Notes and Thoughts From Today’s Terry McGuirk Interview
January 26, 2012 at 11:02 am by Franklin Rabon under Atlanta Braves
Surprisingly frank. That was my first thought when reading today’s interview by Tim Tucker of Braves “Franchise Control Person” Terry McGuirk. I never expected that we’d ever get a firm, confirmed number on the Braves payroll unless it was unearthed in some leaked Liberty internal memo or tax filing. While it was surprising to hear that the Braves payroll is officially $94 Million, the actual number was completely unsurprising.
McGuirk also confirmed that Liberty is not looking to sell now that they are able to do so under the agreement they made with MLB (such an agreement likely wouldn’t have been enforceable anyway had Liberty really wanted to sell). Whether this is true or not is hard to say. First of all, if they were looking to sell, there’s no reason they’d need to tell Terry McGuirk that. You make money in MLB not by making money, but by raising team value, and that’s been what the team has been trying to do all along anyway. So whether or not Liberty would be selling would have little to no effect on the way the day to day operations were run. Second of all, even if McGuirk knew they were trying to sell, he’d have no interest in divulging that information.
McGuirk also commented that the mode of operations going forward is through player development and the farm system, saying effectively that free agency should only provide minor enhancements and that the core of your team should be built through prospects and the occasional trade. McGuirk, correctly, views free agents as overvalued compared to the value received from prospects.
However, the most surprising aspect of the interview was McGuirk’s admitting just how hamstrung the Braves are by their current television and radio deals. McGuirk divulged that during the waning years or the Ted Turner/Time Warner era the team signed, at the time, near 30 year deals for all TV and Radio (currently about 25 years remaining). At the time, McGuirk said, those deals were at the going rates. However, in the intervening years the market price of television and radio deals has exploded. When Tucker pushed McGuirk on whether or not this would be a disadvantage, McGuirk simply stated “let’s just say it won’t be an advantage.” Perhaps worse, McGuirk revealed that the contracts do not provide for opt out or renegotiation clauses, meaning that the Braves really are more or less stuck with their deals for the next 25 years unless both sides decide they want to part ways (not likely an option, since Fox Sports South and Sports South, being the biggest players, would have no incentive to do so).
First, you have to really question the outgoing management for these deals and wonder if the Turner/Time Warner people saw the writing on the walls and just didn’t care what these deals would look like 25 years down the road. While we don’t know the actual numbers, we do know that recent television deals for MLB, the NFL and NCAA Football have taken staggering leaps forward. Regardless of the dollar amount, signing a deal for 30 years without opt out or renegotiation clauses just seems irresponsible. While the businessmen at AOL Timewarner might not have been the world’s greatest, even they had to have known that this deal would likely end up looking awful in 30 years and were just taking a hit on the backend (which they knew they wouldn’t be around for) for a bump on the front end.
One area where I think McGuirk may have let slip even more than he meant to was when admitting that the contract does allow for cost of living increases. While this comment isn’t in and of itself remarkable, it is remarkable in what it probably doesn’t mean. It probably means that the Braves’ deals don’t contain clauses for increases in value based on incoming revenues. For instance, it would have been possible to structure the deal such that it was tied to viewership numbers, ad revenue generated during the games, etc, but this apparently is not the case, since when clauses such as those are added in, cost of living increases generally aren’t. This means that the amount the Braves are getting for their broadcasting deals are likely set, except for relatively minor (usually 2-3% maximum) increases based on inflation.
So, putting the blame game aside, which is pointless by now, what does this mean for the Braves? Not great things. While it doesn’t necessarily mean that the Braves will be confined to Pirates-like mediocrity, it does mean that they will have to work increasingly hard to remain competitive. It will likely also mean that the Braves are going to be stuck with Turner Field for a long time. I don’t forsee the state of Georgia financing a stadium any time soon (the Braves got lucky with the olympics allowing for a retrofit, netting them Turner Field, or we may well still be playing at Atlanta Fulton County Stadium). Not that Turner Field is terrible at this point, by any means, but 25 years from now? And while it is incredibly difficult to predict exactly what the market will be for TV contracts 25 years from now, it’s possible that towards the last 15 years the Braves could very well be today’s equivalent of the Oakland A’s. Worse still, they couldn’t even do anything about it, as even if more people tuned in and came to the games, the flat rate TV contract would still severely inhibit payroll.
