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Home Pete Toms LWIB: Sizing Up the State of the Toronto Blue Jays

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LWIB: Sizing Up the State of the Toronto Blue Jays PDF Print E-mail
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Pete Toms Article Archive
Written by Pete Toms   
Tuesday, 13 December 2011 15:03

Last Week in Bizball by Pete Toms

Once upon a time, the Toronto Blue Jays won back-to-back World Series (92 & 93) and led MLB in player payroll (93 & 95) and attendance (89-93). Since the introduction of the expanded playoffs in 94, they are one of only 4 franchises (the others are the Royals, Pirates and Nationals) to not qualify for the postseason. What the hell happened?

The decline in the on and off field fortunes of the Blue Jays coincides with the '94 acquisition of - then franchise owner Labatts Breweries - by Belgian brewer Interbrew (now InBev). Interbrew proved to be a disinterested and neglectful owner of the baseball club. In 00, media conglomerate Rogers Communications Inc., (RCI) purchased the Blue Jays. It is widely believed that, although decidedly not a sports fan, the late Ted Rogers (former President & CEO) insisted that RCI purchase the Blue Jays out of loyalty to his native Toronto, rather than to bolster his company’s bottom line. During RCI’s decade plus ownership of the Blue Jays, big league player payroll has fluctuated from the bottom third of MLB to the middle ranks. It is not at all unusual that a franchise’s big league payroll fluctuates, as many small/mid market franchises employ a strategy of “cycling”. However, given that Toronto has the 4th largest population amongst MLB cities, behind NY, LA & Chicago (all host 2 MLB franchises), many Blue Jays fans have been frustrated that RCI has, not once, raised the Blue Jays’ big league payroll into the upper echelon of MLB. In other words, RCI has operated as a mid/small market owner while situated in a big market.

SELECT READ MORE TO SEE THE REST OF THIS ARTICLE

This current era of Blue Jays stewardship commenced in October 08 with the return of the President & CEO of their glory years, Paul Beeston. In October 09, Beeston dismissed GM JP Ricciardi and appointed then-asst GM Alex Anthopoulos to the position. Anthopoulos has engendered much good will amongst the Blue Jays faithful. The beginning of Anthopoulos’s “cycling up” plan was meeting Roy Halladay’s demand that he be traded to the Philadelphia Phillies. Subsequently, and seemingly miraculously, he ridded the club of the contracts of Alex Rios and Vernon Wells. After years of the Blue Jays skimping on the cost of acquiring amateur talent, he hired a raft of scouts and the franchise has recently been amongst MLB’s biggest spenders in both the international free agent market and the Rule 4 draft. He signed Jose Bautista and Ricky Romero, the club’s best position player and pitcher, to deals which don’t expire until the middle of this decade. A core of young veterans, Yunel Escobar, Colby Rasmus, Sergio Santos, Travis Snider, Adam Lind, Brandon Morrow and Brett Cecil, are “controllable” (not eligible for free agency) for the next handful of seasons. 3B Brett Lawrie, acquired by Anthopolous for Shaun Marcum, made his major league debut in Toronto last season and is likely a future All Star. Perhaps most promisingly, the Blue Jays farm system contains one of the best collection of prospects in MLB, particularly at the Double A level and below. To top it all off, Beeston has said repeatedly that when his GM is confident that adding expensive, veteran players to the mix is the final piece in vaulting the Blue Jays into the playoffs, RCI won’t hesitate to spend big. Add to that the addition of another Wild Card team to the AL, possibly this upcoming season but more likely in 13, and Blue Jays fans can realistically foresee meaningful September baseball in their city for the first time in almost 2 decades.

