Longreads: Writing About Ownership

Longreads: Writing About Ownership

by mike in boston / @mikeinbostonemail

 

In today’s edition of Longreads we are going to delve into the topic of ownership, and how media covers stories about owners. For previous instalments in this this series, please read my interview with NNA winner Dan Robson on the ethics of writing about tragedy, and Kevin McGran on profiling the notorious Gary Bettman.

 

Be Careful What You Wish For

 

Toronto sports teams have been under corporate ownership for several decades now, with Bell and/or Rogers controlling the Maple Leafs, Raptors, TFC, Blue Jays, Marlies, and Argos. Since MLSE have been in charge they have been near model owners, spending lavishly on coaches, GMs, training facilities, and scouting. This comes after years of suffering under the cold and indifferent Teacher’s Pension Plan, who chronically underspent on the Leafs at a time when there was no salary cap.

 

Things haven’t been rosy with the Jays, as Rogers has chosen to lump the team in with their media division rather than running them as a free-standing business. This means that things like NHL ratings on Sportsnet affect the Blue Jays’ payroll, and a larger concern with the stock price of RCI appears to influence the direction of the team.

 

We often muse about what life would be like if the Jays, who play in a league without a salary cap, were owned by an individual motivated solely by winning. After years of “payroll parameters” and promises that the money would be there when the team is ready to win most Jays fans have made their peace with the fact that the Jays will never spend to the luxury tax so long as Rogers controls the budget. This is despite the fact that fans have shown that they will fill the Dome for a competitive team, and tune in to radio and TV in record numbers. This is frustrating, since the formula is clearly there for someone with deep pockets to both make a tidy profit and field a perennial contender to compete with New York and Boston.

 

Down in Buffalo they have a family-run version of MLSE, with the Pegulas owning both the Sabres and the Bills, along with minor league franchises, venues, restaurants, marketing companies, a record label, and a hotel. Their sports and entertainment empire captures most major events in downtown Buffalo, and as a result Pegula Sports & Entertainment (PSE) employs hundreds of people from the area. In a phenomenal piece of reporting by Tim Graham of The Athletic Buffalo he lays out concerns about “low morale and a lack of faith in corporate leadership”, stemming from a series of layoffs that began a year and a half ago and which recently culminated in large-scale furloughs across the company.

 

The article details issues ranging from nepotism to merging of job portfolios following departures. There is also the issue of Kim Pegula being the president for all five of PSE’s sports teams. The most damning piece of evidence cited in the article concerns a presentation at which maintaining the Pegulas’ lifestyle is given as an organizational directive alongside winning.

 

I highly recommend that you start here and give yourself a good half hour to read Tim’s article. Kim Pegula also agreed to an email Q&A which was published alongside the article. Once you have a sense of the different sides of this story, come back and read my interview with Tim about his reporting. We discussed the culture of Buffalo sports media, how this story came about, and what he expects will happen in the aftermath of this massively negative story for the Pegulas.

 

An Interview with Tim Graham (The Athletic)

 

Q: To get started can you tell me what your career trajectory has been?

 

TG: I’ve mostly been a print person but I did write for ESPN, which meant you also had to do television. I also did a weekly radio show when I was living in Las Vegas. But I have been doing the written word for most of my career, now with The Athletic, which is not technically print since I’m writing for the internet.

 

I started writing in 1991 while in College, doing high school and local sports and a little bit of the Cleveland Browns. I didn’t study journalism in school – I did sports management as a major – so I didn’t have the traditional internship at one of the papers. After graduating I bounced around across the USA, trying to teach myself some of the things I missed. I never took Journalism 101 so I read a lot of books, talked to a lot of people, trial and error …I had to teach myself.

 

Q: Is that a path you would recommend to anyone starting out today?

 

TG: No way. I teach a journalism class at Canisius College and the students are so far ahead of where I was when I started my career. That said, a lot of journalism programs have tons of pre-requisites for getting in, and then you have to wait your turn to write for the school paper. You don’t get to call games on radio, which is something for example I was able to do at Baldwin Wallace because it was such a small school. I have friends who went to journalism programs who stalled out because of the lack of opportunities. So, in my case I think I would have got to where I am faster if I had gone the traditional route, but I don’t know that it would have been better.