Right now, things aren’t necessarily bad. A lot of teams are currently locked into broadcast deals they signed four or more years ago, before the current boom. The problem lies in the fact that a few aren’t, and each year more teams will shed those contracts and negotiate (or renegotiate) lucrative TV deals that will push the Braves payroll further and further towards the bottom. You also have the teams that own their own broadcast deals, which have made a fortune for the most part (it’s no coincidence that the Yankees and Red Sox both own YES and NESN, respectively).
This also would put a damper on any new, individual, owner coming in as a white knight to save the team, as many Braves fans want, because the locked in TV deal likely means that a new owner wouldn’t simply be able to spend on the team and significantly raise revenues. As now that TV deals are the primary revenue drivers in MLB, there isn’t a whole lot that can be done. Any new owner would likely have to plan on holding the team for close to 25 years before they would adequately be able to profit from the expiration of the current TV deal, either through selling the team or directly reaping the actual revenues.
This may actually mean that the current ownership structure, where Liberty Media really doesn’t care that much about how much the Braves are making, could actually be a best case scenario for the team. An owner or ownership group that had a substantial portion of their assets tied up in the Braves may well be forced to slash payroll even more in the coming years, while Liberty will likely just let them continuously break even, until they believe that the coming expiration of the TV deal will let them sell the Braves at an enormous profit. Because if the Braves brand can be maintained over that time period, towards the end, the value of the franchise will see an enormous jump, when they could negotiate a new deal. Liberty may well even run the Braves at a small loss for a while under such a scenario, where an individual owner might not be able to.
However, this can, in no way, be spun as a positive for the Braves. Not only will it likely keep them out of the big ticket free agent market in future years, it will also likely mean that they will only be able to retain a very few of their prime developed prospects much past their arbitration years. This will put an enormous burden on the farm system to churn out top prospects every 5 years at nearly every position. While the Braves do have a good record in terms of getting value out of their farm system, that’s a lot to ask of any system.
The final question I’ll pose is why did Terry McGuirk divulge this information? Was it to get in front of an emerging public relations fiasco, as more and more Braves fans clamor for payroll increases? Effectively (and perhaps justifiably) blaming it on “the old guy”? That’s the most reasonable answer I can think of, especially for an organization that has been so guarded with information of that sort. But it’s still curious.
edit: To explain a little bit more why this is such a raw deal, I’ll lift something I said in the comments, for those who don’t wade through comment sections:
When striking up long term, fixed term, deals, you look at where the risk is going if the deal turns out bad. The Braves took almost 100% of that risk, with no way to mitigate it, for a really, really long time. Then, on top of that, the market for sports shifted away from gate revenues to TV revenues, and that shift doesn’t look like its going to reverse any time soon. Especially not in an area where the fan base is so spread out geographically and transportation costs (ie gas) continue to rise.
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Perhaps TM’s comments were the opening shot in a battle where MLB would pressure the networks to renegotiate the TV deals? It seems like the Braves should be a regional powerhouse financially, but are hamstring by bad TV contracts…maybe MLB sees that situation and is looking to do something about it.
Totally agree that it’s a bit odd….
Thanks for the insight FR.
Hopefully the “sport south” brand will be gone in the next 25 years and out contact will be void.
While it seems incredibly irresponsible of past ownership to negotiate a 30 year deal with the ability to re-negotiate at any point, we really don’t have anything to complain about. Yet.
We’re a mid-market team with mid-market payroll and mid-market attendance.
I can see a huge PR storm on the horizon for the team though if the team flounders this year, after collapsing last year.
Steve…I hope so, though with Selig (who basically signed off on our new ownership’s purchase) in office I dont have high hopes.
I did want to point out that as I read it, the deal is 25 years and was signed off by Time Warner (not Ted) shortly before they traded the team to Liberty. As I figure Time Warner go fat pockets for the signing of that deal knowing that the Braves would be sold and frankly not caring.
Between this Braves post and the politics on TV I am so pissed off at large companies and corporations. Its ALWAYS ALL ABOUT MONEY…thats it. The most destructive force of our era.
Ouch! Does that mean we’ll have to let go of McCann, Heyward and our young pitchers for the next 25 yrs?
Mid-market in terms of attendance and payroll, sure, but the Braves are a large market in terms of fan base, ranking third in the last couple of Harris Interactive surveys behind only the Yankees and Red Sox. Would have been nice to take advantage of that now, because I suspect that 25 years down the road (25 years farther from TBS) we’ll be lucky to stay in the top ten.
