Archive for Business of Baseball
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.
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.
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.
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.