 

Q: It sounds like the opportunities you were given helped you build skills

 

TG: I started from the bottom because that’s all there was for me. My first paid gig was covering a baseball tournament that included “coach pitch” because the kids were so young. It was an all day assignment. I was there for 12 hours and then had to go to the office and write up a story based on all the stats from the day. My boss was so happy with it. I also remember writing a story about a 12 year old weightlifter.

 

There are a lot of people who want to get in to sports journalism and think they can because the internet is there and they can start a blog, or write for one of the free sites or now Sports Illustrated. So you can go from a whim, to writing about the New England Patriots. But you have zero training or experience actually covering sports. And after a few years these people wonder why no one is asking them to write for paid publications. I’m glad I was forced to cover the local stories I did because I think learning the nuts and bolts is really important.

 

Q: You mentioned the transition from print to digital. One of the differences I’m curious about is whether there is more of an expectation that you interact with the audience when you write for a digital publication?

 

TG: When I was at the Buffalo News the comments section on my stories was run through Facebook. And it was nasty. The Athletic is a lot more positive – perhaps too positive – but overall it’s very healthy. But at the Buffalo News I had a policy of never looking at the comments. While I was there I wrote a story where I interviewed O.J. Simpson and I made a point not to read any of the Twitter mentions. That broke me of that habit and now I generally ignore the tweets as a policy. The story is what it is and if you don’t like it then you’ll tell me about it, but I don’t need it to ruin my day. So I would say that personally it’s the same between print and digital in terms of audience interaction.

 

Q: The other difference is obviously deadlines. Has that changed how you work?

 

TG: One of my first game stories for The Athletic was a Bills game in 2018. It was an ugly game with Nathan Peterman throwing dozens of interceptions. After the game I came up to the press box trying to get my story done and emailed my editor that I could either send it to her by 8pm before my flight or by 10:30 when we landed. That was the breakneck ESPN pace I was trained under. She wrote back and said “Great! I’ll look at it first thing in the morning.” And I started laughing about it to one of my print colleagues who was in the midst of trying to file several stories by deadlines that night. The data we have is that we don’t lose many views by not rushing to get a story up as soon as the game is over. Most fans will read in the morning over breakfast or at the office. And we can do that because we don’t have trucks waiting to rush things off from the printing press. The flipside is that The Athletic guys are usually the last people to leave the press box and we lose a lot of sleep because we’re up all night trying to round out our stories.

 

Q: How would you characterize the typical Buffalo sports fan, as a consumer of sports media?

 

TG: Sabres fans and Bills fans are different and you need to take a different approach with each, which is something that some people here in the media don’t fully understand. For Bills coverage, you can flip on the NFL Network any time and get NFL coverage. There are hundreds of different places to get NFL stories. The NHL is different. In Toronto you probably have plenty of options, but here it’s not the same thing. The NHL Network tries to be like the NFL Network but realistically it’s not close. I remember when the last lockout ended I flipped on the NHL Network and it was one of those Top 10 shows about goals from the Western Conference playoffs. And the lockout had just ended! If this were the NFL Network they would be wall to wall on the labour settlement. So there’s a weakness in the coverage there, and don’t forget that we don’t get TSN and Sportsnet down here. ESPN doesn’t have the NHL rights so they don’t cover hockey much except when they bring Barry Melrose out of mothballs. So your Sabres fan needs dedicated coverage. The numbers still say that the NFL is where the action is, but that’s just a volume thing. There are more Bills fans because there are more NFL fans. But if you go fan by fan I’d say the Sabres fan is way more into Sabres coverage than the average Bills fan. Of my top 6 stories at The Athletic, half of them are Sabres stories and only one of them is a Bills story. And that’s where we have been strong as a publication … Sabres fans know that we are taking their team seriously.

 

Q: The Pegulas have wrapped themselves around the blue-collar sports culture of Western New York. As an outsider the marketing and media narrative sometimes comes across as a little patronizing. As a local writer, how do you feel about this?

 

TG: You can always cater to fans by pandering to them. That’s not just true here; that’s true everywhere. But Buffalo sports fans have been neglected for a long time. There’s also that “2nd city” mentality, whether it be New York or Toronto. Buffalo is always fighting to be relevant so there’s definitely a chip on the shoulder. People here notice when ESPN fails to talk about the teams. You saw this with the draft coverage recently. And if there’s a playbook for how to get embraced here then Josh Allen has it because he has done everything perfectly. Bills fans love this guy. I don’t think Bills fans are unique in their passion or traditions. Every fanbase has that. The thing that is maybe a little different is the years of losing. All the craziness you see in the parking lot is maybe a reaction to the games being blowouts so often. Now with the games being more meaningful you’re seeing people pace themselves in terms of drinking so they can pay attention to the game.

