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Home Biz of Baseball - Interviews Maury Brown and Tim Lemke Discuss the Business of Sports

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Maury Brown and Tim Lemke Discuss the Business of Sports PDF Print E-mail
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Written by Maury Brown and Tim Lemke   
Monday, 22 June 2009 00:00
Lemke and Brown

Over the course of the last decade, there has been a steady increase in the media outlets following sports business closely, with many dedicating reporters to the topic. Newspapers in large markets have been part of this growing fraternity, including the likes of Sarah Talalay of the South Florida Sun-Sentinel and Don Walker of the Milwaukee Journal Sentinel to name but two.

But, it has been the Washington Times that has arguably had the best crop of sports business reporters in print media the last several years. First with Eric Fisher, who left to be a cornerstone reporter for Street & Smith’s SportsBusiness Journal, or his replacement Tim Lemke, the paper has covered sports business in detail at a high level.

(See Tim Lemke's article archive on The Washington Times)

With Lemke sourcing me through the Business of Sports Network on a variety of stories, we have been able to strike up a solid relationship covering like ground. Based upon that, Tim approached me about doing a conversational piece that would span several key sports events over the course of June.

The following covers how I view the Expos to D.C. given my work in Portland during the Expos relocation derby; the MLB Draft, and how Stephen Strasburg and Scott Boras collide with the Washington Nationals; whether MLB needs a salary cap; the Phoenix Coyotes and the NHL’s attempts to prevent them from relocating to Hamilton, Ontario in Canada, and why MLB, the NBA, and NFL all have filed briefs supporting the NHL’s position; the NBA playoffs and whether the NBA suffered without a Kobe/LeBron match-up; the challenges of trying to cover all sports all the time, and; whether live streaming of MLB games via MLB.com’s At Bat 2009 for iPhone and iPod touch is going to be the beginning of a technology revolution for sports fans, or a bust given the increased growth of larger HD-TV sets at home.

Finally, all or parts of this exchange are being published in a variety of locations. Here’s a break down of the different locations that will have all or portions of the interview online:

Maury Brown

Select Read More to see the sports business conversation between Washington Times sports business reporter, Tim Lemke, and Maury Brown, President of the Business of Sports Network

Lemke quoteTim Lemke: Alright, Mr. Brown, thanks for agreeing to do this, and I look forward to hearing your insights. There's a lot of newsy things out there in the world of sports business. First though, in the interest of full disclosure, I must point out your past role as an advocate for moving the Expos to your hometown of Portland. In other words, you are the enemy of Nationals fans forever. Something tells me you've moved on, but is there any sense of schadenfreude when you see the rocky start the Nationals have had in Washington?

Maury Brown: (Laughs) I have moved on and then some in regards the Expos relocation. Let’s put it this way, when conditional award was allowed for D.C., well… that was that, and let’s face it, D.C. was always wired for the relocation based upon the market size and incredible demographics. The only fly in the ointment was Peter Angelos, and we know how that was addressed: MASN. As for schadenfreude due to the rocky start, nothing could be further from the truth. D.C. deserved the franchise and as you mentioned, Tim, this is the “start”. I don’t expect the Nationals to have an extended losing stretch.

TL: Nationals fans certainly hope the losing stops soon, because this season has been a killer. There is hope, though. By the time we publish this, the Nationals will most likely have drafted pitching phenom Stephen Strasburg, and we will all be waiting around to see what kind of insane money his agent, Scott Boras, asks for. And inevitably there will be stories--including at least one written by me--that takes a look at whether everyone's lost their minds with the amount of money being paid to athletes just out of high school or college. What's your take on how baseball and the NFL might address this issue down the road? Will we see a hard rookie pay scale in baseball or football like we have in the NBA? Or is this really not all that big of a deal?

