nice and close for Major League rehab assignments and whatnot. Since hooking on with the Yankees, Trenton has won four division titles and two league championships in ten years. They’re in position to add to those totals this season as well.
Along with a subpar May, comparisons to 1965 and premature eulogies for Alex Rodriguez, unsourced whispers of an impending Yankee sale seem to crop up annually. This year, it all happened during the same week as a few hours after Joel Sherman compared the 2012 Yankees to the 1965 crew and A-Rod homered twice to end a long dinger drought, The Daily News reported that the Yankees may be for sale.
The article itself announcing the alleged sale was replete with Wall Street insiders and baseball sources. No one wanted to go on the record saying much of anything. “There has been chatter all around the banking and financial industries in the city for a couple of weeks now,” a baseball source said.
Noting that the Dodgers’ sale could lead to a $3 billion valuation for the Yanks, another unnamed source agreed on the timing. “It would definitely be the right time for the family to sell,” the source said. “The value of the team couldn’t be higher, but at the same time, it’s an older team in a division with younger teams getting better at the same time a lot of the Yankees’ core veterans are starting to go into decline.”
Of course, the age of the current team would have little impact on the intentions of someone looking to make a long-term investment in the Yanks. No one today cares about who was on the Yankees in 1973 when George Steinbrenner bought the team.
Reading the Daily News article closely though, we see the thesis begin to fall apart. The unsourced quotes concern timing. Everyone agrees now would be a great time to sell the Yanks, but “now” is always a great time to sell a baseball team. As baseball is growing with no signs of slowing down, any team — and especially the Yankees — is a valuable commodity. The News’ strongest argument for the sale seemingly is Hal Steinbrenner’s reluctance to hand out large contracts and his hands-off ownership approach. I’m not so sure either of those are negatives.
The Yankees, meanwhile, went into full-scale on-the-record denial mode. “I can say to you there is absolutely, positively nothing to this,” Randy Levine said. “The Steinbrenners are not selling the team.”
“I just learned of the Daily News story,” Hal Steinbrenner said in a statement. “It is pure fiction. The Yankees are not for sale. I expect that the Yankees will be in my family for many years to come.”
Even as Bill Madden stuck by his story, Lonn Trost too denied the rumors. “We’re aghast at such a story,” he said on the radio this morning.
“My impression is not only do they all love being part of it, I think they are interested in handing it to their kids,” Yanks’ GM Brian Cashman said to Joel Sherman. “I think they want the family to be involved for generations to come. The Steinbrenners love owning the Yankees — and they are damn good at it. I have gotten no impression that they want to do anything but own the Yankees. They are the only ones who know the truth, but my impression is they are not even entertaining selling the Yankees.”
Furthermore, Major League Baseball, involved in the sale of all of its member clubs, put out its own statement: “Major League Baseball has received no indications from any representatives of the Yankees or anyone else that the Club is for sale.”
So on the one hand, we have speculation that the club could be put up for sale, and on the other, we have everyone on record denying that the club is for sale. That doesn’t even account for Richard Sandomir’s note on the Yankees trust. In my mind, the fact that the family would incur significant tax penalties is likely the biggest factor keeping the club off the market.
As fans of the team who have long grown accustomed to the Steinbrenner’s free-spending and largely hands-off ownership, what are we to make of this? Yankee fans live in fear that a rich New York family with sports ties such as the Dolans could buy the team and ruin it. No names, though, have been attached to this offer. So are the Yanks floating this story to gauge interest? The across-the-board denials suggest not. Is someone trying to make interest in the team known? Perhaps.
Right now, we know what’s on the record: The Yankees are not for sale, and no one is on the verge of buying them. But money talks, and if the right offer comes around, the Steinbrenner family will be tempted to cash out. It’s only, after all, a business, and the Yankees today aren’t for sale until the day they are.
The baseball franchise valuation world shook when Magic Johnson, Stan Kasten & Co. purchased the Dodgers for $2 billion last month, and as expected, that sale has caught the Steinbrenners’ attention. Bill Madden and Michael O’Keeffe have heard from several sources that ownership is “exploring the possibility” of selling the Yankees. “There has been chatter all around the banking and financial industries in the city for a couple of weeks now,” said one source.
