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December 04, 2005
Yanks The Biggest Loser?
From the Daily News:
Despite drawing more than four million fans, the Yankees lost between $50 million and $85 million for the 2005 season, several Major League Baseball sources told the New York Daily News. The benefactors of baseball, who pumped more than $200 million into their payroll and almost $110 million into revenue sharing and luxury tax, are deep in the red this year.
"Yes, even George has his limits," one source said.
And it may get worse.
According to lawyers close to the situation, the Yankees might have to share additional revenue with poorer clubs if a consultant hired by MLB decides they undervalued their television rights. The Yankees currently charge the YES Network about $60 million a year to broadcast games, but the consultant is expected to say the rights are worth far more. If he does, that will mean the Yankees will be required to make up the difference and put more money into the revenue-sharing fund.
The Yankees and the YES Network might appear to be one and the same, but the ownership of each is constructed differently and they are required by baseball to operate as two separate entities. MLB doesn't want clubs with their own networks to hide team revenues in network accounting books as a way to avoid revenue sharing.
"They're going to owe us money," one MLB source predicted.
Hey, take Kevin Brown off the team and that $50 million is closer to $30 million. And, that doesn't seem all that bad. If the Yankees are smart with what they pay who, they should be OK going forward.
Posted by Steve Lombardi at December 4, 2005 09:19 AM
Comments
If the Yankees are smart with what they pay who, they should be OK going forward.
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You could say that about every team in MLB...
Anyway, this is quite the interesting development; I've gotten the impression that most teams undervalue their tv rights. So if the Yanks are going to be affected other teams will be as well. At least in theory
Posted by: Raf ![[TypeKey Profile Page]](http://www.waswatching.com/nav-commenters.gif)
at December 4, 2005 10:29 AM
Raf, the main reason that YES was created (from a business point of view since you can always just sell your rights to the highest bidder)was to imitate the practices of TBS, WGN, and FOX Sports in So. Cal. of "under-representing" the value of those rights. This has been going on for literally decades...and we're now supposed to believe that MLB is going to crack down on its abuse by...wait for it...the New York Yankees? For years now, I've thought that George has a decent racketeering case against Bud E. Selig and MLB. This only provides further evidence for it.
Posted by: JohnnyC at December 4, 2005 11:48 AM
Putting on my Oliver Stone hat. The lines of influence that connect the last 5 WS champions to Bud Selig's manipulations would make a rather illuminating graph.
Arizona 2001 -- Colangelo is "allowed" to violate Selig's own rule against any team borrowing capital funds above 40% of the fair value of the franchise and makes a series of trades that make GM Joe Garagiola, Jr. look like a fool in order to benefit Red Sox, Brewers, Marlins, and the MacCourt-owned Dodgers (they trade RJ to Yankees only because the Red Sox don't need him and George is the only owner willing to extend the contract of a pitcher already in his forties...even Clemens works on a 1 year deal).
Angels 2002 -- the WS win allows Disney to sell the team for maximum value at precisely the time they needed to sell it -- to another hand-picked Selig client, Arte Moreno, who is already following the Selig Plan of pressuring the local authorities to build a completely unnecessary stadium with taxpayer monies.
Marlins 2003 -- Selig rewards Jeffrey Loria for being his bag man in Montreal and thinks it will push Dade County to build a new stadium on the citizens' dime.
Red Sox 2004 -- see Loria and, again, with Lucchino on board, another attempt to persuade local authorities to build a new stadium (so far rejected...might need another WS before it works).
White Sox 2005 -- Jerry Reinsdorf, longtime critic of Steinbrenner, longtime anti-labor standard bearer, builder of the "new" Comiskey now Unicellular Life Park, currently the head of Selig's select committee on new ballpark extortion (er, development)who just this week traveled to D.C. to berate local pols about the non-existent plans for a Nationals' stadium.
Bud Selig is a visionary who treats his friends very well.
Posted by: JohnnyC at December 4, 2005 12:15 PM
JohnnyC: I'm aware of the financial shenanigans in MLB, I'm just saying that if they're cracking down on it now, it will be an interesting development.
That it's the Yanks is not suprising, the last few CBA's have been aimed directly at them. That's nothing new.
BTW, I would love it if Stein could prove a racketeering case against Bud & Co, but if the Expos and their owners couldn't do it, I wouldn't hold my breath.
The business side of MLB is disgustingly slimy.
Posted by: Raf at December 4, 2005 02:43 PM
//Bud Selig is a visionary who treats his friends very well.//
Great summaries JohnnyC!
Posted by: Steve Lombardi at December 4, 2005 11:02 PM
*gasp* you mean the World Series is fixed?
AOL/Time Warner (they still own the Braves, right?), I suggest you guys start cozying up to Mr. Selig :D
Posted by: Raf at December 5, 2005 11:50 AM
JohnnyC, I agree with you re: racketeering. This is pure and simple racketeering and GS should fight this. It is killing the goose that laid the golden egg.
But how can GS afford a new overpriced ballpark?
Posted by: Don at December 5, 2005 06:29 PM