• From Jacob Ruppert To Rupert Murdoch?

    Posted by on November 19th, 2012 · Comments (21)

    Via Wally Matthews today-

    Rupert Murdoch is knocking on the door of Yankee Stadium. How long will it be before he owns the entire building, and everything in it?

    According to a New York Times report, News Corporation, the multi-media behemoth run by Murdoch, is on the verge of acquiring 49 percent of the YES Network.

    A senior New York Yankees official, who insisted upon anonymity, confirmed the impending deal, although the official insisted it was merely “the stockholders looking to monetize their investment.”

    “This has nothing to do with selling the team,” the official said. “Under no circumstances will the team be sold.”

    And up until a few months before his death in 2010, George M. Steinbrenner was still running the Yankees, every bit as forceful and in command as he had been when he bought the team for $8 million in 1973.

    The point is, nothing is ever precisely the way the New York Yankees portray it to be.

    George was in charge, until he wasn’t. Joe Torre was the manager, until he was fired. And the team isn’t up for sale.

    Until it is.

    The sale of nearly half of the YES Network to Rupert Murdoch may be as simple as the senior team official says it is, an expedient way for Goldman Sachs, which makes its living buying and selling off assets, to score a cool $1.5 billion or more on its 10-year-old investment.

    Or it could be the first step in an exit strategy designed to get the Steinbrenner family out of the baseball business within the next three to five years.

    There is compelling evidence to support both arguments. With many large corporations looking to cash out on investments before an expected corporate tax increase in 2013, it would seem to be the right time for Goldman Sachs to dump its share in the YES Network.

    But in order for News Corp to acquire 49 percent of YES, a figure that the team official confirmed, Murdoch will need to buy more than just Goldman’s 40-percent share of the network. How much of the remaining nine percent will come from the Yankees’ 34 percent share is not known.

    The fact that the Yankees are not taking the opportunity to increase their own share of YES to 51 percent, to insure they retain control of their own network, indicates that they are willing eventually to cede that to Murdoch — who reportedly will have the option of increasing his share of YES to 80 percent within five years.

    I can just see Larry Lucchino now, bitching about phone-tapping…

    Comments on From Jacob Ruppert To Rupert Murdoch?

    1. November 19th, 2012 | 9:04 pm

      YES has one major asset, control of the broadcast rights to 150 Yankee games. Take that away and …… . If Murdoch buys into YES rest assured some arrangement relative to the Yankees ownership can not be far behind.

    2. KPOcala
      November 20th, 2012 | 4:53 am

      We have a contributor or two that understand the thinking of the Stein Boys and Big Business. Love to hear the “take”……..

    3. MJ Recanati
      November 20th, 2012 | 10:25 am

      Joseph Maloney wrote:

      YES has one major asset, control of the broadcast rights to 150 Yankee games. Take that away and …… . If Murdoch buys into YES rest assured some arrangement relative to the Yankees ownership can not be far behind.

      Using that logic, why hasn’t Fox purchased ownership stakes in the other Major League teams whose games Fox broadcasts (Indians, Cardinals, Dodgers, Angels, Orioles, Nationals, etc.)?

      Fox is buying a stake in the largest and most successful regional sports network because it fits their portfolio of sports network holdings in a market that they had been shut out of once the Mets lauched their own regional network with the help of Time Warner and NBC Universal, two of Fox’s competitors.

      Does Murdoch want to buy the Yankees? Perhaps. But I wouldn’t use the purchase of a stake in YES as evidence that the Yankees are selling, only circumstantial evidence that Fox may be interested.

    4. November 20th, 2012 | 11:27 am

      Just saw this -

      darren rovell @darrenrovell
      Sources: Current deal on the table with News Corp has them buying 49% of the Yes Network. Yankees cashing out 9% and making $670M+ from deal

    5. MJ Recanati
      November 20th, 2012 | 6:10 pm

      Steve L. wrote:

      Just saw this -darren rovell @darrenrovell
      Sources: Current deal on the table with News Corp has them buying 49% of the Yes Network. Yankees cashing out 9% and making $670M+ from deal

      If true it really disabuses the idea that the Yankees are for sale. What they’re doing is freeing up cash without losing controlling interest in YES Network.