Stephen StrasburgMB: Well, Tim, let’s put it this way: there’s a finite amount of money that can be doled out in player payroll. If you are throwing large percentages of it at untested talent at the major league level, it can create all kinds of flexibility issues, or worse, can be a matter of flushing money down the drain if the player doesn’t translate at the major league level. So, I believe it is a big deal, and it’s a very big deal for the Nationals after seeing Aaron Crow not getting signed due to what has been reported as a $500,000 gap between the Nationals and Hendricks Sports Management, who represented Crow last year. There’s going to be incredible pressure for Kasten and Rizzo to get Strausburg signed and in the system, which plays into Boras’ hands. The issue is one of philosophical differences between the Nationals and Boras. Boras has reported to be looking at a deal at 6-years and between $25M-$50M. That, to me, seems excessive, and you know that the Nationals think as much. I normally err on the side of the players but in this instance, I thing that a rookie scale, such as the NBA has, might be in order for baseball in the future. [NOTE: Read some more analysis by Maury on valuating Strasburg here.] The other thing that seems destined to happen is the ability for clubs to trade picks. It's been some smaller market clubs, not the MLBPA, that have balked at bringing the process in. But, it's time it happens. Heaven knows, the Draft could use the excitement of trading picks. Look what it's done for the NBA.

TL: Oh, the ability of trading picks would be kinda cool, and I think it would help some of the smaller market clubs stockpile some depth of talent. It's strange that teams don't have the flexibility to do that, because baseball is the one sport where in-season trades are actually pretty compelling and make sense. Without the restriction of a salary cap, teams can make whatever trades they need to make to get better. Trades in the NBA are almost always confusing because it's like "you get Chauncey Billups and we get...Allen Iverson's expiring contract." They're just harder to get done and it's often hard to make sense of them. Of course, given the spending spree from the Yankees in the offseason we are hearing renewed calls for some sort of salary cap in baseball. What is your take on the possibility of that happening?

Brown quoteMB: Can’t see it, and I hope it doesn’t occur. Currently, approx. 52 of league revenues are spent on player payroll, which is down from a high of nearly 60 percent a few years ago. As obnoxious as the Yankees free spending has been, the fact is, baseball has better parity than all the other Big-4 sports. That, and I get a bit squeamish about the effects of a cap in baseball. By extension,  The floor could create serious problems for low-revenue making clubs that bump into financial headwinds due to the economy. It also overvalues marginal talent with a floor, and undervalues premium talent with a cap. Lastly, the call for a cap comes during an economic slide, the likes of which we haven’t seen since the ‘30s. It won’t last forever, but you can guarantee that once you create a cap, it will. Owners have been clamoring for one for years. Once they gain it, a give-back on the issue seems highly unlikely.

TL: You mentioned the economy. A lot of people have being paying close attention to this baseball season because the sports was the first to market and start its season in the mouth of the recession. Every other league managed to get underway before things went really south last fall. My sense is that the sport has held up pretty well. Attendance is down a bit, but hasn't fallen off the table. Maybe there are a fewer people actually filling seats and it's not as easy to sell your tickets on StubHub, but things are OK. Does this lend credence to the belief that sports are like comfort food? And is baseball uniquely positioned to get through this tough time because its generally the least expensive of the major sports to attend?

MB: I think you’re correct, at the league level (some clubs are going to get hammered, such as the Nationals). Attendance appears to be better, and television ratings 2 months into the season were flat compared to last year. The regional ratings look better still when you factor in that the Red Sox were playing a large part of their schedule on the West Coast during that period, which makes for later start times, and therefore, lower ratings when coupled with the time difference. In terms of the “comfort food” reference and its positioning due to cost per game, it’s true, but remember, the majority of the clubs are engaged in promotions to try and get fans to come to games. That will keep attendance up, but I’m curious as to how it impacts league revenues.

TL: Ok, change of topics and I promise I will wrap this up soon so you can get some actual work done. Like you, I've been following the play-by-play of the drama involving the possibility of the NHL's Phoenix Coyotes to southern Ontario. I have this strange sense that most hockey fans wouldn't necessarily mind this move, but I imagine NHL commissioner Gary Bettman really would prefer to try and make it work in Phoenix. At least that's what he's been saying.

Lemke quoteThis situation kind of reminds me of the old debate of "if a league were to expand, what city would be the best fit?" In most instances, people end up debating the various pros and cons of medium-sized markets, because those are all that's left. But the reality is that if you want to pick a place where a team will succeed, you almost always will be best off just adding another team to New York or another major market. I think remember reading somewhere that New York could comfortably support 5 baseball teams. But obviously, leagues would prefer to have a broad geographic footprint. So it seems here that Bettman has a choice: put a team in Hamilton, where it will probably be very successful financially, or keep it in Phoenix, where the team might struggle but he can say the NHL has a presence in the Southwest.

