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Pete Toms Article Archive
Written by Pete Toms   
Monday, 17 January 2011 23:11

Last Week in Bizball by Pete Toms

This week in “Last Week in BizBall”, is MLB done with Frank McCourt? an update on the likely sale of the Astros, more “reality based” TV for MLB, the NCAA indicates they are ready to abolish their “no agent” rule, plus tidbits

IS MLB DONE WITH FRANK MCCOURT?

LWIB Bill Shaikin reported in the LA Times that Fox, which owns the local TV rights to Dodgers games, has “advanced” Dodgers owner Frank McCourt “…money to help cover the team's current operating expenses,..”. Spokesmen for Mr. McCourt, Fox and MLB all refused comment to Mr. Shaikin. It surprised some that Fox, after being so eager to unload the Dodgers that it loaned McCourt almost $200 million to complete the sale in 04, was again investing (indirectly) in the Dodgers. But just as Fox’s interest in acquiring the Texas Rangers was about preventing Mark Cuban, or others, from launching a competing RSN to Fox Sports Southwest, Fox’s loan to Frank McCourt is about maintaining control of Dodgers TV rights. (The Dodgers deal with Fox runs through 13) Court filings in the McCourt divorce trial revealed that they were exploring the possibility of launching a Dodgers centred RSN once the current deal with Fox expires. Given the explosion in the value of local TV rights in MLB, the Dodgers will realize exponential growth in local TV revenues over the reported $35-$39 million annual fees they will collect from Fox over the final three years of their current agreement.

As well, last week the judge presiding over the divorce of Frank and Jamie McCourt certified as final the ruling in which he threw out a marital property agreement that would have provided Frank McCourt with sole ownership of the Dodgers. All this on the heels of a report that earlier this month Mr. McCourt met in NYC over three days with officials from MLB to persuade them that he has the financing in place to operate the Dodgers in light of his well documented financial problems. No doubt the meetings with MLB were leaked to the press by MLB. The same reports included comments from anonymous sources and even an unnamed owner questioning if Commissioner Selig would approve of Mr. McCourt’s financing plans, including an extension of the local TV rights deal with Fox. If the baseball punditry is correct, Frank McCourt’s ownership of the Dodgers is nearing it’s end. Either he will be forced to sell the club (perhaps even to Jamie McCourt) to settle his divorce or Commissioner Selig will make it impossible for him to operate the franchise. Just as MLB forbid former Rangers’ owner Hicks Sports Group (HSG) to accept a loan from Fox, will the commissioner forbid Frank McCourt from accepting Fox’s money? While MLB quashed the Fox loan to HSG, MLB did extend financing to HSG. Is Frank McCourt being afforded the same access to MLB’s credit facility? Ultimately, if Commissioner Selig and the other 29 owners don’t want Frank McCourt to own the Dodgers, he won’t. From Bill Shaikin’s piece on the reported cash advance from Fox:

I don't think it boils down to Frank's ability to get a cash advance," said David Carter, director of the USC Sports Business Institute. "The uncomfortable thing for him is that perception is reality.

"Whether it's rumors that people are lining up to buy the team, or whether he is trying to get partners, any of that dialogue undermines his ability to control and run the team. That includes the perception that Major League Baseball might try to get involved.

"What you're talking about is a much bigger issue, and that is whether the other owners want to see the Dodgers — the Dodger brand — in Frank's hands."

Buster Olney remarked on Bill Shaikin’s report that Frank McCourt had met with MLB officials earlier this month. “This is a big deal, because while MLB cannot force him to sell directly, the other owners can essentially cut off his financial lifelines by not agreeing to his efforts to raise cash -- and, with all of the deliberate effectiveness of a boa constrictor, squeeze out McCourt as the Dodgers' owner. “

If Commissioner Selig is attempting to “force out” Frank McCourt, is MLB headed for another legal battle over their ability to dictate who owns “their” franchises? (see Texas Rangers) After all, Mr. McCourt does have a reputation for being enthusiastically litigious.

Already there is conjecture over the seemingly imminent sale of the Dodgers. LWIB this Forbes SportsMoney video segment (fast forward to about the 2 minute mark) includes a discussion between Mike Ozananian and uber sports banker Sal Galatioto of GSP about a Dodgers sale. Both agree that there will be a long line of super wealthy individuals eager to spend on a “vanity buy” given the Dodgers illustrious brand. Mr. Ozanian speculates that the franchise could fetch $800 million but cautions that the enormous debt the franchise is carrying will be of concern to potential bidders. Mr. Galatioto believes that interested buyers will be dormant until the McCourt divorce is finalized, which he states could drag on for another few years.

A new era of ownership for the Dodgers is coming. It appears only a matter of who and how soon. How soon the McCourt’s divorce can be finalized and which group MLB will approve. Don’t be surprised if that process includes yet another lengthy court battle involving MLB.

SELECT READ MORE TO SEE ASTROS SALE UPDATE, ANOTHER FORAY INTO “REALITY BASED” TV FOR MLB, NCAA SET TO ABOLISH “NO AGENT” RULE?, AND THIS WEEK'S TIDBITS

ASTROS SALE UPDATE

LWIB, Zachary Levine reported in the Houston Chronicle that there are many (20-25) parties interested in purchasing the Houston Astros. Mr. Levine also reports that Steve Greenberg of Allen & Co. is representing Astros owner Drayton McLane in the process. The report notes that, “Allen & Co. was instrumental in the sale of the Brewers from commissioner Bud Selig's family to Mark Attanasio.” Unlike the recent sales of the Rangers and Cubs which were protracted by bankruptcy, Mr. Levine foresees a relatively quick completion of the sale with a new owner in place for the 12 season.

