photo credit: NP/Tom Szczerbowski/Getty Images
by mike in boston / @mikeinboston / hatemailaccount at gmail
Good morning sports media watchers. Since some of you asked, here’s my deal with TSM regarding this column. I have a Brunt type arrangement where I do roughly 35 weekends a year. I usually do 3 or 4 columns in a row, then take a one weekend sabbatical. Over the summer, as the B-teams take up more and more airtime, I may change things up and take more time off too. As always, if there are things you’d like to see discussed in this space, shoot me an email or a DM.
More on the Rogers/NHL deal
I reckon the people at Rogers go to bed every night praying for some exciting financial news out of Glendale, Arizona. That’s where the Coyotes play and that is the story that soaked up all of Mr. David Shoalts’ available time and word count. Since then he has been staging a one-man full-frontal assault on all things Rogers for the Globe (15% owned by BCE). He has been doing excellent reporting on the Blundell hiring, the HNIC changes, the missed targets for ratings, and more. This week he is exclusively reporting that the NHL’s exclusive deal with Rogers, which is in its first year of a twelve year term, is not turning out to be exactly what the NHL bargained for.
Shoalts writes: “Rogers Media isn’t the only struggling partner in the NHL’s $5.2-billion, 12-year Canadian broadcast deal. The league itself is hurting, too. The contract with Rogers is paid in Canadian dollars, which sharply declined in value against the U.S. dollar after the deal was announced on Nov. 26, 2013. As a result, the NHL is taking a large hit in the contract’s first season: One NHL governor, who spoke anonymously because league officials are forbidden to publicly discuss NHL business, said the currency hit for the 2014-2015 season was pegged at about 17 per cent, which, based on the annual average rights fee of $433-million, works out to a $73.61-million loss for the league.”
So, the NHL signed a deal with no protection against fluctuations in the CDN dollar. That seems mighty dumb on their part. You would think that someone would have mentioned the history of the CDN vs the US dollar over the last 10 years. Speaking as someone who moved to the states when the CDN dollar was at 65 cents US, I feel the NHL’s pain. Converting those dollars to US ones hurt. I can only imagine what it’s like to see $70 million dollars disappear due to conversion rates.
That said, this is somewhat of a mountain made out of a molehill. The NHL draws most of its revenues in U.S. currency, and the difference with the CDN dollar works in their favour when they spend US currency in Canada. As someone who has had both US and CDN income for many years, this is why you have bank accounts in both countries. When possible, you avoid converting. So, the NHL can pay its Canadian teams in Canadian dollars from the Canadian revenue they generate from Rogers, and they can pay their US teams in US dollars from the US revenue they generate from NBC/etc. I’m not saying this is all going to balance out perfectly, but it’s also not the calamity you might think.
What would be a calamity is if the CDN dollar were to keep losing value over the next few years. As Shoalts notes, the 7 Canadian teams make up 35% of the league’s revenues, and those revenues are used to determine the NHL’s salary cap. Further, changes to revenue affect how much players must pay into escrow. So there are a lot of moving parts here, and the NHL’s profit sharing and cap systems are deeply linked in ways that are potentially disruptive from year to year. If the cap has to come down because of a low CDN dollar then many teams will have to shed salary.
It seems obvious that the NHL should use a 2 or 3 year average when it comes to currency fluctuations and revenue. This would flatten out some of the peaks and valleys we are seeing, and might allow league growth to cancel out currency devaluations. I wonder if the NHL will implement something like this in the off-season. The players and GMs shouldn’t have to be watching the currency market to figure out what their contracts will be worth.
More RCI News
Shoalts enlisted the help of Globe telecom reporter Christine Dobby to continue to shine the spotlight on any bad news at Rogers (disclaimer: I don’t really think Bell is telling Shoalts what to write — I find the idea ridiculous — but Damien Cox actually does think that). Dobby reports that RCI profits are down 17% from this time last year, with the three biggest units — cable, wireless, media — all taking hits. When you combine these results with the recent departure of Keith Pelley as head of the media business unit, it is hard to resist the implication that he jumped off a ship headed for turbulent waters.
Before people put on their dancing shoes and head out to the cemetery it’s worth pointing out that this is bad news for Toronto sports fans regardless of which sigil flies above your castle. Rogers owns or co-owns all your teams, and a cash crunch means less spending on the things you actually care about. Further, Rogers is blaming some of their losses on CRTC rulings which means Bell is likely in the same boat. (side note: in the last year the CRTC has angered all of the major telecoms. That’s got to be good news for the rest of us, right?)
One thing to watch is whether we will see cutbacks on the sports side to compensate for these overall downward trends. Rogers spent a ton to acquire a stake in MLSE. They spent another fortune on the NHL, which was followed by investing in new studios and cameras and tour buses. The Dome needs $400 million in upgrades to stay serviceable. At some point all of this has to lead to cost cutting in light of declining profits. We’ve seen evidence of this when it comes to the Jays’ payroll over the last two years. At key junctures there has simply been no money.
Further, recall that Guy Laurence is only 15 months into his tenure at Rogers. With Pelley leaving there will soon be a new boss over in the media division, and new bosses mean that the old allegiances and agreements might no longer bind. This could lead to big changes at Sportsnet.