Unsurprisingly, team officials has shot down the report. “I can say to you there is absolutely, positively nothing to this. The Steinbrenners are not selling the team,” said president Randy Levine. “I read the Daily News story. It is fiction. The Yankees are not for sale. I expect (the Yankees) to be in my family for many years to come,” said Hal Steinbrenner.
Of course, there’s no harm in exploring the possibility of a sale. It actually would be foolish of the Steinbrenner to not see what the team could fetch following the Dodgers’ sale. If that franchise is worth $2 billion, what are the Yankees worth, $3 billion? Well, it’s not that simple because the Yankees can’t sell the land Yankee Stadium is built on like the Dodgers were able to sell Chavez Revine. As Richard Sandomir notes, the Steinbrenner family would assume a huge tax hit with the sale because of multi-generational trusts set up by George Steinbrenner years ago, which may be a deterrent. I suspect this will not be the last we hear of this.
The sale of the Triple-A Scranton/Wilkes-Barre Yankees franchise is finally complete, reports David Singleton of The Scranton Times-Tribune. Lackawanna County approved the sale on Thursday following more than two years of political wrangling. The team was sold for $14.6M to SWB Yankees LLC, a joint venture between the Yankees and Mandalay Bay. They had passed on an option to buy to the team for $13M in 2007, when the Yankees moved their Triple-A operations out of Columbus and into Northeast Pennsylvania.
Extensive renovations at PNC Field can finally begin now that the sale is complete, with major demolition starting yesterday. The $43.3M project is forcing the team to play all of its home games on the road this season. Last month we heard that construction had to begin no later than April 1st to ensure the facility is ready for the start of next season, but the park is expected to be ready in time following the sale approval. The Times-Tribune has some new renderings like the one you see above.
The sale locks SWB Yankees LLC into a 30-year stadium lease that could run as long as 50 years, so don’t expect the team’s Triple-A affiliate to move anytime soon. Scranton/Wilkes-Barre is about as close to the Bronx as the Yankees could get their top minor league club, a two-hour drive if you run into some traffic. The season-long road trip is terrible for the players and prospects currently in Triple-A, but hopefully the sale and new facility sets things up well for the organization moving forward.
Magic Johnson and a group of investors sent shockwaves through baseball on Monday when Frank McCourt revealed the group’s $2 billion bid for the Los Angeles Dodgers. Coupled with a $150 million deal for the parking lots that surround Dodger Stadium in Chavez Ravine, it was a monstrous deal that not only dwarfed the next highest bid but set a new mark in professional sports. Of course, it left many in New York wondering for just how much the Yanks could be sold.
The Yankees brass, of course, noticed the sale. How could they not, after all, considering they control the most valuable franchise in baseball right now? “It is an incredible price. If they are worth $2 billion, one can only imagine how high the Yankees’ value is,” Randy Levine said to ESPN New York.
Hal Steinbrenner seemingly spoke in awe of the big figures as well. “It’s certainly a big price. It’s interesting,” he said. “No, I haven’t thought about how this would impact it. We’ll have to see what happens with that sale. It’s a big number.”
It’s a big number indeed, and the Steinbrenners insist they aren’t looking to sell the Yankees. They’re quite content to hold onto their inheritance and allow the team to continue to thrive. Between the YES Network and the team itself, the owners are sitting pretty. We can still play that “what if” game though. What if the Yankees were put up for sale?
As a starting point, we have the recent Forbes valuations. With little explanation, the business mag pegged the Yanks’ value at $1.85 billion, tops in the game. The Dodgers were second at $1.4 billion. A back-of-the-napkin calculation would lead one to believe the Yanks could sell then for $2.775 billion.