This aforementioned Forbes SportsMoney video segment includes a discussion of the state of the Astros sale process. (Fast forward to about the 4 minute mark) Mike Ozanian and Sal Galatioto discuss the role of the nascent RSN CSN Houston in the sale. Mr. Ozanian speculates that McLane is asking $750-$800 million for the franchise, including its stake in the aforementioned RSN, while many believe it is not worth more than $500 million. Ozanian and Galatioto discuss the potential value of the Astros stake in the RSN, mentioning a figure of $150 million. (According to different media reports the Astros and Rockets share 77.5% ownership in the RSN with Comcast owning the balance. According to the same reports, CSN Houston will air Rockets games beginning in 12 and Astros games in 13.)

ANOTHER FORAY INTO “REALITY BASED” TV FOR MLB

Last week I drew attention to Richard Sandomir’s report detailing HBO’s interest in partnering with other pro sports leagues after the success of the recently concluded 24/7 series featuring the NHL’s Capital and Penguins. MLB was mentioned as one of the potential new partners. An MLB/HBO joint venture now seems much less likely with the announcement LWIB that MLB is partnering with Showtime on a “reality based” series which will document the upcoming season of the WS champion SF Giants. Fang’s Bites has the press release here. Henry Schulman of the SF Chronicle raised the subject of whether the production will prove to be a distraction to the Giants:

The Showtime program could benefit the Giants by providing exposure to an entertaining cast of characters and a franchise that gets little national publicity, World Series or not. But that comes with a potential cost.

The notion that what happens in the clubhouse stays in the clubhouse goes out the window; the show could prove to be a distraction.

Team President Larry Baer said there will be a "trust factor" with producers that will allow them to shoot compelling insider video without compromising players' privacy or fomenting internal strife.

Then again, the network will not want to show an hour of pitchers' fielding practice. In the statement announcing the series, Showtime Entertainment President David Nevins said he was confident it "will make for provocative and groundbreaking television."

Nevins told reporters that if the show succeeds it could become a recurring series. “Ideally it’s the beginning of a franchise with a different team every year,”

This isn’t MLB’s first foray into the genre of “reality based” TV. Last season the White Sox were the subject of MLB Network’s The Club. I don’t know if the response to “The Club” met MLB Network’s expectations nor if there are plans for a second season of the program.

NCAA SET TO ABOLISH “NO AGENT” RULE?

In recent years the NCAA’s so called “no agent” rule has been the focus of two different lawsuits involving pitchers Andy Oliver and James Paxton. Oliver settled out of court with the NCAA and Paxton lost his suit with the University of Kentucky over his relationship with Scott Boras. Seemingly everybody involved in baseball except the NCAA thinks the “no agent” rule is a farce. LWIB it appeared that the NCAA is ready to admit that their controversial “no agent” rule needs to be radically altered. Aaron Fitt reported for Baseball America:

After years of denying the simple truth that almost every drafted baseball player has an agent who communicates on his behalf with professional teams (in violation of the NCAA's "no agent" rule), the NCAA suddenly seems ready to acknowledge that its rules are in direct conflict with baseball's industry norm.

"I often say if I had a son who was lefthanded and threw 95, I'd want to know what his worth was," Poppe said. "I've been in the business a long while, and I wouldn't know what it would be. So we need to provide somehow within our rules an opportunity for a young man to be informed and still not professionalize himself, which may require a review of our current regulations. And I'm not saying this is going to happen, but it may require a more federated approach for each sport, because there are distinct differences.

"It's a long way of saying it's a major issue. We're looking at the differences between sports, ways that we can still maintain the principles of college athletics, but most importantly make sure these kids are informed. They've got to make a decision, and they've got to have information. How can we do that within our rules without causing them to violate the rules?" (Dennis Poppe is the NCAA's vice president for baseball and football)

TIDBITS

  • It isn’t Martin Luther King Jr. Day in Canada, but it is MLK Day for practically all my readers. So, happy MLK Day. The integration of MLB, beginning with Jackie Robinson, is typically viewed as the game’s greatest contribution to US society. For instance, see this piece published today at MLB.com. There are some who believe that MLB’s motive to desegregate wasn’t the advancement of civil rights but plain ol money. I blogged about their perspective in June of 09.
  • In November I examined TV ratings for last season’s World Series. Included amongst my remarks was, From ‘99-‘07 the World Series garnered bigger TV ratings than the NBA Finals. This year was the second in the last three that the opposite happened. Match ups and length of series obviously have a lot to do with that but more worrisome to MLB is that the WS numbers for the 18-49 age group are in serious decline, especially in comparison to the NBA Finals. LWIB the Sports Media Watch blog noted that, Nearing the halfway point of its 96-game slate, NBA TV is averaging over 50% more viewers for its live NBA games than MLB Network did for live baseball coverage during the 2010 season. They also note that in the male 18-34 demographic, NBA TV is averaging 59,000 viewers for live games in comparison to 25,000 for games on MLB Network. MLB Network is available in approximately 55 million homes. NBA TV is available in approximately 54 million homes.
  • Somebody I’ve never heard of is reported to be Josh Lewin’s replacement on Rangers’ TV broadcasts.


Pete Toms is senior writer for the Business of Sports Network, most notably, The Biz of Baseball. He looks forward to your comments and can be contacted through The Biz of Baseball.

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