The new Moneyball is… Money

Consider for a moment: the $51 million posting fee paid by the Rangers for the opportunity to negotiate a contract with Japanese pitcher Yu Darvish will surpass the entire 2012 A’s payroll by $15-20 million. We’ve heard enough about the big moves the Angels made. The Mariners are debating whether or not to sign Prince Fielder. Or not. The Astros have a lame duck year in the NL Central before moving to the AL West for good. By the time the Astros enter the AL West, they should be on an upswing with a new, rich TV deal and an incentive for Jim Crane to retain fans because of the move.

MLB and MLBPA announced yesterday that the sum of all salaries for the 2011 season was just a shade under $3 billion. I’ve heard that total revenue was $7.2-7.5 billion, which would put the salaries at only 40-42% of revenue. Average salary was around $3 million. In that same release was the point that only two teams paid the luxury tax: the Yankees ($13.9 million) and Red Sox ($3.4 million). The new CBA is set to be more punitive against luxury taxpayers, but no one should think it’s going to seriously deter the Yanks and Red Sox. If it were a dollar-for-dollar tax as in the old NBA agreement it might have teeth.

Going back to the AL West, there’s a tasty blog entry by the Seattle Times’ Mariners beat writer Geoff Baker about the M’s long-term prospects. Plans are complicated by the ownership situation there. Majority owner and former Nintendo head Hiroshi Yamauchi may be looking to end his ownership tenure, the same way Drayton McLane slow-peddled the Astros for years. The natural choice to take the reins may be minority partner Chris Larson. Unfortunately for he’s embroiled in a messy divorce that has frozen any chances of pulling something off in the near term. (Doesn’t it seem like the only ways owners sell teams – McLane the exception – is because of a divorce or bankruptcy?)

Baker mentions that if the M’s were to be sold, the franchise’s price would be anywhere from $551 to $750 million. That’s an enormous difference. Much of that new value is based on the potential for the M’s to launch their own regional sports network, though they’re locked into an agreement through at least the 2015 season.

Back home in the Bay Area, the Giants (and Angels) are taking advantage of the Dodgers’ malaise. The Bums aren’t going to be down for too long, as they’ll be the recipient of a $4 billion TV deal when they’re allowed to negotiate it. Fox and Frank McCourt have been duking it out in court over when this can happen. McCourt won a battle last week, but today Fox was granted an injunction to stop any sale until their appeal is heard in January. Regardless of the outcome, the new Dodgers owner will be flush with cash thanks to $200 million a year coming just from TV. While the Giants are holding firm to a $130 million payroll, soon the Dodgers will be able to field that payroll without selling a ticket. That, combined with their dubiously perceived threat of the A’s moving to the South Bay, has to scare them a ton. The Giants already have hegemony over the region, and by region I don’t just mean the Bay Area, I’m referring to the 14 million throughout Northern California. They have ownership stakes in the flagship radio and RSN outlets. The sell out China Basin. What else can they do besides hiking up ticket prices sky high?

Surely the Giants have to be thinking about getting more revenue in hopes of matching the Dodgers, even if it means alienating cable partner Comcast/NBC/Universal. It could mean renegotiating the current deal or starting their own network, probably in conjunction with the Warriors, who may be SF-bound. They’d have to go to the trouble of divorcing Comcast, which as we found out with the Orioles/Nationals, isn’t exactly a cakewalk. Still, it’s something that should be explored since the Giants get more households viewing their games than the Angels, yet the Angels stand to make tons more from TV than the Giants.

Moreover, the Giants have to be drooling at the prospect of the A’s leaving NorCal entirely. That would give the Giants completely control over the 7.2 million-strong Bay Area and 14.5 million-strong NorCal region. That last number would put the Giants in control of the largest one-team market in the nation, even larger than the whole of New England (which divides Connecticut between the Red Sox, Yankees, and Mets). One baseball insider I spoke to said that if the Giants got the market to themselves, their franchise value could go up as much $500 million. A billion dollar franchise in SF. That’s the Giants’ gambit. It’s nakedly aggressive and greedy, and it shows in their vociferous defense of territorial rights.

If MLB rules for the A’s to go to San Jose, expect the Giants to go hard at the RSN market. It might start with an attempt to raise the subscriber fee for CSNBA, which shouldn’t be a big deal for Comcast since they’ll get to reap the benefits as well. It would start protracted negotiations with other TV providers such as DirecTV, Dish, Charter, Verizon, and AT&T (oddly enough). And if the Giants weren’t getting enough, they could use their market presence and power to start their own network, Comcast be damned. That would actually be good for the A’s, since it would for the first time create real competition within the market. Right now having Comcast as the only game in town severely depresses the market for the A’s TV rights, even though ratings-wise they’re similar to the Angels. If the Giants were to leave, Comcast could latch onto the A’s as Fox did the Angels, a desperate move to keep valuable content in-house. The A’s could start their own network with the Sharks and Earthquakes, but they wouldn’t be able to muscle Comcast the way the 800-lb. Giants can. (For those who think the cable monopolies will wither as games and other content are going to IP-based solutions with the providers as dumb pipes – think again. There’s too much at stake.)

With all of that in mind, while I’m rooting for the A’s to be able to explore San Jose to keep them in the Bay Area, I’m rooting for the Giants to push forward with their own network and get more revenue, since the move should have positive cascading effects for the A’s as well. Alas, we’re a ways off from anything like this happening. Hang in there, A’s fans.

8 thoughts on “The new Moneyball is… Money

  1. When did the Giants start to get their fingers into everything? I hate them, but their ownership group has seemingly done a great job at manipulating the field. The A’s have a lot of work to do.

  2. The Giants and their fans are a bunch ungrateful, selfish, greedy POS! The Haas family was nice enought to allow them SJ territory rights, so they can work on getting a ballpark in SJ, when they were considering moving to Tampa in the early 90’s. Since the Giants ended up staying, those territorial rights should have been REVOKED by MLB anyways! The A’s will be in SJ, because it is in the best interest of the A’s organization and their future and it is in the best interest of baseball to have the A’s in SJ as well. Screw the best interest of the Giants! What are they scared of the A’s taking away their fans? Unreal.

  3. @ML, can you explain the relationship between CSNBA and CSNCA? Don’t the Giants have a stake in CSNBA?
    @Makhan, In an interview on KNBR last week, Baer did say that the Giants met with MLB, not sure when though. Hope Rosenthal is also wrong about the TR not being on the January agenda. What I don’t get is didn’t MLB say they wanted the A’s in a new ballpark by 2015? If MLB doesn’t decide settle this issue now, how are the A’s supposed to make the 2015 date?
    Not to totally hijack this thread, but I caught Andy Dolich’s interview on KNBR this afternoon. I’ve lost all respect for the guy.
    Sorry ML…

  4. @fc – CSNBA is owned by Comcast, Fox Sports, and the Giants. CSNCA is owned wholly by Comcast.

    What did Dolich say in the interview?

    BTW, new post up with my comments. Ahem.

  5. @marinelayer, so the a’s could either get a much better contract or could attempt to start their own network if Giants blow up CSNBA and try to star their own network?

  6. @Nicosan – I don’t think both teams could start their own networks. It would take the Giants to use their market power to force the price of their rights higher, which should do the same for the A’s. Then it would be up to Comcast to match the asking price(s).

  7. Why not an A’s/Giants jointly owned network? That could make both teams rich and competitive in their divisions.

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