Rogers: Blue Jays are for sale + Blair v Stroman

<span class="entry-title-primary">Rogers: Blue Jays are for sale</span> <span class="entry-subtitle">+ Blair v Stroman</span>

by mike in boston / @mikeinbostonemail

 

Who Should Own the Jays Next?

 

Bloomberg News is reporting that Rogers’ CFO announced the company would like to get out of the team owning business.

 

The Toronto-based telecommunications giant wants to get more value for the assets, though no deal is imminent […] Rogers still wants rights to sports programming but doesn’t have to own a team to have that, he said, pointing to the company’s 12-year deal with the National Hockey League.

 

This raises the very interesting question of who would be in the market to buy the team. Consider that the Jays have publicly stated the Dome needs $200M in repairs and upgrades soon. Add to that the fact that the building is a team-owned asset, but the land underneath it is not. The city of Toronto is looking to redevelop the area around the Dome, and the land underneath the stadium may soon be worth more for a different use as a result. Finally, there is the complicated relationship between the hotel attached to the stadium and the stadium itself. This makes buying the team a tricky proposition for any interested parties.

 

In terms of business synergies, it is hard to think that anyone could do better than Rogers did in using every aspect of the game to promote their cell phones, television channels, and other businesses. If they have decided that it makes more sense to cash out this tells you something about who the next owner won’t be. If we agree that the next owner won’t be a media-telcorp, there will be some advantages for that entity. A new owner would be able to extract full value for the TV and radio rights to Jays games, including striking different deals for regional and national coverage, getting TSN, SN, Corus, and the CBC in on the bidding.

 

The most interesting media angle is that it would once again be a free market in terms of access. Sportsnet currently enjoys a privileged status with the team and its players. It has become customary for big stories about signings or other planned moves to come via Shi Davidi first. This isn’t a dig at Davidi, whose work is beyond reproach. It just means that since the team and the network are owned by the same people it is very easy to coordinate how and when stories will be handled, at least initially.

 

Severing the corporate tie between Sportsnet and the Jays would still leave many interconnections. Some teams directly employ their radio or TV broadcasters for example. But it would mean that the real journalists covering or commenting on the team — Blair, Brunt, Nicholson-Smith, etc. — would instantly be clear of the conflict-of-interest of being paid by the same entity as the subjects they cover.

 

A second outcome is that TSN would once again be fully invested in covering the Jays. I can’t tell you how many times over the last few years I have received messages from people at SN of the form “Bell can’t stand how well the Jays are doing!” or “Celebration time at TSN” when the Jays fell out of the playoff race. I have asked TSN folks if this is true, and received mixed responses. Some acknowledge this reality about ratings, while others say these things don’t affect their day to day jobs and they are free to discuss whatever they want. Whatever the case, it seems obvious to me that TSN has not made Jays coverage a priority. Once clear of the fear of promoting a competitor’s product, the audience might benefit by getting more balanced coverage from both networks.

 

On the publishing side, this shouldn’t change very much. While most hockey and basketball writers have some relationship with either SN or TSN, the Jays writers are less branded. Griffin has been exclusively a TSN guest for the last several years, but Buffery, Longley, Cathal Kelly, Robert McLeod, Scott Stinson, Rosie DiManno, and others who write about the Jays on a semi-regular basis are not. Most of these people don’t do much radio or TV at all, perhaps for the simple reason that Sportsnet promotes its own people and TSN spends limited airtime on the Jays.

 

It’s really interesting to think how a Jays sale might change the dynamic of the marketplace. I’ll let others speculate about who might be interested in owning the Jays and whether Marcus Stroman was consulted before this announcement went public.

 

Stroman v Blair/World

 

Sportsnet’s Jeff Blair has a commentary on Marcus Stroman’s tendency to take to Twitter to air his feelings on things relating to the Jays and the coverage he receives from the media. Over the past couple of years he has taken public shots at a number of people, often without naming them, in response to real or perceived criticism. Stroman has also black-balled certain reporters in the clubhouse and slagged them to teammates. The known targets have been Gregg Zaun (for criticizing Marcus’ on-field showmanship during his Sportsnet show), Buck Martinez (for criticism that was caught on a hot Sportsnet mic), Steve Buffery, Cathal Kelly, and Richard Griffin (misc crimes).

