Friday, May 8, 2020

Bad Business As Usual

I'm about halfway through Part 2 of my Flash in the Pan post. I should have that up by late tonight or tomorrow. In the meantime, there have been a few developments that seem worth commenting upon.

The first is the revelation that Alex Rodriguez' quest to buy that Mets appears to be over. I'm not shocked by the news. Alex Rodriguez and his girlfriend Jennifer Lopez, while certainly quite wealthy, fell far short of the kind of wealth that it would take to buy the Mets. They never seemed to have a partner with deep pockets that was all-in on buying the club. With all of the uncertainty created by the current pandemic complicating matters it would seem that a really tight, committed group would be required to pull off that kind of heavy and complicated transaction.

A sticking point in the potential sale is, allegedly, the Wilpons don't want to include their share of SNY in any sale. Not surprising, since this 2014 story from Bloomberg.com placed the value of the Mets at just over $2 billion, with $1.165 billion of that value coming from the network and $779 million coming from the team.

According to this article in the New York Post from February, the Wilpons own 65% of SNY, which earns about $150 million a year, while the team itself loses about $50 million a year. And this was before the pandemic and resulting shutdown.

All of this brings certain questions to my mind. Let's say that Fred and Jeff somehow manage to sell  the team and keep their 65% share of the network, what happens in 2030 when the contract to carry Mets games runs out? If you own the club, what would stop you from creating your own Regional Sports Network to carry those games? I know 2030 seems a long way off, but time has a way of passing by. Consider that SNY has already been around for 15 years, in a way it feels like yesterday.

If SNY ever lost the Mets, what would keep it viable as a network. SportsNite? Loudmouths? Beer Money? Some generic college basketball?

I've personally never been comfortable with people who own these teams having a stake in the networks that cover them. It seems like a conflict of interest at best. Also, the creation of new RSNs and the carriage costs associated with them have driven up the costs of cable television, and now it seems like every couple of years there is a fight over carriage rights. Providers are starting to balk over the escalating costs, and that would only seem likely to escalate going forward thanks to the financial pressures of the COVID-19 pandemic.

If the Wilpons elect to hold onto the network and can't sell the team, then the question becomes whether they can maintain a winning operation with the Mets. If they can't, what's the network going to be worth? The only really valuable thing on the network is the Mets, and if that turns to sh*t then won't the value of the network diminish?

The Wilpons are already quite unpopular with the fan base. The only way to turn that around would be to put a winner on the field. If they can't do that, things are going to get ugly fast.

At this point, most of us fans who are paying attention are praying to whatever God we follow that someone will step in, buy the club and run it properly. We have no control over what's going on, and we have to spend way too much time worrying about rich people's finances. I still have a strong feeling this club is going to be sold eventually, I just hope that whoever buys it becomes much less of a story than the ongoing travails of the current ownership.

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It doesn't come as much of a surprise that, with talk of baseball attempting to start up, a fight about money is brewing between the players and ownership. According to Evan Drellich in The Athletic, the owners want to discuss a revenue-sharing deal for one year only, essentially to protect their own interests.

The problem with any revenue sharing plan in any sport is that it's ownership that tends to decide what is revenue and what's not, and there is very little trust between the parties.

Either way, despite the protestations of MLBPA executive director Tony Clark that a deal is already done, I think its pretty likely that the players are eventually going to take less money to play this season if the only alternative is to make no money at all. Everyone has bills to pay, and the vast majority of players aren't wealthy enough to spit on income.

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Jeff Passan at ESPN reports that the MLB draft will indeed be downsized to 5 rounds, and any player not drafted will be able to sign for no more than $20,000. I'll personally be sad to lose the intrigue where a team signs a player in a later round and then tries to buy a kid out of a college commitment.

This change probably won't affect the top prospects who are going to sign for the big bucks. The losers will be the kids who have to settle for $20K to play ball. Not that I would sneeze at someone handing me that kind of money, but it's not a life-changer, particularly when you take into account how little most minor leaguers are paid.

Stay well and safe, everyone. I'll get the second half of the Flash in the Pan post finished and online by tomorrow, if not tonight. Thank you for stopping by,


 Follow me on Twitter @MikeSteffanos

2 comments:

  1. Mike,

    Many great points as usual.

    In particular your point regarding the latest Owner/Player money fight: "I think its pretty likely that the players are eventually going to take less money to play this season if the only alternative is to make no money at all."

    I totally agree. I also think that next year's free agent class will very interesting with many bargain basement deals. I think Mookie Betts will get his and probably Marcus Stroman too but the average players will be taking large pay cuts.

    ReplyDelete
    Replies
    1. I think you're right. I also think that there is likely to be more 1 and 2 year contracts for the players who aren't big stars

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I grew up in a very unconventional household. I don't retain the warm memories of home and family that most folks have. I don't live...