Yet, as Richard Sandomir writes in The Times today, not all things are equal. The Dodgers’ deal is a creature of good circumstance and geography that came in $650 million above the next highest bidder. Essentially Magic Johnson and his co-investors — who are going to pay in cash — were bidding against themselves. Sandomir summarizes:
Johnson and Walter are betting on reviving the Dodgers’ fortunes now that the Frank McCourt era is over. More important, the sale price is enormous because the buyers anticipate a huge windfall from a new cable TV deal that would go into effect after the 2013 season. [Investor Mark] Walter said: “It will be substantial.”
It will have to be. To get the most money, the Dodgers will probably be the centerpiece of a regional sports channel that will funnel enormous annual rights fees to the team and amass monthly subscriber fees from the cable, satellite and telephone companies that will carry its games.
A bevy of media companies are likely to line up to give the Dodgers the most lucrative deal, which could couple ownership of a channel with huge yearly rights payments. Time Warner Cable, for instance, is creating two networks, one in English, one in Spanish, with Johnson’s old team, the Los Angeles Lakers, at their core. The Lakers are expected to ultimately realize huge profits from the deal.
It’s worth noting as well that the Dodgers’ deal involved a significant chunk of change for the rights to revenue from the vast acres of parking lots that surround Chavez Ravine. The Yankees would enjoy no such luxury. The city controls the parking lots around Yankee Stadium, and in fact, the city controls the land underneath the stadium as well. No one wants to park in the transit-rich South Bronx, and the city would raise hell if it tried to sell the former park land. Ultimately, then, TV is king.
In contrast to the recently-acquired Cubs, who carried a purchase price of $845 million, the Dodgers’ next owners will benefit tremendously from a brand new TV deal, and that’s a luxury the Yankees also do not have right now. Their rights lie with the YES Network, in which, according to reports, the Yanks have a 30 percent share. Now, that alone could be worth around $1-$1.5 billion, but how to structure such a sale? To maximize their take, the Steinbrenners would have to sell the entire club and their YES share. Even without the fortuitous circumstances in Los Angeles, a Yankee sale involving the team and the TV network could reach $3 or even $4 billion.
At that point, questions begin to shift from “how much” to “who.” Who would spend $3 billion for a baseball franchise and a broadcast TV station that has no chance of controlling much of its Internet broadcast rights? (Those rights belong to MLB Advanced Media and will for the foreseeable future.) It may be a moot point as the Steinbrenners continue to say the club is not for sale, but one thing is certain: Baseball franchise values are on the rise.
On paper, the rich are getting richer, and so too are the smaller market teams. The Dodgers’ sale is a tide that can lift all boats. Frank McCourt, who invested just over $400 million in the Dodgers, walks away a very wealthy man. The Boss, on the other hand, spent just $10 million on the Yanks 40 years ago, and even as his children vow to keep the team, that allure of the cash must be strong indeed.
With Opening Day just a few weeks away, Forbes released its annual MLB valuations today, and once again, the Yankees are the game’s top dogs. According to the business mag, the Yanks are worth a cool $1.85 billion, up nine percent over 2011. Interestingly enough, Forbes guesses that the club itself turns a profit of only around $10 million a year with the money generated through live TV programming. In other words, the dollars are in the TV rights.
“The Rolls-Royce of the RSN model is the New York Yankees, who own 34% of the YES Network,” Mike Ozanian wrote. “The Bronx Bombers are the most valuable team in baseball, worth $1.85 billion, tying them with the National Football League’s Dallas Cowboys for the top spot among American sports teams and placing them second in the world to Manchester United, the English soccer team worth $1.9 billion. YES generated a staggering $224 million in operating income and paid the Yankees a $90 million rights fee in 2011.”
For what it’s worth, only two teams — the Mets and Rays — saw their values decline from 2011 as legal woes for the former and attendance woes for the latter were the main drivers there. Meanwhile, it’s somewhat incongruous to hear how the Yanks are eying “austerity” budgets of only $189 million for 2014 and 2015, but that’s how baseball economics work these days. The Dodgers, currently undergoing a sale and with their TV rights up for renewal, will set the market, but if the Steinbrenner family ever wanted to sell, they could command a pretty penny for the crown jewel of Major League Baseball.