 

Blair’s recent post includes the following:

 

“Stroman is verging on becoming a cartoon character. The chip on his shoulder is tiresome, and needs to go away for the benefit of all. As far as I can tell, nobody writes or says any more that he’s too small to succeed.”

 

This is in response to a number of recent tweets but was prompted by this one in particular:

 

 

As Blair notes, the idea that a team would owe advanced warning to players of roster moves is not in touch with business practices anywhere in the league. Marcus went on to retweet and like various comments from people insulting Blair and supporting the diminutive star pitcher and his various hashtags. Blair summarizes his stance with this:

 

“Look: I have no problem with Stroman taking to social media to rip media members, whether they work at Sportsnet or elsewhere, and I sure as hell don’t care whether or not he likes me. As long as he is a good teammate who delivers on and off the field and treats fans with respect, well, I’m cool with everything else. I’d prefer he not show up opposing players, but that’s not a deal-breaker as far as I’m concerned.”

 

What is clear is that Stroman is very conscious of what is said about him by the local media. It’s hard to think of a recent example of an athlete who was so public and immediate in his need to reply to criticism. Many in the media have told me that it’s a core tenet of their industry that if a subject has a problem with something you write or say, the professional response is for them to address it personally. As one person explained, “lots of players would give you the cold shoulder for a while after a critical column, but eventually they would get it off their chest with you. This would reset things and normal life would then resume.”

 

Stroman’s approach represents a new reality in sports media: stars can just speak to their fans directly, rather than deal with the media. We have seen — both with athletes and media — that some prefer to get into spats on Twitter rather than take the time to write an email or make a phone call and attempt to find common ground. or tell one’s side of the story. This issue is related to a very interesting column by Elliotte Friedman about how some athletes are affected by media criticism.

 

With all the changes to the Jays’ media relations department, the above news that the team is for sale, the firing of Gregg Zaun, the uncertainty about what role Dan Shulman will play with the network, and rumours of Jerry Howarth’s retirement, it will be interesting to watch how this story evolves over the course of the off-season and into next year. One has to assume that the Jays do not enjoy Stroman’s public fights with media or his discussion of the roster and have spoken to him about it.

 

Recommendations

 

  • TSN and CTV teamed up for a story about ex-CFL player Orlando Bowen and his abuse at the hands of the Peel Police. It marks a return to the kind of investigative work Rick Westhead did when he joined TSN a few years ago.

 

  • SI’s Richard Deitsch has some comments from women in sports media about sexual harassment on the job.

 


 

thanks for reading,

mike

photo credit: Richard Lautens/Toronto Star

COMMENTS

WORDPRESS: 29
  • comment-avatar
    Paul G. 1 week

    Never thought I would say this but I fully agree with Blair.

  • comment-avatar

    I’m old enough to remember when the Jays came into the league and attended games at the Ex. Followed the Jays closely for many years. Went through the disappointment of their collapse to Detroit and then finally the excitement of the world series wins. However one thing I discovered was that even with back to back world series wins my life didn’t change. It was 5 minutes of jumping around and then no one really cared. The strike didn’t help things. In the end I discovered that the games are actually boring. Not just MLB, but NHL and NFL. The only interest I have is in the off-field stuff and for that it doesn’t matter if the team is located in Toronto or elsewhere.

    If Rogers sells the team I hope it goes out of Canada. Less traffic jams downtown. One less ownership group asking for public handouts. Reality is that Toronto is a Maple Leafs city and bandwagon jumpers for everything else.

  • comment-avatar
    Curt 1 week

    “It has become customary for big stories about signings or other planned moves to come via Shi Davidi first.”

    You see, I’m not sure that is accurate. It seems to me that most of these types of stories are usually reported first by the likes of Jon Heyman or Ken Rosenthal, and then picked up by SN. So while SN staff may have better “access” to the organization than other outlets for stories of less importance (puff pieces like Brunt’s slurping stories or Hazel’s dugout chats), I find most relevant breaking news tends to come from outside the SN bubble.

  • comment-avatar
    Paul G. 1 week

    @Curt

    You are right. It is not uncommon on PTS for example to see Bob reading from a report that quotes Rosenthal or another US source, concerning the Jays.