 

Q: Toronto sports teams have been under corporate ownership for several decades now so most of our readers won’t remember what it’s like when your local team is owned by an individual or family. How would you describe the Pegula family tenure so far?

 

TG: Mostly good but turbulent. They are viewed as saviours. People didn’t even know who Terry Pegula was when he emerged to buy the Sabres. Most of his business was in Pennsylvania; he’s not from Western New York. When he buys the Sabres fans are very down on Tom Galisano due to key departures of popular players, and the perception that he is a penny-pincher. And here comes Mr. Pegula telling fans that the goal is to win a Stanley Cup, not to make money. And if we need to spend more money then we’ll just drill another well. This is unheard of in Buffalo. Ralph Wilson had a reputation for being cheap. The Rigas’ allowed players to leave over money. So Buffalo fans were used to being told that they can’t have nice things because we can’t afford it. And with the Bills there was a real threat they would leave. So when Terry Pegula buys the team it was one of the greatest days in Western New York history. They walk out at the stadium and unveil the slogan One Buffalo, and people are crying in the stands. Maybe that was pandering, but at the time you couldn’t help but feel this was truly amazing.

 

But then things went back to being bad. The Sabres made the playoffs once since they took over, and not again. On the Bills side you had coaching departures, and one guy who quit just to get away. You have the folly of Rex Ryan. Things are looking better again with Sean McDermott. But if you look at the totality of the moves the Pegulas have made, they have been failures. Bills fans have come around, but Sabres fans would love for Terry Pegula to sell the team.

 

Q: Your recent reporting highlights some dissatisfaction within the fanbase with the Pegulas. When, in your opinion, did that shift begin?

 

TG: It was gradual with the Sabres. With the Bills I think it was the Rex Ryan fiasco. Buffalo sports fans have been fooled so many times. Not because they are dumb, but because they trust. And they have trusted so many of the moves the Pegulas have made. And certain fans feel put over by these owners. And it’s very hard to get the trust back once you feel betrayed. And now we are seeing it not on the field, but on the business side. This family has a huge profile. They are big time, and there’s not much in this region that makes you big time on a national scale. But at the same time there’s a lot of civic pride in the teams. And fans and taxpayers have started to focus on the business sense of the Pegulas. So that cloud is definitely there now.

 

Q: As a media member, you play a role in mediating a conversation between fans and ownership. How have the Pegulas handled the media, in your opinion?

 

TG: Poorly. I think there is an aloofness in that they don’t speak to the fans too often. They only seem to do it when they have to. You only hear from them when it suits them. I think they have done a poor job of entrenching themselves during really bad times, and of extending themselves to fans. So they come across as people who don’t come down from their tower. And I want to note that the Bills are not like this. You can find Brandon Beane. If I needed him for a story I could get him today or tomorrow.

 

With the Pegulas, you’d see them on the sidelines at Bills games. But are they attending Sabres games? That might seem unfair, but fans know that the Pegulas live in Florida for tax reasons. So they can fly up for Bills games and have it not affect their tax status, but it’s harder to do that with the Sabres. And fans keep score. Their brand – One Buffalo – is shot. Whoever is advising them not to talk is doing them a disservice. They have not been transparent.

 

Q: That’s interesting as a criticism since Kim Pegula agreed to do a Q&A with you. Were you expecting her to say yes to that request?

 

TG: I was informed during the process of reporting on this story that if I were to reach out for comment from the Pegulas I would be rejected. As more conversations happened, she was eventually offered to me but only through email. I checked with my editors because emailed answers are not ideal. You don’t know who is actually writing or how many people looked over the answers. Now, I’m quite confident Kim Pegula wrote those answers. And we thought it would be a good complement to the story so we agreed to run it alongside and unedited. So to go from a pre-emptive rejection to having all the questions answered – and, I thought, answered with humility and from her heart – I was surprised. But I also think they felt they had to. It suited them to speak, after their initial decision not to talk to me. That’s how they work. That’s how the people around them advise them.

 

Q: One of the most contentious items from your reporting is the presentation slide that mentions maintaining the Pegulas’ lifestyle as one of their priorities alongside winning championships and sustainability. How do you interpret that reference to lifestyle, based on your research?

