This week, a second edition of “Last Week in Bizball”. Can Wilpon and Katz keep the Mets?, plus the tidbits.

ARE WILPON AND KATZ KEEPING THE METS?

Where to start with the Mets woes? Irving Picard, representing the victims of Bernie Madoff, is attempting to extract close to $400 million from Mets owners Fred Wilpon and Saul Katz (aka Sterling Equities). The Mets operating losses over the past 2 seasons are reportedly $120 million. In November, the Mets arranged a bridge loan from BofA for $40 million. MLB also loaned the club $25 million and both are expected to be repaid next month. The baseball club and Sterling’s RSN, SNY, combined, have a reported $375 million coming due in a few years. Attendance and ticket prices at Citi Field have dropped dramatically the past few seasons. This upcoming season will see the Mets slash year-over-year payroll by $50 million plus and the team is expected to stink. They also folded a minor league team this off season. Last month it was reported that the Mets had retained the services of “turnaround specialists” CRG Partners. CRG was one of the key players in the bankruptcy auction of the Texas Rangers. David Einhorn agreed to invest $200 million in the Mets, but the deal collapsed. But, unlike with Tom Hicks and Frank McCourt, MLB hasn’t wrested the Mets away from Wilpon and Katz. Oh well, we cynics think, eventually being an FOB won’t be enough to save the Mets owners. They‘ll soon go bust and the creditors will take over.

But, LWIB there was buzz amongst sports industry insiders that Wilpon and Katz aren‘t leaving MLB any time soon. In this SportsMoney video segment, big time sports banker Sal Galatioto of GSP (no, not MMA) predicted that the many reports of the Mets “near bankruptcy” are “greatly exaggerated”. Galatioto foresees the Mets current efforts to raise $200 million via the sale of 10 minority shares in the team @ $20 million per succeeding. He also sees a lot of value in the Mets media rights. Sterling owns approximately 70% of the RSN (SNY) which broadcast Mets games. TWC and Comcast own the balance. The banker notes the guaranteed value of these cable rights deals, “...when you have a media deal, like a cable rights deal, you’re going to get paid, whatever your rights fee is whether the product is good or the product isn’t good.”

LWIB, Richard Sandomir reported in the New York Times that the Mets are close to finalizing the sale of the $200 million in minority shares. Richard confirms the earlier LA Times report that Steven Cohen (also bidding for the Dodgers) is set to become a Mets minority investor. But Richard’s scoop, and the more interesting development, is that the Mets aforementioned partners in SNY will invest $80 million in the baseball franchise. Howard Megdal explained that TWC and Comcast are motivated to help Sterling maintain control of the club for a few reasons. First, because Sterling owns both the team and a majority of SNY, the RSN lowballs the club’s rights fee, which is good for TWC and Comcast. And, if Sterling is forced to sell the team there is no guarantee SNY would continue to control the Mets local TV rights. Losing the Mets would make SNY worthless because they don’t own the rights to any other properties of significant value.

LWIB, Bill Madden wrote that the expected $2 billion sale price of the Dodgers will be a big help to the Mets owners. According to Bill’s unnamed “industry insider”, if the Dodgers are worth $2 billion, the Mets must be worth $3 billion. “What that means,” said the insider, “is that the Wilpons can now go back to their banks, point to the value of the team, and say: ‘Lend us more money.’”

SELECT READ MORE TO SEE THIS WEEK'S TIDBITS

With Marlins SS Emilio Bonifacio going to hearing today, 2012 will pass last year in terms of the number of salary arbitration hearings that will take place.

Last year, just three players went to salary arbitration hearing with their respective clubs (Ross Ohlendorf- Pirates, Jered Weaver – Angels, and Hunter Pence – Astros) with all but Weaver having the arbitration panel rule in their favor, and therefore, received the salary they were seeking through the process.

This year, John Lannan (Nationals), and Jeff Niemann (Rays) have lost their cases while Anibal Sanchez beat the Marlins

Lannan Salary Arbitration Hearing Win Key for Nationals

Why Jeff Niemann Will Likely Lose His Salary Arbitration Hearing With the Rays

To date, clubs have beat the players 288-213 over 501 hearings (57.49%)

SEE THE COMPLETE BREAKDOWN OF SALARY ARB CASES BY CLUB

The last time the players won more cases than clubs was 2009.

Dating back to 2005, clubs have beat the players 23 to 15 in 38 salary arbitration cases, or 61% of the total

SEE THE COMPLETE MLB SALARY ARBITRATION SCORECARD

For more details see Salary Arbitration Picture Postcards on Baseball Prospectus

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. Hewrites for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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This week in “Last Week in Bizball”, MLB teams are media companies.