  • comment-avatar

    So the rumors of the sale of media assets by Rogers appear to be true.

    I love that Blair and Brunt kept saying on the radio this am that “we are a long way from the team being sold”. How do they know that I wonder? Just because the CFO made the revelation that they will look at the sale doesn’t mean that they are or are not neck deep in talks.

    What ensued was a lengthy discussion about how the Jays are in a hard spot because they are owned by a public company and profit is so important.

    They also talked about hard it would be to get a deal like this done, given the team, the media rights, naming rights and the stadium. All of these things are entwined with Rogers right now.

    I think the bigger problem is that the list of folks (private or public) wanting to buy this franchise is small.

    Let’s assume Rogers wouldn’t be able to hold back rights forever. Assume the Forbes valuations are close and the last one on the Jays was $1.3B. Note that number was at end of the 16 season. That number has gone down. Blair and Brunt said the dome needs 500m in updates/upgrades. The team last year didn’t perform well and as a result, attendnace and ratings were down.

    So assume you get them for 1b.

    Who is lining up to buy the team at that price?

    One guess would be MLSE.

    The problem there is, we would have to assume they would then have to split tv and radio rights. I cant see that happening.

    Brunt said on the air that the Jays are selling at a high time. I completely disagree. The team’s performance last year was subpar. If they are selling or contemplating selling they aren’t going to overspend, and the dome needs 500m in updates.

    Perhaps the smartest thing discussed on air was when Brunt said that Rogers might be stuck with the Jays

    I will keep posting thoughts here.

  • comment-avatar
    Original Mitch 1 week

    I for one look forward to bringing balance back to Jays coverage. Considering how long season is and the time of year it takes place, it seems that Rogers shameful biased reporting is spotlighted even more. Watching a game from TSN or CBC with more objective analysis will do the team some good. Buffoons like Jamie Campbell will remain dolts, of course but at least it won’t be because his boss owns the team.

  • comment-avatar
    Big G 1 week

    The mere fact that stadium renovations are estimated to be 50% of the teams value is staggering.

    The team from a cost standpoint will also have to deal with the government mandated pay increase to minimum wage workers in the jays business. The cost of this operation certainly outweighs the benefit.

  • comment-avatar
    Mike V 1 week

    Forbes is universally low on their franchise valuations compared to where transactions actually take place. The Coyotes might be the only sports team that sold for less than what they think they are worth. And franchise values don’t swing by 20% because of the on field performance for one season. Prospective owners would look through the cycle and they shouldn’t expect a bargain because of a sub-par 2017.

    To me is seems some in the media are running way ahead with the story compared to what was actually said, which was

    “Well, certainly ways – other ways we can get the exclusive content through renting it, much like we did with our NHL deal. And so, we’re looking at ways to better surface values for the Blue Jays, for example. That’s become a very valuable asset for us that we don’t get full credit for. And so, like some of the other assets on our balance sheet, we’re looking at better ways to surface value for them. To be clear, there isn’t anything imminent that we’re about to announce, but we’re certainly looking at the alternatives”

    So there’s lots of value in the franchise but Staffieri doesn’t think they get credit for it so they have been evaluating alternatives. That statement’s not a for sale sign on the Rogers Centre. He actually sounded much more negative on Cocego, where he said

    There were some strategic benefits that we’ve hoped for Cogeco, and those seem to be further and further away

    If Rogers wanted to free up a billion in capital that would be the easier thing to divest.

  • comment-avatar
    Mario 1 week

    Thanks for the read . I hope this will happen at some point not sure if possibly only a smoke screen to generate interest I the team and the Roger’s brand in general. They have the best of both worlds going forward, in marketing all aspects of there product and very profitable. If and when sold a Canadian ownership is always better.

  • comment-avatar

    Put me in the camp that thinks the stadium reno costs will be a major issue in any potential sale, and may keep the Jays with Rogers for another decade.

    $200-$400M? Yikes. At what point does it make more sense to look at building something new? That’s not something Rogers will want to do if they are lukewarm on long term ownership. But they won’t be thrilled about paying for renovations on the current building either, assuming these aren’t going to open up new revenue streams. Recall that Rogers took a half a billion dollar write-down on their IPTV investment recently. That’s a lot in sunk costs.