Excellent insight Franklin. I wouldn’t have caught on to a lot of this just from the interview alone. Hopefully we can avoid the dark ages though.
So, I’m Sports South and I’m supposed to LIKE it because the Braves don’t produce at the plate, the ratings numbers plunge, and ad rates fall in the somewhat nebulous future?
Even worse, I have Terry out front preparing the faithful today to blame ME should the nebulous future arrive?
Sports South needs the Braves to do well. There is very little they can gain from holding the team down with an out of date contract. Which, by the way, isn’t all that out of date as of today.
Mark it down as the first shot across the bow from master negotiator, John Malone. 25 years of patience for a big payout? Not happening. I suspect he’s willing to dangle a little today money in return for getting a new contract that lets him cash out.
The Braves have already been shunted into a stock class marked “non-strategic assets”. Translate that as “for sale” although it would behoove them to deny it until such time as they have a buyer.
@1
I don’t think so, because MLB is so scared of losing their anti-trust exemption that I don’t think they’d take on a battle like that. However stupid the contract was, you can’t just void a contract because you were really stupid, especially not when you’re a multibillion dollar corporation (as TimeWarner was). And Liberty knew what they were getting as well, so they’d have no grounds for termination either.
@3
Hopeful, but unlikely. As if this deal is really as good as it seems for the broadcasters, they’d have to be an astonishingly terribly run company to not keep the Sport South name around purely for the positive value they’re getting out of this TV deal. That’s part of the problem with signing a 30 year, fixed terms deal. The Braves aren’t going to fold if things go bad for them, but if things had worked out terribly for sports south, they just fold, deal is voided. The Braves took ALL the risk with this deal, and now it’s biting them.
@4
yeah, like I said, right now isn’t the problem, it seems to be only a mild negative. The problem lies in a couple related areas. A) A larger and larger percentage of major sports revenues are coming from TV deals. Attendance for almost all sporting events has fallen in recent years, but TV numbers continue to explode. THe Braves have a gigantic stadium and an awful TV deal. Its almost like they were constructed to make money in what is increasingly becoming a bygone era, where team revenues are driven by attendance. B) Other teams will continuously get better and better deals through TV contracts, meaning every year we are under this burden of a TV contract, we’ll get pushed further and further down the payroll scale.
@6
Hard to say, I think we’ll be okay for the next few years. It’s 5-7 years down the road when things could potentially get ugly.
@7
Seems ironic that a fortuitous TV deal (Turner) more or less built this franchise in it’s current state and a disadvantageous one may well be it’s undoing from that run.
On “mid market”
Drewdat, that is 3rd in “fan alignment”. That includes Braves fans by satellite tv from Montana because of the Superstation that can only get games via paid cable or satellite accounts. It influences merchandise sales, but little else.
Actually, the Atlanta metro area is about 10 of 30. the broader Southeast area is about 8 of 30. The market should allow for a 30 percentile or so payroll.
I smell a rat. When the Dodgers tried last year before the bankruptcy to sell 10 years of rights, MLB had to approve and didn’t. I cannot imagine MLB didn’t have to appove any 30 year tv deal. Plus, the 30 year TV deal was partly with a wholly owned subsidiary of Time Warner ((the Peachtree TV thing).
Yes, FJrabon, you have accurately predicted the continuing decline of the Braves to “NO MONEY BALL” status.
It also shows just how badly Liberty wanted to get the tax exempt cash out of Time Warner (since I believe their people were plenty smart enough to know that the Braves would be functionally non saleable for almost 30 years).
Getting this news is akin to hearing that the only hospital in your community has been bought by a national funeral home chain with a local presence.
Not gonna lie this is pretty depressing. Pretty money driven decision to sign a 30 yr. deal and reap the benefits for the first few years while being stuck with a shitty deal for at least over a decade. But, wow… thanks for the insight though.
@9
If they got a fixed rate 4 years ago, then yes, they are getting pretty out of whack with what current TV deals are going for.
Interesting point as to Sport South wanting the Braves to be competitive. Though we’d have to firmly know the exact numbers to know how much of a factor that would play.
I think perhaps the BEST CASE scenario is that Sport South combines with a big owner/ownership group/media conglomerate that buys both Sport South and the Braves and then buys their way out of the rest of their contracts, thus aligning all interests. It’d be mighty expensive, but if the values get way out of whack with what market rates are, could very well happen down the road.