MB: First off, the Coyotes case is a heck of a precedent setter. It goes to the heart of whether clubs can relocate or be sold off out of league control by using a Chapter 11 bankruptcy mechanism (see The Biz of Hockey’s sizable archive of court documents on the case). It's why MLB, the NBA, and NFL have all filed briefs in support of the NHL's position. The judge in the case seems to be leaning toward allowing the relocation due to the fact that the other bidders, well… aren’t really bidding; they’re showing a passing interest, more or less. [NOTE: The judge last week dismissed the bid by billionaire Jim Balsillie to buy the team and take it to Hamilton based upon Balsillie's initial small purchase window. Balsillie has insisted he will still try to buy the team, and last week moved the purchase date out to Sept 15.]

Brown quoteHamilton works, but as I have been saying since this issue arose, relocation is like throwing a pebble in a pool: it creates waves. With a limited sponsorship market, and chewing into fan base, a club in Hamilton impacts not only the Maple Leafs, but the Sabres, as well. It’s why the judge said that there needed to be some form of indemnification involved, and with that the NHL is going to say that there is a $100 million relocation fee, and possibly another $100 million more for to the Leafs and Sabres in play. That could push the price tag up over $400 million. Jim Balsillie is a billionaire, but I don’t know if he will swallow that much. After all, he’s also going to be assisting in the renovation to Copps Coliseum, as well. So, Hamilton is a very good relocation market. But somehow, I don’t think the Leafs, Sabres, and Bettman think as much. Having an outsider shove them around isn’t exactly endearing him to the NHL Board of Governors.

TL: The news of the Coyotes is certainly taking some luster off what turned out to be a very compelling NHL playoffs. And the NBA playoffs were pretty memorable, too, even if the Lakers-Magic series didn't match the excitement of the rest. How much of the NBA playoffs did you watch? I must admit to being a somewhat casual NBA fan, but did find myself watching a lot of basketball in May and June. I always leaned toward college basketball because of the intensity factor, but some of these NBA games were amazingly tense and the effort level by some of the players was ridiculous. Can Stern and Co. capitalize on this? Did he lose out by not having a LeBron and Kobe finale?

MB: I watched all the NBA playoffs, or if I was out and about, listened via radio. The only time I wasn’t able to catch a whole game was when the NHL and NBA went head-to-head with the Finals (Game 3 for the NBA and Game 6 for the NHL) this past Tuesday. In word, it was maddening. I was a TV clicking freak sitting with the laptop doing Gamecasts to fill the void.

There’s probably an explanation, but I would love to hear what NBC and the NHL were thinking by matching up with the NBA.

Did the NBA lose a little luster by not having LeBron in the Finals? Yeah, I’m sure they did. It would have arguably been the best star pairing in the Finals since Bird and Johnson. It also didn’t help to have the series not go the distance; ending in five games never helps interest. Game 5 averaged 13,992,000 viewers (P2+), down 19 percent from last year’s Game 5 between the Lakers and Celtics. All that said, the league can capitalize on the compelling story lines that were the Lakers: Kobe winning his fourth title, but this time without Shaq, and Phil Jackson winning his tenth title, thus surpassing Red Auerbach. Plus, it’s the Lakers, the league’s most marketable brand. I would guess that the NBA was looking at it from a “glass is half-full” perspective. It would have been something entirely different if the Finals would have been the Nuggets and Magic, agreed?

Lemke quoteTL: My sense is that leagues look at the broad picture when it comes to TV ratings. Yes, the NBA missed out on the Kobe-LeBron bonanza but they did get a very highly rated playoffs overall and should enter next season with some momentum. Given the economy, that all has to be positive.

Kobe Bryant fascinates me. Remember when everyone was saying that his chances for big endorsements were shot? There he was, sitting accused of rape, and companies either dropped him or stopped using him. Now, he's back to being the #1 most marketable guy in the NBA. It's amazing how quickly things turn. I've always been a huge believer that America loves a reclamation project, and the reclamation of his image has been remarkable. Winning has the tendency to change everything, of course.

