Financial story about Cleveland franchise and media rightsDecember 29th, 2012 by terrybenish
In the past twenty four months there has been an almost monthly set of events regarding various sport’s franchises making deals about their media rights for periods of times. Enormous deals, billion dollar deals, hundreds of million dollar deals.
The Los Angeles Dodgers emerged from a bankruptcy sale and did an enormous deal with Fox and then went on a spending spree in terms of trades and free agent signings. The new owners thinking if we get a bunch of really good players, we will win games and people will come to games and a lot more people will watch them on television/cable and the television/cable people will make even more money selling ad space to mega firms. The cable company being Fox for $6.1 billion Fox http://www.sportsbusinessdaily.com/Daily/Issues/2012/12/19/Media/Dodgers.aspx
These are not forever deals. They are for five years or ten years and then the team gets to do it all over again. For potentially even more money. Capitalism, got to love it.
But the deal below is different in a number of ways. Several teams, such as Atlanta, New York, Boston actually own their own networks. Fox also owns some twenty regional sport’s networks as well their so called news network. Cleveland had their own network and sold it to Fox. Then they bought the rights for ten years for $400 million for ten years.
$400 million is a great deal less than the number that has been
bandied about for the Mariner media rights, say $700 million to a
$1 billion. The Mariner owners can say that they had 3,000,000
people come to their games and a huge media audience from Oregon to
Montana and Alaska
that is most likely bigger than Cleveland’s market area and it’s unlikely that Portland, Spokane, Anchorage or Spokane will get a team so that seems locked up, but it is the smallest number for a ten year deal that has been seen recently.
Do the Mariners then follow the Dodger’s lead and trade for players, or wait until the new deal happens and sign players? Do they dividend the new media deal to the group of investors that put up a relatively small number to own the company? They can do that, legally. $400 million is bound to put some vinegar in their cream this morning, though. Especially, when they’ve been looking at that $1 billion like the rest of us.
Geoff Baker wrote yesterday that Jack Zduriencik said more is to come before end of spring training. Like to Cleveland story below.