@11
I don’t think they’re functionally non sale-able for the next 25 years, but it will be harder. They’ll either have to take a hit in value or somehow negotiate buying their way out of the contracts, either through purchase of Sport South or just flat out paying their way out of the deals.
@11
Couldn’t you bring in some of the disparate fan base with a YES-type network? Not that that would be an option until we’re all septuagenarians.
@15
It’s not totally impossible, it will just be extremely expensive. You can always breach a contract and pay damages. However, in this case those damages would be close to whatever gain they’d reap from doing so, and you’d also have transaction costs, making it a net loss. Unless the numbers got way, way out of whack.
Also, like I said earlier, it would be possible for someone to buy out sports south as well. Which, again, if the numbers get way out of whack, will almost certainly happen. (if they get tremendously out of whack, I could even see Sports South growing to the point where so much value would be tied up in the Braves that they themselves could actually purchase the Braves, which would probably be a good thing).
First, how much could we foresee payrolls going up over the next 30 years? Would we see teams like the Yankees spending 300-400mil with the Phillies, Red Sox and Angels following faithfully behind? Where could we foresee the Rays, Pirates and A’s?
Where is 90-100mil on the current stage and on the stage that we could see in 10, 15, and 20 years?
Franklin, you predict that the Braves would quite possibly be a bottom third team in those coming years, but isn’t it also just as likely that teams would start limiting their spending and/or have a mandatory cap limiting their spending? It’s been spoken of in the past, though to what extent I do not know. It just seems that 5 years is hard to predict, let alone 10 or 20.
The news of the TV deal has got to be the biggest Braves news in some time. The potential implications are enormous. Funny that it got slipped into the tail end of an article about the 2012 budget. This could screw the franchise for literally an entire generation of fans.
@17
Sure, its certainly hard to predict. However, at the same time, there’s no possibility of good from a deal like this is the main problem. Like our option are A) eh, not awful or B) terrible.
If something changes and this ends up being a bad deal for Sports South, they just fold as an interest. If, as projected, this ends up being a bad deal for the Braves, they’re either stuck with it or have to pay a TON of money to get out of it.
Sure, a hard salary cap could come along, the economy could completely collapse, etc. The point, however, is that this is an already bad deal and with greater than 50% probability is that it will only get worse. There’s almost 0% chance it will ever be a good deal for the Braves.
When striking up long term, fixed term, deals, you look at where the risk is going if the deal turns out bad. The Braves took almost 100% of that risk, with no way to mitigate it, for a really, really long time. Then, on top of that, the market for sports shifted away from gate revenues to TV revenues, and that shift doesn’t look like its going to reverse any time soon. Especially not in an area where the fan base is so spread out geographically and transportation costs (ie gas) continue to rise.
So, basically, there’s a very good chance this really hurts the Braves. There’s some chance that something unforeseen happens that means it’s not really that bad. There is no chance that it’s good.
Well, there goes my weekend.
Good points, all. I especially am intrigued by the idea of Sports South buying the team…
Another thought: the freshly-signed labor agreement between MLBPA and the owners limits the amount that any team can spend on signing amateur talent. This has already been cited by many mid- and small-market GMs as eliminating their ability to compete with the big spenders. With the amateur signing limits, The Braves will now be at even more of a disadvantage because of their bad TV contract. Who was the person that led the charge on the amateur signing limit portion of the labor agreement? Mr. John Scheurholtz….
@21
well, on the plus side of that, the Braves were already spending less on the draft than just about anybody else, so at least we’re not getting clobbered in that regard like we used to.
I disagree with your extreme assessment of this TV contract for a few reasons:
1) We know very little about it; nowhere in the interview does McGuirk say it’s a constant rate year-to-year with only cost-of-living (i.e., inflation) increases. He says inflation adjustments are built into the contract but that could be on top of a rate structure that already increases year-to-year. Obviously McGuirk doesn’t think it will increase as quickly as would a market-negotiated rate, but it may increase nonetheless.
2) The other parties (e.g., sports south) did not assume “no risk”. First of all, we have no idea if the trend of higher-priced TV rights will continue. Again, I’m not sure what the terms of the contract are exactly (i.e., to what extent it limits the Braves ability to broadcast their games through other media), but I think traditional television networks are going to see a HUGE decline in viewership over the next 25 years as people move to on-demand programming like Netflix, Hulu, and MLB.TV. Second of all, I don’t buy the argument that Sports South is likely to “just fold” if the contract becomes unfavorable. It would have to become so unfavorable that they start losing a lot of money. I’m pretty sure that won’t happen since they wouldn’t have signed a contract that wasn’t very likely to continue covering their operational cost. I’m also not sure to what extent their parent company would be liable for outstanding contract obligations.
