26
2012
Can Yankees Deal With News Corp, Bring Good Tidings To Mets Fans?
An article by 
They say it takes money to make money, and nobody does that better than the New York Yankees. Those suits running the Bronx Bombers and the YES Network are always on the move - looking to make more money and win more championships. They have one of the best brands in all of sports, but never sit on their laurels.
This latest deal with billionaire mogul Rupert Murdoch’s News Corp, is just the latest coup for the Yankees who just never cease to amaze.
Under the terms of the deal, which was announced last week, News Corp. will pay about $1.5 billion for a 49% stake in the YES Network, the home for Yankees baseball and Brooklyn Nets basketball games. After three years, News Corp. has the right to increase its stake to 80%, according to a statement released by the company. The deal, which will keep Yankees baseball on YES through 2042, allows Goldman Sachs, which was an early investor in YES and owns 30% of the network, to cash out some of its stake.
So who cares right? This is a Mets blog…
I got an email from one of our readers, Hank, last week alerting me to this and asking whether this is something the Mets should pursue.
I say why not?
It would make a great deal of sense in my opinion, and it would give the Mets owners an opportunity to rid themselves of all their debt and get a new lease on life with the Mets.
It would be their “Get Out Of Jail Free” card, but mostly it would enable the team to once again act like a big market club as they did before all of this Bernie Madoff mess came to light.
It would be nice again to have a team whose every decision wasn’t always bogged down by financial indifference. It would be a breath of fresh air to go after a player who you know is exactly what the team needs, but can’t afford.
No longer would the Mets be on the sidelines with the Royals, Astros and Pirates while they watch the Phillies, Braves, Nationals and Yankees build their teams without want or need.
If the YES Network is valued at $3 billion, at the very least SNY would be in the $2 billion or more range. Like the Yankees, the Mets owners don’t own all of SNY, 65% to be exact with the other 35% held equally by Time Warner and Comcast. Who knows, after news of this deal broke, I bet that Time Warner may already be considering taking on a larger stake in the Mets and maybe getting the Wilpons out of their hair in the process. There’s no love lost between Time Warner and News Corp, I can tell you that.
We already know that when the Wilpon have money they spend it, almost to a fault. No team in the National League spent more than the Wilpons did from 1990 until 2010. Over $2 billion dollars in Mets payroll during those two decades, with nary a World Championship to be seen. (Sad, I know.)
But apparently the Wilpons can make good decisions, that’s what many are calling this front office (even though it wasn’t Fred or Saul’s decision).
Fred Wilpon and Saul Katz are not going anywhere. They are entrenched (Hat tip to Sandy).
So why not have a rich ownership that can spend freely again, rather than a poor ownership whose hands are tied because of all the still remaining and substantial debt?
Hey Fred, whaddaya say?
Fred Wilpon in 2014: I wonder how Bernie is making out with that prison food, I hear it’s pretty nasty.
About the Author: Joe DeCaro
I'm a lifelong Mets fan who loves writing and talking about the Amazins' 24/7. From the Miracle in 1969 to the magic of 1986, and even the near misses in '73 and '00, I've experienced it all - the highs and the lows. I started Mets Merized Online in 2005 to feed my addiction. Follow me on Twitter @metsmerized.
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NL East Standings
| Team | W | L | Pct. | GB |
|---|---|---|---|---|
| Braves | 23 | 18 | .561 | - |
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| Phillies | 20 | 22 | .476 | 3.5 |
| Mets | 16 | 23 | .410 | 6.0 |
| Marlins | 11 | 31 | .262 | 12.5 |
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I say do it Joe; Saul and I are tired of being demonized and slammed on MMO daily. People think we’re broke, but you know we’re not. Gotta keep a few $$ I the bank for the grand babies you know, but if we could do this and spend our new found fortune from Bernie……er TimeWarner and bring our beloved Mets back to being the toast of the town then I’m all in.
Fred
It’s all about the product though. If YES is worth $3b then I am not sure how you can just say SNY is worth $2b. I agree with the premise of selling pieces but I can’t see how it’s anywhere close to “in demand” as YES was.