      As to what they’re doing with that cash, I have no idea. Maybe they want to have it handy in case they find a buying opportunity via free agency or trade or maybe the Steinbrenners racked up huge tabs in Las Vegas and need to pay off their gambling markers. Who knows.

    6. Raf
      November 20th, 2012 | 7:22 pm

      MJ Recanati wrote:

      As to what they’re doing with that cash, I have no idea. Maybe they want to have it handy in case they find a buying opportunity via free agency or trade or maybe the Steinbrenners racked up huge tabs in Las Vegas and need to pay off their gambling markers. Who knows.

      I think they want to make like Scrooge McDuck and swim in a vault full of money :)

    7. Evan3457
      November 20th, 2012 | 8:46 pm

      MJ Recanati wrote:

      Steve L. wrote:
      Just saw this -darren rovell @darrenrovell
      Sources: Current deal on the table with News Corp has them buying 49% of the Yes Network. Yankees cashing out 9% and making $670M+ from deal

      Simple figgerrin’ means that the market value of the YES network as a whole is a little less than $7.5 billion dollars.

    8. Evan3457
      November 20th, 2012 | 8:47 pm

      Raf wrote:

      I think they want to make like Scrooge McDuck and swim in a vault full of money.

      Nice work if you can get it.

    9. Raf
      November 20th, 2012 | 10:27 pm

      Evan3457 wrote:

      Simple figgerrin’ means that the market value of the YES network as a whole is a little less than $7.5 billion dollars.

      They could buy the Dodgers twice. They’re worth 4 years of the MLB TV deal

      So, once they’re done with the $670M, maybe they say “eff the luxury tax.”

      Some food for thought; between MLB’s $1.5B deal, and regional sports networks, and Fox, and whatever local deals teams can negotiate, there are going to be many owners that will be flush with cash. I doubt that they will sit on it.

      I see luxury tax machinations in the future.

    10. November 20th, 2012 | 10:28 pm

      To get this deal done the rights to the Yankees games were locked up by YES through 2042. News Corp has an option to raise their ownership level from 49% to 80% in three years. Imagine a future when YES will be used as another chip in battles with cable systems for additional rights fees for FOX channels. News Corp has a relationship with the Big 10 Network so watch for additional issues around clearance of the network on cable systems carrying YES.

      The family will be selling the Yankees soon, there is too much money sitting on the table and this is just the first course. The move in this direction has been etched in stone since the day George passed.

    11. KPOcala
      November 21st, 2012 | 12:52 am

      Joseph Maloney wrote:

      The family will be selling the Yankees soon, there is too much money sitting on the table and this is just the first course. The move in this direction has been etched in stone since the day George passed.

      Joseph, in this economic climate, I believe your dead on. May events prove to be otherwise….

    12. MJ Recanati
      November 21st, 2012 | 10:11 am

      Raf wrote:

      I think they want to make like Scrooge McDuck and swim in a vault full of money

      I’ve always wanted to do a cannonball into a swimming pool full of gold coins! :-D

    13. November 21st, 2012 | 12:45 pm

      Me? I would love to make a sliding catch in the grass at Yankee Stadium. But, that’s not going to happen any time soon…

      Back to point, at some point, the Steinbrenner kids are going to cash out and sell.

      Has there ever been a sports franchise that has stayed with a family for three generations? (I’m asking, because I don’t know.)

      Think about it, IIRC, there are 13 grandchildren of the Big Stein. How is that going to work when Hank and Hal (and the daughters) are ready to get out of it?