    The big issue is that, as a publicly traded company, they have a fiduciary duty to maximize returns. If they can take the money from the sale and get a better (and quicker) return investing in other areas, they have to do it. It seemed inconceivable that the TPP fund would ever sell their stake in MLSE but that came to fruition, even though they were raking in money.

  • comment-avatar
    Pete 1 week

    Just as Mike seemed to sign off and made it seem like this site was going to die a slow death, things pick up in the last month with the death of Halladay (RIP) and the subsequent reactions to it, McCown’s pending extension, the Zaun saga, and now this massive news of a potential Blue Jays sale by Rogers. I find that funny (and glad this site continues to be a must-read multiple times a day).

    As for the sale of the Jays, I have a tough time coming up with a list of prospective owner(s) that would have the capacity to make such a purchase outside of Larry Tanenbaum and/or Bell. I assume a big hurdle will be the TV rights. I just can’t see Rogers relinquishing all that content in the dead of summer.

  • comment-avatar

    Pete – I didn’t sign off, I just gave notice that I don’t have the heart to cover radio any more and that I’d be writing less often as a result. This is supposed to be fun, and writing about radio was getting me down. Jonah and I are both busy but love writing for this site and keeping the conversation going. Thanks to you and everyone for reading.

    On your point about the TV rights, this is a fascinating topic. As far as I know the Jays have to sell the rights to Sportsnet because this revenue gets added to the totals that are used for MLB revenue sharing. But Sportsnet obviously doesn’t pay the market price. This raises the question of whether Rogers could commit the Jays to a long-term deal with Sportsnet prior to a sale. This seems unfair to the buyers, who would want the ability to sell the rights to the highest bidder. Don’t know if MLB has a policy to cover this possibility. Further research needed.

  • comment-avatar
    yaz 1 week

    Brace yourself for three hours of rounding error talk on PTS.

  • comment-avatar
    Original Mitch 1 week

    I would think the new owners would see the value of a multi-station broadcast deal as opposed to an exclusive deal with one. The NFL and the NBA are on multiple station and therefore discussed among multiple stations in US and Canada. NHL is on NBC and all but ignored by every other ones. A bad Jays team is more or less ignored by TSN and the CFL is the plague within the walls of Rogers. If the team is sold, it has to be handed everything including the chance to sell their own tv/radio rights deal.

  • comment-avatar
    Bob Canuck 1 week

    Mike (in Boston),

    I’m not as sure as most are that the Blue Jays receive a lot less than market for their broadcast rights. I say this for the following reasons:

    Given that income taxes are incurred at the company level, if the Blue Jays were in a loss position and Sportsnet had taxable income, it would make sense for Sportsnet to pay a higher rights fee to the Blue Jays;
    Rogers audited financial statements are prepared on a consolidated basis. Therefore, from a consolidated-entity perspective, it does not matter how much Sportsnet pays because it gets eliminated 100% upon consolidation. Sportsnet could pay $1 or $100 million annually and it would not affect the consolidated statements; and
    There must be a mechanism in the calculation of revenue sharing to address whether or not Rogers pays a fair market price for the Blue Jays rights. I would assume that the other 29 clubs would insist upon such a mechanism. If this is correct, then why wouldn’t Shapiro (and Beeston before) use the rights fee from the revenue-sharing calculation when they propose a Blue Jays budget to Rogers?

    I do not know how the Blue Jays rights fees are calculated for internal purposes. However, my sense is that it is not as low as some say.

    I agree that the rights fees are interesting. It certainly complicates the valuation of the Blue Jays depending upon whether Sportsnet would retain the rights for a period of time after a potential sale.

  • comment-avatar

    I love the talk that because we don’t talk about profit we don’t understand that Rogers is a business. There are a ton of ways for Rogers to profit from the Jays. the actual team themselves, but there are ancillary platforms from which Rogers can be profitable as a result of their ownership of the Jays. TV revenue, marketing revenue, radio revenue etc are all examples. My point on Twitter is that Davidi today stated that the goal of Mark Shapiro is profit. I haven’t heard anyone say that before.

    Personally, I think that the Jays would be best served walking away from the dome. That allows them to utilize real estate as part of this deal. The dome – rail lands could return to the city and everyone moves on.