In 2011 YES’ average of 30,000 Total Day TV households in the New York was more than the MSG, MSG+ and SNY combined. (25,000)
YES’ Primetime average of 72,000 TV households is comparable to the next two New York regional sports networks combined (SNY and MSG — 72,000 combined)
SNY’s biggest problem is they whiffed on Big East because they are losing all of the regional teams to bigger conferences who have their own networks. That was their big move and now it’s gone.
I don’t know a ton about the NBA but I’d venture to guess Yankees+Nets blow the Mets broadcast out which is literally all SNY has after the conference mergers outside of Jets non-game programming.
SNY has to work on re-branding before they look to sell in my view. Right now the Mets aren’t an attractive buy and once Cuse’, Rutgers, Uconn eventually leave the Big East the NY market has 0 interest in Big East anything unless you’re a Seton Hall/St Johns person which still carries little weight.
This is not a good idea, nor is it a bad idea, for the simple reason that any money made on that deal will go where it has gone for the last 10 years. Right into the Wilpons pockets, never to be see again. The days of the Wilpons spending any money to improve this team are long over. I also don’t buy into their poverty BS…..
The only solution for this team is for a cleaning house, which starts at the ownership and ends with the field manager!!!!!! It is time for the worst run team in professional sports to make these moves and give the best fans in baseball something to be proud and not embarrassed of!!!!!!!
If you consider that there are rumors the Dodgers TV deal could be somewhere between six and seven billion It’s no wonder why the Wilpons are unwilling to sell any of their 65% stake in SNY. I read where last season SNY was valued at one billion but with the recent announcements regarding tv deals with the Yanks and Dodgers I have to wonder if that would still be the case.
I don’t dispute your numbers but don’t the Wilpons have a 450 million dollar debt to SNY or am I confused about their debt situation?
I believe that is the case. My understanding as well is their debt is something that they could refinance if need be. My point is that it seems owing a sports network seems to be something that will bring back a very good return on investment. Time will tell if SNY will make whatever debt the Wilpons have worth it.
I read last year SNY was reported to be bringing in about $300M a year from just monthly subscriber fees. If SNY is indeed worth 2 or 3 times more than what it was say last year then I would think as Joe D said SNY would be like a “Get out of jail free card” or in this case a “Get out of debt free card”.
owning
Other tv deals don’t compare to what SNY has to offer.
What are you getting if you purchase SNY right now? You’re getting a 70-80 win baseball team on your network annnnd?
nothing.
The 3 biggest tv markets/fan bases in the Big East were Rutgers, Syracuse and Uconn. Once Uconn officially goes to the ACC, what is left for the big east on tv? It’s value plummets.
The football season brings them nothing but games nobody in the market cares for, the nba season nothing, nhl nothing, ncaa b brings some low level games at best.
Fox is trying to nationalize their sports brand to rival ESPN. That is why they bought the Yes shares. They want Yanks and Dodgers, two largest sports markets across the country with 1 network. Plus they have the Pac 12 and the Lakers, now Brooklyn Nets with the deal.
The Mets have nothing to do with that.
Clearly this is all but speculation as I have no idea what SNY is indeed worth or why they would be worth whatever it is they are. You may just be correct in your assessments.
I don’t know if anyone predicted the Fox Sports deal if the rumors turn out to be true could be in the $6B to $7B range. I read an LA Times article that referenced the previous Dodger ownership seeking half that in the Fox Sports deal.
What has yet to be known and may not be for some time is what is SNY worth today? Could they be worth more than what some might suggest? I’d be curios to know that.
There is another difference….
The Dodger deal was a straight rights deal, not for a network itself.
SNY is it’s own network and therefore has more value than the simple rights it owns to broadcast Met games.
Yes would concievably be worth more as it does have a way to profitize via ad sales more revenue for more than just the baseball season but that is not the main component that would drive thier sale price.
As I stated below it is the contracts for channel space that is the most imporant asset a TV network owns.
It is those subscriber fees that pays all the operating bills and the profit is then derived (if sub fees only set break even) from ad sales that are the only things that are actually ratings based.
You don’t seem to understand how Networks are valued in the industry….
has NOTHING to do with thier programming and or Ratings.
Content can be changed overnight and the Rights contract is not all that valuable to the network as it can expire and not be an asset anymore.
The Value of Yes is not in the teams it has rights for but in the contracts with Cable Carriers for channel space.