Funny that you mention watching two games at once while following Gamecasts. I find myself doing the same thing nearly every night. Here in D.C. we have the Nats and Orioles playing simultaneously, and then I'm switching to the MLB Network to watch their studio show with all the highlights and live look-ins, plus I've got at least one game going on MLB.TV on my laptop. It got really crazy recently when I did that while also flipping to the NBA or NHL Playoffs.

I watch a ton of sports, but I'm always amazed at how little I watch of certain things. I watch very little NASCAR. The NBA and NHL kinda get moved to the back-burner during the regular season. I catch a good amount of college football, but realized this past winter than I watched maybe one bowl game and only part of the BCS title game. But I still feel like I watch a lot of sports. They're on all the time. Which is why I am amazed at the people who have like 10 premium sports packages. Like people who have the MLB, NHL and NBA out-of-market packages, as if anyone has enough time for all three. The ESPN College Basketball package is the one that kills me because there are already thousands of games on regular cable. Thousands. What packages, if any, do you subscribe to?

Brown quoteMB: Yeah, I’m in the same position. I have a hard time keeping up with everything – at least in terms of watching complete games. I’ll admit that I don’t catch every NCAA football game that goes down, and ditto for NCAA basketball. I’m an auto racing junkie from my days as a kid watching SCCA races at Sears Point in the Bay Area, and I used to race motocross, so when it comes to motor sports, I try to catch as much as possible. I guess the sports I watch the least are tennis and golf, unless there is a compelling story line. I’m so engrossed in following the business side of things I just don’t have time for all of it.

As for packages, I have MLB Extra Innings, NFL Network NHL Center Ice and MLB Network. I could very easily see me going to NBA League Pass this season. After that, I’m going to have to clone myself to allow me to catch all the action.

As for Kobe, it has been a slow climb out of the darkness that happened in Colorado back in 2004. Think of where he'd be if he hadn't been wrapped up in the ordeal. Prosecutors dropped the charges, but something appears to happened there, it just wasn't rape.

Lemke quoteTL: Ok, as I am sending this message, you are probably staring at your iPhone, waiting for the White Sox-Cubs game to start so that you can check out the new version of the MLB At Bat application. Live baseball on your phone...what will these crazy kids think of next? Alas, I do not have an iPhone because I am too loyal to Verizon and a little stubborn. But I am jealous. First, I need you to give me your nutshell review. And second, I need you to speculate on whether live video on your mobile phone will ever take off. I mean, we live in an era with 72-inch high-definition televisions and people are hunched over their phones to watch a live sporting event? Am I missing something here?

MB: Baseball fans and tech geeks lucked out when MLB.com rolled out the Yankees/Nats and A’s/Dodgers games on Weds. night so I was able to give it a test drive the live streaming on the Dodgers game (for those interested, here’s the full review.) In a nutshell, the app for iPhone and iPod Touch is MLB.TV for mobile devices – live streamed games. Initially there will be two games a day, but eventually the full slate that MLB.TV online has will be streaming over-the-air for the mobile devices. There’s a couple of interesting technical pieces to the app. One, blackouts are done via patented geolocation technology. You select the game, and then a Google map-type activity occurs showing exactly where you are located and whether you fall in or out of a game’s blackout area. Second, the video quality is dynamic depending on whether you are on WiFi, G3, or Edge networks. I tested on G3 and the video quality still needs some work. Think low-def YouTube and you’re pretty close. The worst thing is that getting a full game in means stretching your battery life to the limit.

As to whether live streaming video for mobile will take off, I absolutely think so. For sports fans, I can see it becoming common place, but can really see it being used for content such as breaking news. Imagine being at a Nationals game and being able to watch live other teams playing in the NL East. For anyone that commutes via mass transit, such as the train, or for guy that’s gone on an extended shopping spree with their wife, it’s a great way to see what you might be missing otherwise. Lastly, don’t be jealous, Tim. Apple is reportedly in negotiations with Verizon as we speak, so iPhone may soon be coming to you, as well. When you throw in the fact that you can get home and away radio feeds, Gamecast graphics, and condensed games for At Bat 2009, it’s a must have for any sports junky.

 


Maury BrownMaury 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. He is contributor to Baseball Prospectus, and 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.

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Tim LemkeTim Lemke is the sports business reporter for the Washington Times

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