These past handful of seasons, MLB attendance and regular season national TV ratings have been pretty much flat. The overall ratings trends for MLB’s marquee TV events, the ASG and WS, are clearly downward. MLB’s fan base is easily the oldest amongst the “big 4”. The building boom of retro/Americana/baseball-only stadia, which contributed greatly to increased industry revenues and franchise values, is well past its peak. Nonetheless, industry revenues remain at a record high of $7 billion annually. In addition, in 09, the Ricketts family paid a record amount for an MLB franchise when they acquired the Cubs, Wrigley Field and a minority stake in CSN Chicago for $800 million plus. That record amount is soon to be obliterated with the auctioning off of the Dodgers. If the sports biz punditry is correct, the sale price of the Dodgers will be in the neighbourhood of $2 billion. The sale of the Dodgers includes no additional assets, other than a ballpark which reportedly requires $400 million plus in renovations to bring it up to contemporary industry standards. The purchase price includes no equity in an RSN nor any property development rights to real estate adjacent to the stadium (both common in today’s franchise sales). In fact, for $2 billion, the purchaser might not even acquire the parking lots surrounding the stadium. In 04, the McCourts purchased the Dodgers from Fox for a reported $430 million, with Fox financing most of the purchase. So, eight years later, why has the value of the Dodgers increased by multiples of four or five? The reason is the soaring value of media rights for live sports. The Dodgers current local TV deal with Fox’s Prime Ticket expires after the 13 season. The final season of the deal will reportedly garner the club $39 million. By comparison, the Angels just concluded a 20yr / $3 billion deal with Fox Sports West. LWIB, sports media dealmaker Chris Bevilacqua (check out his CV, VERY impressive) discussed the trend of soaring local TV rights fees in MLB on SportsMoney (video here).

According to Chris, the “tipping point” for the value of media rights for live sports occurred in 09/10 when the threat of the so-called OTT services became real to the $150 billion per year cable industry. The cable industry concluded that live sports programming was THE offering which would differentiate them from the OTT alternatives and, in turn, rights fees skyrocketed. Chris describes a transformation of the MLB ownership model with “..teams becoming media companies..”, maximizing on the value of media and IP rights. When asked how, given local TV ratings in the bottom 5 of MLB last season, the Angels managed to triple their annual TV rights fee to $150 million, Chris outlined how the cable industry functions. Ratings drive ad revenue, but the value of local MLB TV rights is in the distribution, or subscriber fees. Chris notes that the value of present and future deals will be based on market size and competition in that market amongst providers (MSOs, telcos, RSNs). Chris foresees all MLB franchises eventually benefiting from this trend, the “tonnage” of the 162 game sked also uniquely valuable, leading to eventual annual industry revenues of $9 - $10 billion.

SELECT READ MORE TO SEE THE REST OF THIS ARTICLE, INCLUDING COMMENTS FROM MARK CUBAN

UPDATE: Rays win salary arbitration case with Niemann. He will earn $2.75 million rather than the $3.2 million he had been seeking. The Rays are now 6-0 in salary arbitration hearings.

On the same day that a panel of three arbitrators ruled in favor of the Washington Nationals over John Lannan in the first salary arbitration hearing of 2012, Jeff Niemann and the Tampa Bay Rays made salary arbitration cases before a panel comprised of arbitrators James Oldham, Howard Edelman and Mark Irvings.

Based upon history (and comps this salary arb season), Niemann is likely to lose his case.

For those that don’t know, the Rays have historically gone with a “file and go” policy with players in salary arb. That is, if the player does not agree to an offer in advance of salary figures being exchanged, the Rays have said, “If you file salary figures, we intend on going all the way to hearing. We won’t be negotiating after that point.”

It’s clearly designed as a deterrent, but there’s more: those players that took the gamble and went against the Rays have lost in every case. The Rays are batting 1.000 in salary arbitration hearings going 5-0, most recently beating B.J. Upton in 2010 before a panel comprised of Gil Vernon, Elizabeth Neumeier, and Elliott Shriftman.

SEE THE COMPLETE HISTORICAL SALARY ARBITRATION SCORECARD

More than history weighs on the side of the Rays with Niemann, however. Niemann was hurt from May 4 and June 20 with a strained back. That doesn’t help his case.

Also, looking at this year’s class of players in salary arbitration, if Niemann loses, he might have to look to the Cubs and Chris Volstad for the reason why.