3) Time Warner would not have agreed to a contract that completely and utterly hamstrung the team as you’re implying it might. They still owned the asset at that point. They have no incentive to hurt the value of the asset right before they sold it. Regardless of whatever tax incentive made the Braves attractive to Liberty Media, it was still in Time Warner’s interest to keep the value of their asset as high as possible.
The take-away I’m trying to get at here is that McGuirk’s comments were very vague and while he clearly indicates we shouldn’t be happy about this contract, that doesn’t mean we should anticipate it being a huge albatross that condemns the Braves to decades of mediocre play and its fans to decades of frustration.
Let me ask something here that I’ve never been clear on: where do the revenues from MLB.tv go? If, as Evan/23 suggests, we see a big shift in the next two decades to baseball viewing through a wholly-owned subsidiary of MLB, what does that mean for competitive balance in the league?
The solution to this situation is to buy Sports South. Their capitalization is not that great and it will give the Braves their own network (sans Yankees/Red Sox).
@23
One major issue I have with your point is that you say that SS/FSS/PTV assumes risk, but your end reasoning for saying that they assume risk is because they wouldn’t fold in the event of the deal becoming bad for them, because they wouldn’t have signed a deal that took on that much risk.
additionally, the biggest problem I have is the length of the contract, with no opt out or renegotiation clauses. I also didn’t say that the dollars wouldn’t increase I’m sure they will, even outside the inflation clause, I just said that they sounded to be fixed, ie already decided upon. Fixed doesn’t mean “exactly the same for every year” it means “locked in”. That is, if I agree to pay you $10 tomorrow, $15 next friday and $20 the friday after that, those are fixed costs. They won’t vary upon an unknown variable.
The problem lies in that it certainly seems to be trending that TV makes up an increasing portion of revenues. Also problematic for the MLB.TV theory (which, since somebody asked, is split evenly amongst all teams) is that MLB actively protects local TV deals with aggressive blackouts.
Tv revenues have exploded exponentially since this deal was signed. If it had been a reasonable price for today, it would have been outrageously wealthy when signed, and there was no indication it was outrageously lucrative for the braves when signed. Which indicates, as McGuirk said, it was a market rate deal when signed. Which is nowhere even close to what the market rate would be at this point.
Additionally, all indicators point towards this trend increasing. Sure, something unforeseen could happen and change everything. But when your argument is “we just can’t know for sure about the future” you’re probably losing the argument. Sure, we don’t know for certain that this deal will be bad 15 years from now, but it looks pretty darn likely to.
I agree on point 3. However, people do dumb things. The reaction from contract attorneys I know was something along the lines of “what the F***?! A large organization with no bankruptcy out (the Braves) signed a fixed costs deal for 30 years with smaller companies with bankrutcy outs owned by larger companies that are not liable for the smaller corporations debts, and there are no renegotiation clauses?! That’s malpractice, or corporate malfeasance, or something!”
@25
agreed. Either a third party needs to buy both, or the braves them or them the braves. That would allow both parties’ interests to be aligned, which is the best case scenario.
FR/26: So, this is not likely, but your comment made me think of a way MLB might be able to put the screws on TV providers growing rich off MLB teams while the teams themselves stagnate. What if, instead of actually trying to force the TV stations to renegotiate the deals, they just waived MLB.tv blackout rules for the worst offenders? Then the carrot is, renegotiate a decent deal, and you get blackout protection again.
Potential problems:
1) Does it raise the same potential antitrust/political issues that direct importuning to renegotiate would?
2) Would it actually be at all effective? As I understand it, Peachtree TV has very little regional presence, and Sports South doesn’t cover the entire area covered by the Braves’ blackout market for MLB.tv purposes. Presumably, they actually aren’t realizing revenue from the areas outside their broadcast zones in either scenario, and Atlanta residents get both channels on basic cable, meaning they have no incentive to pick up an MLB.tv subscription anyway.
3) This might just send the entire market for MLB TV rights into a tailspin, as TV channels lose confidence that they will retain all the rights guaranteed to them in their contracts. Why pay exclusivity prices if MLB has shown itself willing to yank that exclusivity out from under you?