      I suspect that Big Stein’s kids will sell and then split the money. Will it happen soon? I dunno. But, it’s going to happen, eventually, at some point. And, if so, it seems to make sense to do it when the team is at peak value, like now.

    14. MJ Recanati
      November 21st, 2012 | 2:58 pm

      Steve L. wrote:

      And, if so, it seems to make sense to do it when the team is at peak value, like now.

      Why is peak value right now? Seems like baseball teams are getting richer, not poorer. Hard for me to see how the Yankees will be worth less in 10 years’ time than they’ll be right now.

      I don’t agree at all that the Yankees are anywhere close to peak value relative to where their valuation is heading. They might be at peak value relative to yesterday but, unlike assets in a bubble, the monopoly of baseball assures that the assets will continue to appreciate in value.

    15. November 21st, 2012 | 3:03 pm

      @ MJ Recanati:
      Could it be possible that, if the product on the field slips, then attendance and TV ratings go down, and then the value of the franchise and network also go down?

    16. MJ Recanati
      November 21st, 2012 | 3:18 pm

      Steve L. wrote:

      Could it be possible that, if the product on the field slips, then attendance and TV ratings go down, and then the value of the franchise and network also go down?

      The value of the franchise includes much more than just attendance and local TV ratings. MLB Advanced Media (things like MLB.tv and the MLB app on iPhone), the national TV deals with ESPN, FOX and TBS, and global licensing all make up a part of every team’s value.

      The Dodgers’ recent sale for over $2B guarantees that the Yankees can be sold for well in excess of their $1.85B valuation, in large part because, unlike the Dodgers, they have both the revenue-generating new stadium and own their own media rights.

    17. November 21st, 2012 | 3:35 pm

      But, if Murdoch gets up to 80% of the broadcast media, and the new Stadium stops generating as much revenue, because of lacking attendance, doesn’t the value go down for the Yankees in the future?

    18. Raf
      November 21st, 2012 | 5:12 pm

      Steve L. wrote:

      Could it be possible that, if the product on the field slips, then attendance and TV ratings go down, and then the value of the franchise and network also go down?

      Anything is possible. Probable is a whole ‘nother ballgame. Taking a quick look over @ Cots

      Vince Naimoli paid $130M for the Rays (1995), they’re now valued at $323M according to Forbes.

      Kevin McClatchy paid $92M for the Pirates (1996), they’re now valued at $336M.

      Drayton McLane did ok; in 1993 he picked up the Astros for $117M, flipped them to Jim Crane in 2011 for $680M, Forbes valued them at $549M.

      Not going to go through all 30 teams, but I imagine that owners have made a pretty penny off their clubs; even the Rangers were bought in bankruptcy auction for $593M after Tom Hicks bought them for $250M.

    19. Raf
      November 21st, 2012 | 5:13 pm

      Steve L. wrote:

      But, if Murdoch gets up to 80% of the broadcast media, and the new Stadium stops generating as much revenue, because of lacking attendance, doesn’t the value go down for the Yankees in the future?

      IIRC, the money’s in broadcast rights and advertising, not ticket sales.

    20. Raf
      November 27th, 2012 | 8:05 pm

      h/t to Fangraphs… Oly Chit!

      http://www.latimes.com/sports/dodgersnow/la-sp-dn-dodgers-fox-sports-6-billion-tv-deal-20121125,0,4821671.story

      “Fox Sports could pay at least $6 billion to retain the Dodgers’ television rights, three parties familiar with the negotiations said Sunday.

      The deal could be worth three times what the Dodgers’ new owners paid for the team and almost 20 times the value of the Dodgers’ current television contract.”

    21. MJ Recanati
      November 28th, 2012 | 9:13 am

      @ Raf:
      That’s an incredible haul for the Dodgers and makes you wonder if team-controlled sports networks like YES and NESN were only forward-thinking for a decade and are now irrelevant. If I were the Yanks, I’d torpedo YES right away and let FOX pay me $10B to broadcast Yankee games.

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