If lets say the Yankees and Nets left YES network tomorrow the network would still have a contract that pays them X amount per subscriber with every cable/sat provider that they would get until the contract expires.
Since these contracts normally go for as long as 5-10 years they would have that amount of time to find new programming that might even increase viewership to use as leverage during the next contract negotiation.
If you have a contract to be carried it’s a guaranteed channel that you can turn into anything you want and still get paid regardless of the content showed on it.
So the fact that the Mets are not a great team really has no affect on the value of SNY when compared to YES.
What matters is the contracts and length of them each has with the providers to fill channel space.
The Advertising is about the only thing that is ratings driven for a TV network. And the difference between the price for a show that gets a 1 share and a 3 share is not an awful lot of money when it comes down to it…About 2-3K a pop
The Mets and Yankees are MLB teams and that is where the similarity ends. As a Met fan since ’62 I only follow the Mets in all of professional sports, wear my Mets cap (have about five) have my Mets license plate and so on. Gotham has the Yankees and the Mets and there are enough fans to support both teams. I don’t like the AL because of the designated hitter. It destroys the purity and strategy of the sport and takes away from the game so I consider all AL baseball as a bast…..ization of the sport. It is interesting to read about the Yankees but I am guessing most Met fans could care less and I never met a fan that was a Met fan AND a Yankee fan so I enjoyed the article but in the bowels of the Met fan base it is something to dispose of if you get my drift. If you think the Yankees do it better than the Mets then become a Yankee fan. The Mets will come back. PS: the Yanks spent 185 million on payroll and stunk out the place in the playoffs. Billions from Murdoch won’t help all that much!
“If you think the Yankees do it better than the Mets then become a Yankee fan. ”
If you think losing year after year is cool, become a Pirates fan.
The Yankees will live to regret that deal.George would never have allowed that to happen.
He would remember WHY he started the Yes network in the first place, To control the MESSAGE regarding his team’s broadcasts. The ability to package TV Ads with Stadium sponsors. And being able to set the price on Rights fees without worrying about the Network saying “NO WAY” and having to find another network to buy the rights that has a channel agreement already.
The Mets would be dmb to sell of the network and truth is Time Warner would never allow that deal to go through.
The only reason why Fox could get the 49% was because a 30% partner wanted out of the investment.
In rder for the Wilpons to do a similar thing they would have to get Time Warner to want out of the partnership.
Considring thier past fights with the folks at Fox it is unlikely they would agree to it and more likely that they would instead buy Wilpon out and own the network outright.
This is not the time to sell a TV network no matter how much money is thrown at you.
The industry is in the throws of a transition phase with Digital over IP being the next big distibution method (See Hulu and Netflix as examples)
And bottom line even if they did make a similar deal there is no proof that any of that money would go towards spending on a team that it’s own fans refuse to go see and support.
Hi Metsie,
I was asking myself why in the world would the Yankees want to part with any of their portion of the YES Network while it is reaping in so much. I agree with you, I think they will live to regret it especially because it is YES that is making so much the Yankee fortune.
Unless they see the handwriting on the wall for the value of sports networks – there being such a glut of them – going down in worth. I’m not a corporate marketing executive so that is only a hunch on my part based on nothing else but wondering why one would want to sell a portion of anything that lucrative – unless there is something in the Yankee financial empire we don’t know about. Or maybe this is the start of the Steinbrenner family getting away from the Yankee business while the selling price is high – for it is not beyond reason that a few years from now they might not be the money maker they are now but more like the team that spent everything they could and got nothing in return for the years between 1980 and 1995 (I don’t count 1981 for they were essentially a mediocre team that got lucky due to the split season format from the strike)
As far as SNY is concerned, we know Fred Wilpon has been adamant that selling any portion of his share of the network (after the approvals, of course) is out of the question. That in itself is an indication of how lucrative sports networks – even if not on the scale of YES – can be.
….. or is it that with all the debt tied into SNY at this point, the Wilpons would not be getting a fair share of the network’s worth?
It takes (tax payer) money to make money.
Also, this is just the Yankees hedging their bets against the upcoming bubble bursting. We’re seeing customers fighting back against rising cable rates and the cable providers turning on the sports networks.