 

TG: I put in the story exactly how she intended it. She articulated to the people in the room that it was about maintaining the family lifestyle. So people can quibble about what she meant but we know what she said and what her VPs then relayed to their teams. So my reporting states how I took it. I took it based on how people told me they took it. And that’s really the point: whether she should or shoudn’t have done it is another discussion.

 

I had heard about it whenever this originally took place, and rolled my eyes and filed it away. The impetus to actually write this into a story was based on an exchange with a former employee, who sent me an internal email from Kim letting employees know how they could contribute to a charitable pandemic fund. This was 2 weeks before they announced their layoffs and furloughs. So I was looking at this email through the lens of the 135 affected employees, or the people still employed wondering if they would be next, or the people whose workload would expand due to the layoffs. So I was thinking about all of this and the One Buffalo brand, and the bitter taste left in people’s mouths if they had donated before they lost their jobs. It was a bad look.

 

But people got mad at me on twitter because lots of companies do the same thing, in asking employees to donate to various causes. But the difference I saw was that this drive was announced two weeks before you know you are making cutbacks. And I knew how bad morale is there, so rather than getting into it with people on twitter, I held back and decided to write about it. I drafted an invitation for people to contact me and checked with my editors. They were on board and so I sent the tweet out and it was a monsoon of DMs. I mention 39 people in the story. But it was 39 who fit the criteria of having worked full-time currently or in the past 14 months. There were another 50 or so who fell just outside of those parameters. I felt really honoured that people trusted me to tell their story. That gives you a sense of how bad people are hurting over there.

 

Q: When you write about people losing their jobs you know there is going to be a lot of negativity. Even under ideal circumstances, no one who gets fired is going to be happy. When interviewing ex-employees with the cover of the Pegulas with the cover of anonymity, what can you do to make sure the story is fair to your subjects?

 

TG: I’m certainly mindful of that when writing. Certainly there were some punches pulled. You’ll notice the quotes are pretty short. We didn’t let people go on rants in the story. We wanted to express the sentiment and move on. That’s where the editing process helps. We had multiple eyes on it, including people who had never heard of the Pegulas. So yes there is an opening for shots, but I wanted to provide a snapshot of what company morale looked like. And let’s note that Kim Pegula acknowledged that these problems exist. She pushed back on nepotism. She pushed back on some minor things, but essentially she does not deny a lot of what was said.

 

Q:Do you think about how publishing this story will affect your access going forward?

 

TG: I do, but I have to not care. If I lose access, then so be it. I have covered ownership groups in the past where I had no access and I did ok. I think it’s always a toxic situation when they want to give the Heisman stiff-arm to media for personal reasons. It’s unhealthy and it’s stupid. Do they assume I’m just going to go away and change my profession? If you want to deny access or box me out then I’m going to get my info from other sources. Is that better? Confrontation and being adversarial only hurts your ability to get your message out. I’m going to do my job regardless.

 

As I said earlier, fans keep score. And if all of a sudden certain outlets are getting lots of Kim Pegula stories, the audience will be able to tell. That’s already happening: when press releases with bad news – like firings – have come out it has been in conjunction with a story in the Buffalo News. You don’t have to be a genius to figure out that they have been coordinating with the paper to soften the blow. People notice that, both in the media and within the fanbase. Do you fault the News for taking advantage of that access? Of course not. I’ve been a reporter on the other side of that. I get it. But I think the fans are smart enough to figure out who is getting access. And I’ll say, my eyes were open going in to this story. I knew they weren’t going to like it. My response would be, don’t talk about maintaining your lifestyle to your employees. Don’t put them in a situation where they have to wonder who they are working for. And that’s really what the story was about. And I do know that these employees feel heard and seen because of the story. My hope is that the story causes some reflection. And I guess we will see what the Pegulas do with it.

 

 

Further Thoughts

 

I want to thank Tim for being so frank in his answers. As mentioned, the articles are fantastic and it’s the kind of high quality journalism that makes The Athletic a tremendous value. (Disclosure: I pay for a subscription to The Athletic). You can follow Tim on twitter.

 

The main questions I have following this interview are the following:

 

How has MLSE avoided the pitfalls of rapid expansion and poor management we see at PSE? There were some rough moments under Tim Leiweke and Richard Peddie, but nothing like a toxic culture. On a side note, has anyone ever heard a quote from the new man in charge, Michael Friisdahl? He’s been a ghost for almost five years.