Volstad and Niemann are good comps. They have nearly identical Major League Service Time (Volstad - 3.076, Niemann - 3.022). Volstad avoided arbitration with a 1-year, $2,655,000 deal on Jan. 17. Niemann is seeking $3.2 million while the Rays have offered $2.75 million.

Uh, oh. Here’s why.

Volstad’s ERA with the Marlins over 29 games was 4.89 going 5-13. Niemann was 11-7 with a 4.06 ERA in 23 starts. Wins and losses become an arguable point for the Rays with the comp as clearly the Rays were better than the Marlins last season.

Volstad’s splits for ERA were identical (4.89), while Niemann was 4.95 at home and 3.27 away.

Niemann is seeking salary above average for his MLST and ERA, while his ERA of 4.06 on the wrong side of the league ERA average of 3.94.

Niemann doesn’t get help from Volstad in strikeouts, as well. In 23 games, Niemann had 105 Ks. Volstad had 117 in 29 games. In other words, it’s a push based on the number of games Niemann played due to that back injury, and it comes back to looking at Niemann’s asking figure compared to the Rays offering number, which is higher than what Volstad settled for with the Cubs ahead of arbitration.

We can drill down deeper. On 0-1 counts Volstad had 79 Ks last season to 77 for Niemann, another push.  When the pitchers are in jams, it’s the same deal: a push. Niemann struck out 12 with RISP and 2 outs. Volstad struck out 14 in the same situation.

In almost every statistical category used in salary arbitration (advanced metrics are rarely used due to arguing before arbitrators, not "baseball people"), the two are nearly identical. So, it’s going to come back to that asking figure of $3.2 million compared to the Rays offering $2.75 million.

The ruling is expected to be handed down on Friday. We’re going to land on the side of the Rays on this one. If so, Tampa Bay will retain their perfect record going 6-0 in salary arbitration cases.

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. Hewrites for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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UPDATE: The Nationals win the first salary arbitration case of 2012 against Lannan. He will earn $5 million for the 2012 season as opposed to the $5.7 million he had been seeking (see the Salary Arbitration Scorecard)

The first salary arbitration hearing for 2012 took place yesterday between LHP pitcher John Lannan and the Washington Nationals.

Beyond it being the first hearing of the year (it’s likely that the results of it will be made known today), as arb hearings go, it’s a substantive one for the Nationals.

Lannan has his work cut out for him if history holds court. From 2005-2011, the Nationals were involved in 7 salary arbitration hearings, and won 5 of them (71% record). The two that they lost were Shawn Hill in 2009 (Hill sought $775,000 to the Nats’ $500,000) and Chad Cordero in 2007 (Cordero sought $4.15 million to the Nationals $3.65 million).

In other words, if Lannan wins, the difference between asking ($5.7 million) to Nationals offering ($5 million) would be the highest sum won by a player in a Nationals uniform ($700,000) since the Expos relocated to DC.

That likely doesn’t bode well for Lannan.

He’s a second-time salary arb player with 4.011 years of ML Service Time. He went 10-13 with a 3.70 ERA in 33 starts last season ranking him 50th in the league by ERA. With the acquisition of Gio Gonzalez, he’d rank 3rd on the Nat’s pitching staff by Ks (Gonzalez – 197, Zimmerman – 124, Lannan – 106). Gonzalez was a Super Two who reached a $2.7 million deal avoiding arbitration. In terms of splits, he pitched a 3.34 ERA at home compared to 4.11 on the road. He pitched exceptionally well in June (1.95 ERA), after posting the worst ERA of his season the month prior (5.14 in May). He was, at the very least, consistent posting an ERA of 3.64 before the All-Star break and a 3.79 ERA after the ASG break.

Nothing screams “spectacular” for Lannan. He’s consistent and only saw wild fluctuation between the May and June numbers. His one goose-egg outing was a mid-season game against the Astros where he popped up a 15.43 ERA, the only double-digit earned-run average outing of the season.

Still, it comes back to the amount he’s seeking against his service time and stats. We’re going with the Nationals to win today. Remember, it’s salary arbitration… depending on how well a presentation is made, it can swing the three-member panel either way.

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. Hewrites for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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Baseball is an amazing thing... short of being a metorologist, where can you fail more that succeed and keep your job? For that matter, you hit into play fair 1/4 of the time, you're going straight to the Hall of Fame.

The reason for it's difficulty are based on a couple of things, none the least of which is reaction time. How so? Check this infographic:

Via: Phoenix Bats: Wood Bats

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. Hewrites for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

Follow Maury Brown on Twitter

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