“It takes (tax payer) money to make money. ”
Is this anything like “You Didn’t Build That”?
The only ones who have to worry about people cutting the chord are the ones who own the chord.
The TV Network could just as easily offer thier services on the net via Hulu or Netflix.
In fact the MLB has been doing that for years now.
The TV Industry is transforming albeit slowly and hesitantlly….
But thats why the Network is still a safe thing to have because the network produces content and is not limited to distibuting over one method and can sell itself on many different chords and systems.
If I had to predict 20-30 years from now TV will eventually be an ala carte service where you subscribe to the networks you want to see that downloads an app to a smart TV and that $150-$200 average cable bill gets reduced to $50-100 but all you get are the channel you actually want to see.
““It takes (tax payer) money to make money. ”
Is this anything like “You Didn’t Build That”?”
Actually, the phrase is “You didn’t build that by yourself”
“The only ones who have to worry about people cutting the chord are the ones who own the chord.
The TV Network could just as easily offer thier services on the net via Hulu or Netflix.”
Except they are guaranteed truck loads more money from their current cable deals than if they went ala cart and let people buy on a case by case basis.
“In fact the MLB has been doing that for years now.”
Have you used MLB.TV? It is subject to the same local blackout restrictions as regular TV. And guess which produces exponentially more revenue. The fact that the cable providers have an almost captive audience (ie they are paying for it whether they watch it or not) is something that internet can’t compete with right now.
“If I had to predict 20-30 years from now TV will eventually be an ala carte service where you subscribe to the networks you want to see that downloads an app to a smart TV and that $150-$200 average cable bill gets reduced to $50-100 but all you get are the channel you actually want to see.”
Except the majority of households with broadband are getting it from their TV provider as well. And the cable TV service deals are worth way more. What you propose is for the Cable companies to facilitate their own demise.
also, I do think what you proposed will happen eventually after a lot of ugliness (and probably federal intervention) but it will come full circle. You’ll have to subscribe to youtube/Hulu/Netflix/Amazon etc etc to get certain shows. So, you’ll be buying the whole package of what the respective providers offer to get what you really want.
As for your Obama Quote, How much National Infrastructure did Microsoft need or use to make thier billions?
So much for Liberal communism thinking it is the inventor of innovation….
I wonder if Obama thinks that because Al Gore invented the Internet?
“Except they are guaranteed truck loads more money ”
Hardly they would make 5 times per subscriber compared to what they make now.
So as long as they got a 5th of all the people who have cable (and would if that was the only place to get thier channel) they would make AS MUCH as they do currently without having someone else mark up thier product.
And in the proccess would be able to charge more to cable providers than they do now since losing that cable distribution would no longer be a threat anymore.
Yep MLB TV is subject to the same local blackout laws…Your point is?
As for your dumb captive audience remark…
If they are so CAPTIVE then why are they leaving the system and cutting the chord in droves eh?
Why don’t they get the dogs out and FORCE thier captive audience to keep on paying thier ver inflated bill each month huh?
I hope you learn a skill because you would be doomed if you ever had to do something that required some sense of business.
With all these TV deals of late it seems the Late, Great Bill Gallo’s illustration of the formula still seems to apply.
http://realdirtymets.com/wp-content/uploads/2012/11/Gallo-After-All-Is-Said-And-Done-1020×577.png
Wouldn’t it be nice if #5 were true.
The Yankees deal and the Dodgers pending deal have set the bar. I don’t believe Time Warner lets Newscorp anywhere near SNY, but this for sure just upped the price of SNY. If you’re the Wilpons, you have to be jumping for joy. The market is being determined by outside forces in ways unforeseen and in ways that has made you money just sitting there doing nothing.
That said, I think all Mets fans need to hope for this kind of get out of jail free card. Again, please move on from the elementary debate that more money doesn’t guarantee championships. Yes you have to spend money money wisely, but that means being wise and spending. Again, let’s say the Mets can commit to a $140MM payroll for 2013 and beyond…that would mean re-signing Wright and Dickey and bringing in more pieces to fill holes. Or trading Wright to add hitting prospects to our system that has one close to the majors, and then bringing in more MLB talent to fill holes. Oh the possibility (for good) are endless. We’re just used to always holding out for the possibility for bad.
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