 

Would a single owner for the Jays be an improvement on the status quo? I go back and forth on this but keep coming back to the RCI issue, and the need to explain payroll spending to shareholders. We keep reading stories about how things like dead salary money gets calculated in the annual reporting, and this seems like a kind of nuisance that a privately held venture would not have to go through. Rogers is not cheap with the Jays but they have never behaved like an owner that cares about winning more than other considerations. That would probably be a breach of fiduciary duty.

 

Would it be better if MLSE owned the Jays? Probably yes. In speaking with many people at Sportsnet it is clear they don’t like being accused of being shills for the Jays. Yet many will also acknowledge the preferential treatment they receive from that relationship. This would mostly disappear if both Bell and Rogers owned the team. We don’t get worked up about McKenzie’s Leafs reporting despite the fact that his employer owns a chunk of the team. As a consumer of sports media, and the fine baseball work done by many at Sportsnet, I’m rooting for the shill talking point to die.

 


 

thanks for reading and commenting,

until next time …

mike (not really in boston)

image credit: Tom Szczerbowski / Getty Images

COMMENTS

WORDPRESS: 3
  • comment-avatar

    “Things haven’t been rosy with the Jays, as Rogers has chosen to lump the team in with their media division rather than running them as a free-standing business. This means that things like NHL ratings on Sportsnet affect the Blue Jays’ payroll, and a larger concern with the stock price of RCI appears to influence the direction of the team”.

    If the concern is the impact of the Jays on Rogers earnings, and ultimately the share price, having the Blue Jays report as part of Media or in a separate line of business does not address that concern. If Rogers owns more than 50% of the voting rights of the Jays, then Rogers must consolidate the financial statements of the Jays with the Rogers financial statements regardless of their assigned business segment.

    I also think that some people overstate the financial impact of the Jays on Rogers overall. In 2019, Media, which includes Sportsnet, Blue Jays and other entities, accounted for only 2.3% of Adjusted EBITDA. If the Jays made $100 million less than they did in 2019 due to higher payroll costs, Rogers Adjusted EBITDA would decrease from $6.212 billion to $6.112 billion, a 1.6% decrease. That is not very impactful for a company as large as Rogers.

  • comment-avatar
    Daniel 4 weeks ago

    @Bob Usually a companies bonus structure is based on the performance of their BU as well as the overall companies performance. So if you’re heading up the media division and could sign a player for $10m per season but you know that this season he is not going to return anywhere near $10m in ads or ticket sales and their salary may put you under on your bonus, then you don’t sign him. its short term thinking but that’s what bonuses incentivize. It’s an overly simplistic example I know but I think that’s what happens with a sports team controlled by 1 arm of a corporation

  • comment-avatar

    I would make the following remarks in response to your comment:

    First, I don’t think the Head of Rogers Media gets into the weeds as you suggest. Yes, the Blue Jays would present a budget that would include projections of payroll, other costs, and revenues. However, I don’t think there would be an in-depth discussion of specific players, as you contend.

    Second, I don’t think the culture at Rogers Media is as short-term orientated as you suggest. Rogers, as a whole, is used to making long-term investment decisions: they have averaged over $2.5 billion in capital expenditures in the past five fiscal years. Also, Rogers Media signed the $5.2 billion, 12-year NHL contract that required an upfront payment of $150 million. Finally, the Blue Jays upped their payroll from 2019 (for example, Ryu). I doubt that Rogers Media thought in December that they would recoup that payroll increase in 2020, which would affect the 2020 bonuses of Rogers executives.

    Third, my point was that from an accounting perspective, it does not matter where the Blue Jays are within the Rogers structure. I was refuting Mike’s position that the Blue Jays assignment to Rogers Media, and not as a free-standing business, affected the stock price via earnings. It does not.

    Fourth, I am not arguing that Rogers does not place some form of financial discipline upon the Blue Jays. However, the impact of the Blue Jays on Rogers is not as significant as some people believe. I know a portfolio manager who covered Rogers and his focus, and I think the same holds for the stock market as a whole, is on the wireless and cable business segments. In his words, the Blue Jays were not significant; the Jays account for less than 2% of total revenues. He just wanted to know that the Blue Jays were not spending like drunken sailors.