Here is what New Pelley will notice straight away: the line-up at the radio station is incredibly expensive. Blundell probably costs more than Brady & Walker combined. Jeff Blair negotiated his way from a high profile newspaper job to Sportsnet and must be expensive given the low value slot he occupies. The same point goes for Brady & Walker. Both guys have been in a position to negotiate with Rogers, and so likely make a lot of money relative to their timeslot. Then we get to PTS which has the Million Dollar Man himself, plus the huge salary bumps his co-hosts receive, plus all the paid guests, plus the extensive production team. That’s just the radio side, which is arguably the least important unit at Sportsnet. I have no idea what things are like over on TV but I imagine it’s a similar picture.
My point is that the NHL deal brought on a lot of financial liabilities at a time when profits are down and the overarching business is in transition. One could easily understand a choice to streamline things until the telecom marketplace settles down. It will be interesting to watch.
Well the season is off to a fun start. The team has been exactly as advertised: offensively gifted, defensively improved, and a giant question mark on the pitching side. The wrinkle in the rug has come from the new turf. Mark Zwolinski at the Star reports that the crybaby Orioles considered boycotting a game due to the black-pelleted wonder that covers the concrete at the Dome.
I have said this before in this space, but it bears repeating this week. People will look back on Jose Bautista’s time in Toronto and marvel at how lucky we were to watch him play. His most recent accomplishment is being thrown at by the opposition and then hitting a home run in the same at bat. Oh, he’s done this twice in the last 10 days to the same team. Ian over at Blue Jay Hunter has all the glorious footage. If the Jays win nothing during Bautista’s time in Toronto then I think there will be a great (dispiriting) discussion to be had over whether he or Halladay represents the most wasted value in Toronto sports history. I guess Sundin belongs in that discussion too.
The main theory in the off-season was that Gibby would be the sacrifice for a poor performance out of the gate. The team is currently around .500 but has some tough games ahead and could well be 5 games under by the first week of May. My own opinion is that Everyone Loves Gibby, and he’ll be here regardless of how the team performs. No one wants to see him go, and the youth movement provides a convenient cover for poor performance. Gibby has worked hard at staying on the media’s good side. For contrast here’s how Reds manager Bryan Price deals with local writers (NSFW – language).
Finally, new Jays 3B Josh Donaldson has looked awesome (except for his terrible 90’s haircut). The departed 3B Brett Lawrie has been making news for, well, being exactly who we remember him to be. He’s currently at the centre of another controversy for going spikes up and off the bag at another player when there was no chance of a double-play. The well established MLB practice of beanball then ensued along with the obligatory pushing and shoving theatre. See here for some footage. After watching the Orioles embarrass themselves trying to defend their guy (and their manager) for doing something stupid, I’m glad Lawrie is no longer a Jay.
Jarret Stoll was arrested for drugs. TSN has two stories up, one which allows comments and one which doesn’t. Might be nice to have some consistency. Either it’s too sensitive for the screaming hordes or it isn’t.
We don’t lose to Spanish players? If your motivational strategy involves targeting an opposing player’s country of origin, then you’re not a very good human being and probably not a very good coach either. It’s 2015.
Speaking of bad strategies, Masai Ujiri’s 2014 “Fuck Brooklyn” was a fun departure from the normal platitudes we hear come playoff time. His current shot at Paul Pierce was just dumb, and seems even worse given how lethal Pierce has been against the Raptors.
The NFL looks like it will pay about $1 billion dollars to settle 6000 concussion lawsuits. I wonder how much they will pay out to the 200 or so players who are not party to this class-action suit. What will a jury think when these guys get on the stand and give the gory details of being rushed back on to the field after a concussion? The NFL has annual revenues of $10 billion by the way. That might figure in the amount of damages a jury will award if it goes to trial.
Rick Westhead at TSN is reporting that another high profile target for the MLSE top job has turned down an offer. As we get closer to Leiweke’s departure I am shocked at how difficult it has been to find his replacement.
Low Hanging Fruit
- I didn’t have time to properly survey the range of opinions on the Corey Perry/Katy Perry/Gary Bettman controversy. If it still seems worth talking about next week, I’ll get to it then. You would think that Gary would have had the sense to say something about how the NHL deplores violence against women and all its social precursors.
- Congratulations to Steve Simmons for getting the interview everyone is talking about. If you were on the radio and referenced it but didn’t give Steve credit, it makes you look kind of small.
- I caught 5 minutes of Jeff Blair talking about the Nonis interview “from a local paper” and he was complaining that Nonis didn’t apologize for the Leafs’ failures and said this more or less tells you what kind of a guy he was inside the organization. To be fair, I didn’t listen for very long, but being annoyed that a guy who was just fired didn’t say he was sorry strikes me almost too stupid for words. For Jeffy, that’s an hour’s worth of calls.
- I had hoped that Brady & Walker would develop some good interview relationships in their new time-slot. Unfortunately they have had a hard time breaking out out of the Sportsnet sandbox. There’s a lot of interviews with Kypreos and Zaun and Wilner and MacLean. One of the things that keeps PTS in a different league is the deep pool of non-Sportsnet guests they draw from.
- Speaking of PTS and B&W, I haven’t heard them do any cross-over segments yet. I recall Krystal routinely appearing on PTS in the 4pm hour when he was with the station, and who can forget the numerous awful segments where Tim &/or Sid would stick around to chat with Bob. I’m a little surprised that the station isn’t trying to use PTS’ brand to generate some momentum for Brady & Walker PM.
thanks for reading and commenting,
until next time …
mike (not really in boston)