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August 02, 2007
Fortune: YES (and Yanks?) For Sale
I heard Mike & Mike talking about this report from Fortune on ESPN Radio this AM. Here's the highlights from the article:
The New York Yankees' cable network, the YES Network, is for sale, Fortune has learned. And some baseball insiders and Yankees limited partners are wondering whether the team itself might be next.
The highest-rated regional sports network in the country and the cable home of the Yankees and the NBA New Jersey Nets, YES is jointly owned by the Yankees, investment bank Goldman Sachs & Co. and former Nets owner Ray Chambers. Goldman and Chambers would like to cash out, YES and Yankees insiders say, and one source says to expect a deal by summer's end. Some possible bidders: Cablevision, Comcast, News Corp. and Verizon.
Publicly, Yankees and YES officials are noncommittal. "Absolutely not," Yankees president Randy Levine replies when asked whether YES is for sale - though not before acknowledging some "testing of the market." Gerry Cardinale, a Goldman managing director and YES board member, is more forthcoming, conceding that YES is in fact being shopped. "We're testing the waters with a limited universe of quality buyers," says Cardinale. "We would consider selling only if we receive a full and fair price."And what might a "full and fair" price be? Try a cool $3 billion to $3.5 billion. At that price, one could argue that the true gem of the Yankees business empire isn't the team itself but YES.
Indeed, selling YES could well be part of a long-term plan to keep the Yankees in the Steinbrenner family. The windfall from YES, of which the Yanks own 36 percent, would provide a cushion to pay off any future estate taxes as well as provide the money needed to sign expensive free agents, pay draft picks and otherwise run a business heavy on fixed costs. "The reason they're cashing out is in very large part so they'll have enough cash to continue to own the team," says one source.
Even so, there remains speculation among the Yankees limited partners and other baseball insiders that Hal is simply echoing the wishes of an ailing father - that the Steinbrenners do not intend on keeping the team long term. The topic of a sale "comes up all the time" in conversations with the other partners, says Yanks minority owner Edward Rosenthal, a retired steel executive. Adds another Yankees limited partner: "If I were handicapping it, I think we're looking at a sale of the team within three or four years."
Maybe Yankees fans should hope that Mark Cuban doesn't get the Cubs - so that he can buy the Yankees when/if the team goes up for sale?
Posted by Steve Lombardi at August 2, 2007 09:05 AM
Comments
Paul Allen is a possibility too. He's been after an MLB team for a while and he certainly has the $$$.
Posted by: christopher ![[TypeKey Profile Page]](http://www.waswatching.com/nav-commenters.gif)
at August 2, 2007 09:26 AM
For those who don't know Allen:
http://www.forbes.com/lists/2007/10/07billionaires_Paul-Allen_1217.html
Posted by: Steve Lombardi at August 2, 2007 10:10 AM
Big fluffy towels!
Posted by: rbj at August 2, 2007 10:25 AM
It's scary to think of what is being contemplated here. Cablevision or Rupert Murdoch owning the YES Network makes my stomach turn.
From a business standpoint, I don't see how selling YES makes any sense for the Steinbrenners unless they totally divest themselves of the team as well. The biggest value in sports isn't owning the team but owning entity that holds the media rights. It's why teams that simply sell their media rights in exchange for a fee don't have the payrolls of teams like the Yanks, Mets, or Red Sox, who all have dedicated networks.
I guess the Yanks are on the block and this is the first step in that endeavor. Gloomy days lie ahead if an asshole like Murdoch does to the Yanks what he did to the Dodgers...
Posted by: MJ at August 2, 2007 10:51 AM
It doesn't sound like the Steinbrenners are the ones who want to sell. They are only hold a minority stake in the network. If the other boardmembers want to sell, there's not much the Steinbrenners can do. I suppose they could make an offer to buyout the remaining the 64%, but I'm not sure the have the money or the interest to compete with some of the other big corporations mentioned.
Posted by: christopher at August 2, 2007 11:20 AM
If Allen bought the Yankees, one can only hope he wouldn't run them like he has the Trail Blazers. Ugh.
Posted by: nettles at August 2, 2007 11:54 AM
The Yanks don't have to sell their share; Goldman Sachs & Chambers can be bought out without the Yanks dumping their 36%. I assume that if the Steinbrenners are selling their share of YES that they're certainly getting ready to put the team on the market. The Yanks derive much of their financial muscle and value from YES and one without the other isn't a great investment.
Posted by: MJ at August 2, 2007 12:09 PM
The key to this is the estate taxes generated upon George's ultimate demise. I can guarantee you that Hank, Hal and Jennifer do not have the liquid assets to pay it. If you remember, when Joe Robbie died his heirs were forced to sell the Dolphins to pay huge estate taxes. So divesting interest in the network,while unsettling to those
who are no fans of Cablevision, may be necessary to hold on to the team itself. Thus, the new ballpark is critical to generate new income to make up for the potential loss of network income.
Posted by: Santino53 at August 2, 2007 12:53 PM
And when Jack Kent Cooke died, his heirs had to sell the Washington Redskins -- to Dan Snyder. I don't want a Snyder type to own the Yankees.
Posted by: rbj at August 2, 2007 01:10 PM