Let’s not forget though that the Braves are owned by a media/cable conglomerate. I would think that if the Braves really want to push the matter, they can figure out a suitable win-win scenario for all parties and gain an amicable release from or renegotiation of the contract.
It’s in no one’s interest for the Braves to fundamentally lose ground on a competitive basis – and that includes FSS and the other networks.
A) This is horrifying.
B) Thank you for the insight, Franklin.
C) This is actually quite horrifying.
D) It appears to me that if online access to content were to annihilate the value of traditional TV advertizing, as some voices insist it will, it could have a tremendous leveling consequence across the league, revenue-wise. I’m envisioning, not to say predicting, a process in four stages. First, the rising expense of going to games combined with the HD-enhanced quality and ease of home viewing results in the continuing decline of ticket sales and the increasing value of TV contracts we’re currently seeing. Second, in response to this trend, those franchises that can (or need to; for possible exceptions, see: Yankees, Red Sox, Phils(?)) will build smaller, more efficient parks. Third, internet on-demand access to games eventually ravages the value of airing rights while distributing subscription revenues equally (admittedly, this is the least likely outcome, as the big franchises are certainly trying to avert the rise of any such “Senatorial” system). Fourth and final, as a result of the more evenly distributed, and likely (greatly) diminished, access revenues, operating costs in the big markets are slashed and everywhere (except Pittsburgh, Oakland, and, direfully, potentially even Atlanta) are austerely controlled. The end result is a marked decrease in payroll discrepancy by way of a league-wide reduction in payroll. Which leaves us with players living on and playing for salaries that are within the realm of comprehension for the average fan. To see that, it might even be worth it.
E) Blah, blah, blah
Yes. This is horrifying. Horrifying indeed. Ugh. Time to drink.
I think it is much more likely that Liberty will just buy these small networks, rather than let them continue to rob the Braves blind.
@29
I agree that it likely wouldn’t get to a point where it is truly terrible. If the deal was WAY off, it would almost certainly get bought out. The problem comes with “what if it’s only kind of disadvantageous?” What if it doesn’t put us rock bottom, but does cement us in the bottom third? Just bad enough to not be a playoff team with any regularity, but no so bad that it gets bought out?
Franklin: let’s hope it doesn’t hamstring them too much – I agree that McGuirk’s disclosure was interesting, to say the least.
Can one of you guys write a funny and/or heartwarming story to get this one out of our minds? It’s still making me mad sad. Maybe something about the Marlins new home run feature or something like Dallas Braden’s new tattoo??
Well, here are a few scenarios that could lower the damage of this extended TV deal:
A)new internet revenue streams for broadcast could arise creating more income
B)MLB could eventually require all TV revenue be shared by all teams equally. kinda like they do in college football
C)pressure from other broadcast sources (like the internet) could end up lowering the actual revenue stream TV creates presently, meaning that the locked in $$ could end up being a decent deal 20 years from now
Not all likely, but possible….
I’m in the camp of this being “not awful” over the “absolutely terrible.”
After these last 6-8 years, I doubt that anyone could predict significant growth over the next 5-10 years with any certainty, let alone 2-3% per year. Or even amongst all 30 teams.
While it could be notably significant to say this could drop the Braves from a league average payroll to a bottom third payroll, I do not think it is much more than 25% likely.
I already think that it is much too harsh for the average MLB team to value a win higher than $5mil. If the average MLB team valued a win in the 7-8mil range, then MLB will be in about as much trouble as the NBA has been. It’s a joke how much the role players are being paid in the NBA in comparison to their on-court production.
Isn’t length the only thing we know about the contract at this point? What’s the annual difference between an “at-market” deal 5 year ago and one now? $5 million, $10 million, $15 million?
McGuirk states, “It’s nothing to be ashamed of, but it’s not going to be these newer deals where there is cash up front.” Is this the only difference and was there a premium negotiated at the time because of the length of the contract?
Didn’t the Braves overpay for Lowe, Kawakami, and Uggla knowing that they had this ungodly contract constraining us? I’m sorry, but I don’t see what’s here to worry about yet.
@38
Sure, we don’t know for sure what the numbers were. What we do know is that regional TV deals have exploded in the last few years. If we signed a market contract at the time, it’s already marginally undervalued.
Sure, it is difficult to project the future, but the safest, most likely projection is that TV deals make an increasing percentage of revenue going forward. And yes, of course, something totally unforeseen could happen that changes that, but it seems likely, as of now, that it is a major handicap going forward.
