Archive for Business of Baseball

Via Darren Rovell: Robinson Cano has signed a multi-year deal with Pepsi to be the face of their national MLB marketing campaign. Pepsi been the league’s official soft drink sponsor for nearly two decades now. Cano will be a featured in an advertisement at some point during tonight’s All-Star Game.

“He represents the kind of athlete who is in the moment, has a great personality and connects with consumers,” said Heidi Sandreuter, Pepsi’s senior director of sports marketing. The deal is Cano’s first endorsement contract since hooking on with CAA Sports and Jay-Z’s Roc Nation back in April. In a statement released at that time, Robbie basically said he was looking for better off-the-field opportunities. Landing multiple years with Pepsi is a great first step, I’d say.

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Forbes released its annual MLB valuations yesterday, and for the umpteenth consecutive year (actually 16th), the Yankees rank as the sport’s most valuable franchise. Their $2.3 billion valuation is a) higher than any other club in U.S. sports, b) $700M higher than the second most valuable club (Dodgers), and c) more than double the fourth most valuable club (Cubs). It’s also up considerably from 2012 ($1.85B), especially with regards to 2011 ($1.6B) and 2010 ($1.5B). You can thank the YES Network and the new Yankee Stadium for that.

“The Yankees sold some of their interest in the YES Network as part of Fox’s purchase of 49% of the regional sport network in late 2012 and as part of the deal the team’s rights fee from YES will increase from $85 million this season to $350 million in 2042,” wrote the publication, meaning the team’s value is going nowhere but up. Forbes estimates the Yankees’ revenue at $471M and their operating income at just $1.4M, but Yankee Global Enterprises is far more profitable due to its other holdings. The team technically operated at a loss for about a decade before the new Stadium opened.

The Athletics, up 46% from 2012, saw their value increase more than any other club in the last year. At $450M, the Rays are the least valuable franchise in the sport while the Cubs ($32.1M) and Angels ($-12.9M) had the largest and smallest operating incomes, respectively. Revenue sharing throws a big wrench into those calculations, however. Baseball will be getting a big financial boost in 2014 when its new agreements with FOX and TBS kick in, doubling the money each team receives from national television broadcast.

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Via Steven Marcus: The Yankees will opt-out of MLB’s secondary ticket market agreement with StubHub and instead sign a new deal with TicketMaster. “Less fees, more fan-friendly,” said a source to Marcus about the arrangement, which is only partially true. TicketMaster will be more fan-friendly to season ticket owners because they’ll be able to get face value for their tickets through TicketExchange.

The Yankees haven’t announced anything yet, but a StubHub spokesperson confirmed they have opted out of the deal along with the Angels and Cubs. MLB’s new five-year agreement with StubHub was announced today. Team executives have openly complained about StubHub recently, claiming it artificially deflated the value of tickets and is unfair to season ticket holders. Team president Randy Levine even blamed the empty Stadium in the postseason on StubHub, which was pretty silly. I haven’t seen any firm details on the Ticketmaster deal yet so I don’t know how that will impact the secondary market, but info will trickle out eventually.

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Early last week, an agreement was reached allowing News Corp. to purchase 49% — potentially as much as 80% down the road — of the YES Network from investors like Goldman Sachs and Providence Equity. The deal is expected to be finalized by the end of the calendar year. Here’s some more on the transaction, courtesy of Richard Sandomir

  • The Yankees will retain control of all Yankees-related content on the network. The announcers will continue to be biased — “We tell our people if you want to be bipartisan and fair, don’t work for YES,” said team president Randy Levine to Sandomir — and long-running features like Yankeeography and Yankees Classics aren’t going anywhere.
  • FOX, which is owned by News Corp., will bring some programming to the network however. It doesn’t sound like a SportsCenter-esque, nightly sports news show is in the cards though.
  • The Yankees will receive $420M from News Corp. to keep the team on YES through 2042. They’re getting half of that now and the other half in three years. Just think, they’re trimming payroll in less than 16 months.
  • Just as we heard the other day, Sandomir says the Steinbrenners are unlikely to sell the team in the wake of the agreement. The team continues to make a fortune and, perhaps more importantly, the family would get slapped with a massive tax bill should they sell.
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Nov
21

The Latest on YES & News Corp.

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The Yankees officially announced an agreement that allows News Corp. to acquire a 49% stake (which could reportedly grow to 80%) in the YES Network from investors like Goldman Sachs, NJ Holdings, and Providence Equity yesterday. The deal is still pending MLB approval and is expected to close by the end of the calendar year. The sale price indicates that the network is worth approximately $3 billion right now, meaning it’s likely more valuable than the team itself. Here’s more on the transaction courtesy of Darren Rovell, Andy Fixmer, and Scott Soshnick

  • The Yankees will sell 9% of their stake in YES, lowering their share to 25% and earning the club a whopping $270M. The team might also receive a $400-500M payment separate from the rights agreement, so think of it like a signing bonus.
  • As part of the transaction, the Yankees have extended their agreement with YES to ensure the network will broadcast games through 2042. YES currently pays the team $85M annually for broadcast rights, but escalators will push that to $350M annually (!) by the end of the new agreement.
  • Goldman, NJ Holdings, and Providence will retain some stake in YES but will have the option to sell the remainder to the Yankees and News Corp. in four years for a portion of the predetermined market value of $3.8 billion. That’s what everyone expects the network to be worth in 2016.
  • Although there has been speculation (including by me) this deal with News Corp. is an indication the Steinbrenner family will look to sell the team down the line, the reporting trio all say this move puts them in better position to hold on to the club long-term.
  • Brian Heyman has official statements from Hal Steinbrenner and others, so check that out if you’re interested.
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Nov. 19th: News Corp. would acquire 49% of YES in the transaction according to Richard Sandomir and Amy Chozick, but there would be the option to increase their stake to as much as 80% in 3-5 years. I can’t help but wonder if that option is an indication that the Steinbrenners have their eye on selling the club down the line. The network, meanwhile, is worth a bit more than $3 billion, meaning it is likely more valuable than the team itself. In-freakin’-sanity.

Nov. 15th: Via Matthew Futterman: News Corp. is closing in on a deal to purchase a minority stake in the YES Network. They have their eye on the nearly 40% share currently owned by long-time investors Goldman Sachs and Providence Equity Partners. The Yankees own about one-third of the network and aren’t selling any portion of their share.

Last month we learned that the team was looking for investors to buy out Goldman and Providence. News Corp. is a monster, the world’s second largest media group in terms of revenue. They have stakes in FOX, The New York Post, and The Wall Street Journal among many other media outlets. Futterman says YES is likely to raise the monthly fees (which currently lag behind other regional networks) it receives from cable providers when their contracts expire in the coming years. In other words, the deal will make the Yankees a ton of money and your cable bill might be slightly higher in the future. Business as usual, really.

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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.

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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.

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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.

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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.

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