    In any event, this is going to drag on until the team is sold. Whenever that may be.

  • comment-avatar
    Paul G. 1 week

    The Dome sits on property owned by Canada Lands Co.; a federal Crown Corporation. No doubt the city could leverage this factor in requesting a cost sharing arrangement for future development.

  • comment-avatar
    Daniel 1 week

    @Bob Canuck

    The jays are 100% owned by Rogers. They would file a consolidated tax return so rights fees would make no difference from a tax prospective. I also assume MLB has a formula or some sort of transfer pricing division verify the rights payments, especially considering YES and NESN would want to pull the same trick as SN

    As an employee of a division at the bottom of a vertically integrated company (a la blue jays) I get this. NEW CEO comes in, looks at the divisional profits, sees the operation closest to the customer has the lowest return and requires significant capital investment, thinks hes smarter than the last CEO, and sells off that division with a “supply agreement”. Sale value significantly hurt because the supply agreement is so disadvantageous to the new company.

    15 years later, after this guy is long gone, company laments selling off this division because the cost of buying the rights has increased and of the synergies lost.

  • comment-avatar
    Bob Canuck 1 week

    @Readers,

    Welcome to the World of Accounting! 🙂

    @Daniel,

    In Canada, companies file income tax returns using unconsolidated financial statements; consolidated statements are not used. Therefore, Rogers would not file a consolidated tax return. Accordingly, my point regarding the potential tax advantage of Rogers paying a higher rights fee to the Blue Jays remains valid.

    https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4088-general-index-financial-information-gifi.html

    Click on the link above, click on the PDF link, and then scroll down to Page 5 of the document. You will see “Reporting unconsolidated financial statement information”.

  • comment-avatar
    cirroc 1 week

    @Paul G

    My thoughts exactly regarding agreeing with Blair. I think Stroman is a great pitcher, but I too get tired of his antics. If the scrappy underdog role helps him compete and be effective then so be it. Just stop whining and be the bigger man (no pun intended). I mean, he is the highly paid, potential all star professional athlete. What’s he worrying about what people think anyway?

  • comment-avatar
    Paul G. 1 week

    @cirroc

    Steve Buffery noted in yesterday’s Toronto Sun that Stroman was the unanimous choice of the Baseball Writers of America Toronto Chapter, for their Pitcher of the Year award.

    In addition to ignoring criticisms, he also needs to stop assuming that the media at large is against him.

  • comment-avatar
    Steve in Waterloo 1 week

    Stroman retweeted every tweet that supported him. I love all the tweeters who supported Stroman, likely just so they could get Stroman to retweet.

    I don’t agree with Zaun calling him out, when Stroman was doing no less than Grille was when he would get a strike out. That seemed strange to me – age favoritism?

    Please don’t remind me of the era when the Leafs were owned by the Teacher’s Pension Plan.
    Please have a rich egocentric individual with no heirs buy the Jays.

  • comment-avatar
    Big G 7 days

    At the end of the day don’t forget that the transaction could very well be ED Rogers and the Rogers Family acquiring this team.

    Im sure Edward would love to have an acquisition under his belt, not to mention there is sentimental value there. This way nothing really changes in terms of the broadcast and from an accounting prospective.

  • comment-avatar
    Omario 6 days
  • comment-avatar
    Paul G. 6 days

    @Omario

    Sadly, it probably means just that.

  • comment-avatar
    Mike V 6 days

    Paul is right. Bob/PTS are not going to change now so be prepared for more of the same between 4-7 until 2020.

    In related news, latest radio book is out. Overall in M25-54, FAN declines to 4.1 from 4.7 in the summer and TSN improves slightly to 1.0 from 0.7.

  • comment-avatar
    yaz 6 days

    Officiall. Bob has signed for 3 more years. I wonder if it will negatively affect Rogers’ EBITDA.

  • comment-avatar
    Daniel 6 days

    Glad Bob’s back.

  • comment-avatar
    Pants Go Brown 4 days

    With so many SJW’s on the Fan — Blair etc. catches me a bit strange that they now have Matthew Barnaby on as a pseudo regular especially with his spotty record on violence, drinking etc.

    Sure seems like an odd fit to me and you’d have to think there are other voices around without the same baggage.