But LWIB, the message coming from Blue Jays management took an abrupt turn (or did it?). Going into, and during, the Winter Meetings, the baseball punditry reported and tweeted often that the Blue Jays had a lot of money to spend. The Blue Jays were frequently reported as serious suitors for both Prince Fielder and Yu Darvish (the reports persist, and may be valid). But we are astute enough to realize that clubs and agents manipulate the baseball press to influence the free agent market….so, take it for what you will. But what caused much consternation amongst the Toronto baseball press was Anthopoulos seemingly going out of his way to temper the expectations of Blue Jays fans in regards to future spending on big league payroll. Shi Davidi wrote that, “Last winter, during an event with the club’s season ticket holders, Beeston said he envisioned one day spending well into nine figures on payroll, a position he still stands by.” However, as Davidi reported, during a discussion with Toronto reporters concerning the acquisition of Sergio Santos, Anthopoulos surprised all when he communicated that Blue Jays fans should not assume that RCI will soon fund a big increase in big league payroll:

Yet there was something odd in hearing Anthopoulos go out of his way Tuesday to repeatedly talk about the financial "parameters" he must work within, and how his team’s ability to hike up its payroll has been "grossly exaggerated."

Anthopoulos could have left things on the trade for Santos – who is guaranteed US$7.5 million over the next three years and up to US$2.25 million more if all three of his club options for 2015-17 are declined – at another clever and fiscally responsible move, but he didn’t.

Instead, a perception was created that the Blue Jays – who will lose a chunk of money through changes to revenue sharing in the new collective bargaining agreement starting in 2013 – may be altering their spending plans for seasons to come.

Beeston responded to Anthopoulos’s comments, "We’re still capable of going to the US$120 million payroll once we start drawing the people," he said. "Once we start drawing the people means that we’re winning, right? The formula hasn’t changed."

A few days later, Jeff Blair wrote, “This was a week in which Blue Jays general manager Alex Anthopoulos had to defend himself against charges he’d called out the team’s fan base when he said increased attendance was a necessary precursor to a $120-million payroll, amending it to increased revenues, and telling a reporter at a morning scrum on Thursday he did not want to go over payroll “parameters” or “borders” any more but would rather focus on what he’s trying to do with the team. Nobody in Toronto seems to know any more what the chicken or egg is, let alone which comes first.”

Further fuelling the media speculation over the Blue Jays’ uncertain direction is their long-reported interest in Yu Darvish. During the season, Anthopoulos travelled to Japan to scout the pitcher. More recently, Beeston has made comments critical of the “posting process” which is unavoidable if the Blue Jays are to acquire Darvish. The obvious, and frequently asked question in Toronto, is why did Anthopoulos go to Japan if his boss was philosophically opposed to the “posting process”?

If there has been a very recent, and significant, change in RCI’s approach to operating the Blue Jays, is it a direct result of the new CBA? The initial concern in the Toronto baseball media about the impact of the new basic agreement focused on the limits it will impose on spending in both the Rule 4 draft and international free agent market. As already mentioned, the Blue Jays under Anthopoulos have been very aggressive in both. But LWIB Anthopoulos publicly acknowledged that the new CBA will result in the Blue Jays receiving less revenue sharing money. LWIB, Darren Rovell wrote, “The new deal, for the first time ever, disqualifies 15 markets from receiving initial revenue sharing dollars. They are: The Yankees, Mets, Red Sox, Cubs, White Sox, Phillies, Blue Jays, Nationals, Braves, Rangers, Astros, Giants and A's (assuming they build their new stadium).” However, the new CBA’s market disqualification revenue sharing program may help the Blue Jays more than it hurts them. Joel Sherman explained how it has taken the Blue Jays’ AL East rivals, the Yankees, out of this free agent market. Sherman also noted that it also, “…is designed to prevent big markets such as Toronto and Washington from receiving revenue sharing dollars,..”