At the very least it’s just irresponsible to sign a 30 year, fixed price deal, with no renegotiation clauses.
Look at the SEC in college football. They trigger a renegotiation clause almost every few years and sign richer and richer and richer deals.
Yes, it is certainly possible that this deal ends up not mattering that much. But there is also a substantial, and seemingly likely, risk that it does handicap the Braves going forward. It’s mostly a question of how severe.
I watched moneyball last night to get a feel for the direction the braves are going. Let’s just say it doesn’t turn out well
I felt really badly reading that article a couple of days ago, and I’ve only felt worse about it as time has gone on. It’s going to be hard for the Braves to competitive, but hopefully things go well for them and we have a long run of 4th infielders play SS.
If Terry is complaining about the local/regional TV deals signed to a long duration before his reign, he should also publicize the name of the law firm advising the team; this was short-sighted.
The good news is, as some have commented, that if the market has moved substantially in terms of rates to the point where the team is handicapped for decades, Terry will have a good argument for renegotiating or breaching based on unconscionable terms (i.e. 30 year, fixed rate).
If they don’t pursue one of these strategies – the opportunity costs will be severe.
It’s a good time to find something else to do for three hours X 162 games per year. Seriously.
1. The stadium’s in a ghetto. It’s depressing. Fans ain’t coming. And it’s about to get worse.
2. Fredi Gonzalez
3. Stuck in 2005 tv money from now till Jason Heyward retires from broadcasting.
4. Fredi Gonzalez
5. Jason Heyward’s twitter feed. My God.
6. Gonzalez, Fredi
7. Baseball’s just getting dumb. The Yankees, oy. Bud Selig. Yeah, let’s add another Wild Card, another way for a team that couldn’t prove itself over 162 games to bump off a team in a short series in a game where great teams only win 30% more than poor ones. Since we’re already basing WS home field on a freak show/ beauty contest.
8. Braves have a terrible manager.
9. Free Agency. Yes, it really did kill baseball. No, its death didn’t stop fans from coming to the park. Yes, it really is dead anyway.
10. Cuban Guy. Braves Dugout. Horribly, horribly stupid man.
I ain’t watching it anymore. You guys who are, you’re just … you’re just being lazy. It ain’t enjoyable and it ain’t a good product.
@43 /El Lupe
I can only hope your disgust means you will stop coming here so I never have to read your asinine opinions ever again.
TV DEAL: The franchise got hosed, while under AOL/TW. There’s no going back to undo that, and the league can “pressure” for a renegotiation all they want; an agreed to contract is impenetrable. The ONLY possible “out” may be when the MLB/Fox TV contract expires and is up for renegotiation; if the league were to coerce FOX to allow an “opt-out” to transpire, maybe FOX could be convinced; but the MLB won’t do that because it’s not a league concern that the Braves got hosed in their TV deal.
TURNER FIELD: It’s definitely not in the optimal part of the city, however I think Atlanta and ACOG (local Olympic committee) missed an opportunity to redefine the area around Fulton County Stadium and Turner Field. Where I think they (collectively) dropped the ball was in building directly behind the old stadium instead of elsewhere within the city limits, but free (or dirt cheap) property made for an appealing bottom line. Personally, I think if they’d build the stadium behind the old stadium’s left field wall (closer to I-20 and downtown, we’d be staring out into a dazzling downtown skyline and a block further from the shifty neighborhoods south of the stadium. It may have meant taking out a chunk of the old stadium while still in use, but they did that in Cincinnati with no major issues.
Having a MARTA rail station near the stadium wouldn’t hurt, either; I know when I go to a Falcons game, I’m driving in from SC and prefer to park in a satellite MARTA station and take the train in.
Then there’s the sheer size of Turner Field; it’s too big, by about 10,000 seats. The White Sox realized they had too large a stadium and spent money to downsize it, making theirs a more intimate ball-game experience. The Miami Dolphins are exploring this possibility, as well.
Yes, the area around the stadium needs developing, but when what’s around the stadium is nothing but super-expensive revenue-generating parking lots, you certainly aren’t going to get much movement on that, now, are you? Besides, because the stadium is basically enclosed (The 755 club, scoreboard, cow, Coke bottle leave no panorama or view “in” from outside), building around it worth the effort, frankly.
It seemed at the time that the Braves was a ‘Throw in’ asset between TW & Liberty to complete a much bigger deal. The guys at AOL probably did the right thing for TW in order to prep the Braves as an asset with a Gtd TV revenue stream for 30 years. I really stupid move for the Braves but not so for TW.
The Braves value will likely to increase gradually under the Liberty umbrella but they must have a figure or date in mind on when to get out or they could just sit on the Braves asset for the next 20 years and use it as a non cash-flow type asset that keeps increasing marginally in actual value before selling it when the TV contract is close to expiring. The Liberty share prices have done amazingly well in the past 3 years so they don’t need to sell the Braves as long as the value is growing steadily.
The down side of having a good farm system and a decent front office is we could field a competitive team on the cheap.
El Lupe,
You’re nuts just go away.
But you guys are overreacting. First the deal was for 25 years so there is about 20 years left. Now you guys are freaking out, and maybe rightfully so, but you don’t know how much the media rights are. But I remember back in 05 when the media rights were up/getting close to being up, that the Braves got a lot of money for their TV deal. At the time I remember reading that it was a very good deal and that they were getting money for Peachtree TV games that were also simulcast on CSS and independent feeds throughout the south east for those without Comcast/Charter cable. Then this past year those games went to Fox Sports for those outside the ATL metro area. You have to believe that Liberty got a nice payday from that. Now it looks like Peachtree TV itself is going to be sold, if so that could mean those 45 games will be up for grabs in the metro Atlanta area. That should be another decent increase, especially if Fox Sports grabs them, which I’m sure they will. I just graduated with my MBA back in May and one of the businesses that we researched was Liberty. They are an extremely well ran corporation, owning companies like Direct TV, QVC, the digital porn distribution channels that hotel’s offer, as well as owning a stake in Sirius XM. So as long as they own the Braves I highly doubt they will let the company erode to the level of the Oakland A’s. They will probably continue to a mid market franchise unless they can win another World Series and get attendance back over 3 million. But the Braves attendance is actually extremely consistent over a long period of time. They have been over 2 million fans for 21 straight years. The team should be competitive for the foreseeable future so that number should probably be around the mid 2 million mark. Also, and this is a big one, most teams are actually stuck in long term deals. The Rangers and Angels are the two teams that have gotten extremely lucky with their timing and the Dodgers are about to follow suit. The only other team with an upcoming opt out of their deal, besides the Dodgers, that I could find is the Nationals, who can opt out of their deal with MASN in the next couple of years.
Also another good thing is that with the new CBA the luxury tax penalties have gotten more severe. I know on MLB network Peter Gammons has mentioned several times that is one of the reasons that the Red Sox refuse to increase their payroll because they do not want to get docked with a bigger tax penalty. Also remember the new restrictions on the draft and signing bonuses too, they are pretty harsh. So just because these teams have the money doesn’t necessarily mean they are going to spend it all on players.
As for Turner Field it’s actually a nice park. They need to remove anywhere from 5 to 10 thousand seats and it would make it a lot better, also all the jokes about the team not selling out playoff games would go away. The city is just too congested to think that 52,000 people can get to Turner Field on a Tuesday at 2pm in October. Also build a MARTA station, which is something that is apparently up for consideration according to the AJC back during the season. And just think in 20 years maybe the Braves can capitalize and get an even larger regional rights deal while the Dodgers and Nationals are stuck in even longer deals.
“simpler explanations are, other things being equal, generally better than more complex ones” … do you enjoy baseball? then turn it on and watch it or go to the ballpark and take in Summer’s greatest pastime. If you focus on the sky falling b/c the Braves future looks bleak ,,then you are just utterly wasting your time. Why not graduate from being the Drone, who focuses on things you have absolutetly zero control over, and shift your focus to things that you do. Hope Springs Eternal ,, thoughts of warm summer evenings with peanuts, hotdogs and beer are great ,, but spending time thinking or worrying about the Braves chances of remaining competitive, especially when it falls into the realm of corporate BS ,, is a waste of time… I repeat a waste of time. Keep it simple and wonder about the season Pastornicky will have and how soon Andrelton Simmons will come up?….will JHey bounce back? ,, will Gonzo make as many bone-headed in-game blunders?
[...] suggests that Uggla has compromising photos of Fredi Gonzalez, while poor Martin Prado does not. As the one team that won’t make out well on an upcoming regional television deal, the Atlanta Braves would love to have a do-over, not only on Uggla’s contract, but also the [...]