None of us know for certain if LWIB saw a fundamental change in course by Blue Jays management and ownership. Perhaps the Blue Jays will sign one of, or both, Fielder and Darvish. But the uncertainty surrounding the Blue Jays is consistent with RCI’s inconsistent (disinterested?) approach to ownership of their baseball franchise. As mentioned, Ted Rogers reportedly bought the team out of civic duty but then proceeded to largely ignore the team up until his passing in December, 08. Within weeks of Rogers death, a swath of Blue Jays reporters were writing that “unnamed sources” (I have to assume from within RCI) were telling them that RCI wanted to sell the baseball franchise. Whether or not RCI failed to attract any interest in the franchise, or simply changed their mind, is unknown to me. The return of Beeston has marked a renewed commitment from RCI to the Blue Jays. Via the return of the red maple leaf to the Blue Jays uniforms and logo, affiliating with a minor league team in Vancouver, bringing back the “winter caravan”, partnering with Baseball Canada in summer baseball camps and, reportedly, affiliating with, and perhaps investing in, a Double A franchise to operate in Ottawa starting in 13, RCI is attempting to brand the Blue Jays as Canada’s, not just Toronto’s, MLB franchise. And there is evidence that fans are responding to the Blue Jays offerings. Blue Jays TV ratings were up 17% last season and year-over-year attendance was up approximately 12%. Beeston has also succeeded in securing greatly more dollars from ownership for player development. Live Blue Jays games were an integral part of last year’s launch of RCI’s 5th all sports channel, Sportsnet One. Some games were available exclusively on the new channel to entice RCI’s cable subscribers to pay for another channel. At the same time, the exclusivity of games on the new channel put pressure on other canadian cable providers to carry it. Last season, live Blue Jays games were at the centre of RCI’s rollout of their version of “TV Everywhere”. In other words, allowing authenticated RCI cable and mobile subscribers to view the live games over the internet and on their mobile devices.

But nobody has ever questioned that RCI’s ownership of the Blue Jays isn’t worth something to them. The Blue Jays provide valuable programming to RCI’s collection of all sports TV channels plus terrestrial radio stations and now to their internet and mobile subscribers. Televised Blue Jays games are available exclusively on RCI’s cable TV sports channels and RCI is the nation’s largest cable provider, most importantly, the dominant provider in Toronto. RCI owns the Rogers Centre, which serves as a corporate billboard in downtown Toronto. Whether or not the Blue Jays are a “profitable” asset to RCI is impossible to know, and maybe even irrelevant, given the fungibility of the money involved in corporate related party transactions. Not so long ago, there was fear within MLB that franchises owned by big media companies (Fox, Disney, Time Warner, Tribune Co.) would dominate on, and off, the field. That hasn’t happened. Today only 2 big media companies, Liberty Media is the other, own MLB franchises. Not coincidentally, Liberty Media, like RCI with the Blue Jays, has taken a very conservative approach to owning the Braves. Large publicly traded companies learned that pro sports ownership didn’t fit with their model. The revenues that these franchises generate are irregular and seasonal, a poor fit when investors and analysts are scrutinizing quarterly EBITDA. Revenues are greatly impacted by making, or missing, the playoffs, which, as fans know, is highly unpredictable. Corporate brands, like RCI, take a public beating when their pro sports team underperforms and disappoints. Simply, the teams got lost in a vast corporate culture where they only proved to be a nuisance. .

For better or worse, the Blue Jays and RCI will likely remain wedded. Like their counterparts in the US, Canadian cable/sat providers RCI, Bell and Quebecor are betting that controlling the rights to live sports programming is the key to preventing their subscribers from switching to OTT services. Ideally, RCI could rid themselves of the headache of owning the Blue Jays and the Rogers Centre (probably a bigger money pit) if they were certain they would continue to control the media rights. But there appears to be no wealthy Toronto baseball fan looking for a “vanity buy” (I don’t think Geddy Lee is THAT wealthy) plus playing in one of the last 2 multipurpose stadiums in MLB makes the Blue Jays an even less appealing asset, particularly minus the TV/digital rights. There are no viable markets to move to, and if there were, RCI would meet with a severe backlash from fans and media for selling the team to an American buyer.

Prior to LWIB, Blue Jays fans had plenty of reasons for optimism. After LWIB, we are left to wonder if the future of RCI and their baseball team is just more of the same.

You can follow me on Twitter @PeteToms


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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