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A bit more on the distinction between the Wilpons and the McCourts

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In that last post about the difference between the McCourt situation and the Wilpon situation, I said that there was a difference between Wilpon’s ownership interest in SNY and the Dodgers’ ownership of broadcast rights.  That distinction led to a couple of similar reader comments. Like this one:

The situations are identical, just different structures. The major asset of SNY is the rights to Mets games, right? McCourt has Dodgers rights He could create a network and sell the broadcast rights to for $bazillion
He could then sell the network which is his personal asset to pay off his divorce. And that is OK where selling the rights to Fox is not?  SNY is just a shell for the rights that is packaged as an operating company.  No difference at all.

It’s actually even more stark than my reader says.  The Mets — as a team — likely get pennies on the dollar of what their broadcast rights would be worth on the open market because Wilpon is on both sides of the deal with SNY.   By underpaying for Mets rights, SNY is worth more and the money it keeps — as opposed to the money the Mets would have received — is not subject to revenue sharing with the other 29 clubs.  This has been going on for years, by the way. Ted Turner used to do with the Braves and TBS, albeit for some different reasons.

All of that said, I don’t disagree with my reader’s analysis. The point I was trying to make in the last post — and in hindsight utterly failed to make — is not that there is a fundamental difference between broadcast rights and regional sports network ownership interest. It’s that Bud Selig does and will continue to treat such things differently — and thus he will likely treat McCourt and Wilpon differently — even if doing so is disingenuous.

Why?  Because if he acknowledges that straight broadcast rights and the revenues of team-owned cable networks are essentially the same, the economic structure of baseball unravels.  Because it’s not really a structure. It’s an uneasy peace between big market, high revenue teams and the small ones.

That peace is predicated, in part, on the big clubs and the little clubs being allowed their respective excesses.  The big clubs can house their money in enterprises that are not subject to revenue sharing. Think the Red Sox investing in NASCAR teams and, more traditionally, big teams operating RSNs.  For their part, the small clubs are allowed to pocket revenue sharing money rather than invest it in their teams. At least within reason, as Jeff Loria and the Marlins found out last year.  Each type of team chafes at what the other is allowed to get away with, but they mostly keep their powder dry because everyone is getting rich.

Practically speaking, if the Wilpons are forbidden from using SNY money to settle their Madoff problems on a theory that doing so would harm the Mets, the fiction that this money is non-baseball-related is exposed and the Pirates and Royals of the world will demand that they be given a share of the RSN money the big teams are making.

Likewise, if Frank McCourt is allowed to use straight broadcast rights money to pay off his wife, the Pirates and other small teams — who are smaller than the Dodgers but, like the Dodgers, don’t have an RSN —  will feel free to pocket their own rights money and put even less into their teams than they already do, which will be a bridge too far for both the big clubs and the fan bases of the small teams (pocket the gate receipts and the concessions, Mr. Loria, but too many people are watching when you pocket the TV money).

If all of this sounds borderline corrupt to you — if it sounds like, hey, at some point someone should have filed a lawsuit over it — don’t worry! You’re not crazy!  Someone probably should have long ago.  But they didn’t.  Why? Because there are only like three owners in all of baseball who weren’t admitted to the very cozy ownership club before Selig took over. The price of their entry to the club: fealty to Selig and the highly anti-competitive arrangement described above.  Indeed, every year there are a half dozen things that happen that, if baseball teams were run as independent businesses who felt free to vindicate their rights through legal action, would lead to lawsuits.

But the lawsuits never come because no one is willing.  Big city teams are given monopolies over huge media markets so that they can build media empires. Small market owners are given the keys to small teams that, while not as lucrative on a cash flow basis, are almost certain to appreciate nicely and — with a few high profile exceptions like media revenues — they’re allowed to treat as their own private piggy bank.  It’s not ideal and it’s not fair, but it ain’t a bad bargain.

At least if you own a baseball team.

Drew Smyly brings youth and experience to Mariners rotation

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PEORIA, Ariz. (AP) Trades don’t surprise Drew Smyly anymore.

At age 27, the Seattle Mariners left-hander has been dealt twice. The first swap sent him from the team that drafted and developed Smyly, the Detroit Tigers, to the Tampa Bay Rays in midseason 2014. That trade landed star pitcher David Price in Detroit.

“I was surprised by that one,” Smyly said.

The most recent trade involving him came in January, when the Rays shipped Smyly to Seattle for three prospects in one of many moves by Mariners general manager Jerry Dipoto. Smyly immediately joined the Mariners’ projected starting rotation, and is having fun getting to know his new teammates at spring training by way of manager Scott Servais’ clubhouse icebreakers.

Servais thinks Smyly is a solid fit as a still young yet experienced pitcher.

“One, being where he’s at in his career age-wise and service time, he’s kind of at the point where, put him in the right environment … very good defensive outfield, he’s a fly ball guy, maybe he does step up and take the next step,” Servais said. “Getting out of the American League East certainly should help him, but there’s no guarantees. Our division’s pretty tough.”

Servais suggested that another Arkansas native, ex-big leaguer Cliff Lee, might have helped sell Seattle on Smyly. Lee is a former Mariner and the two share an agent.

Smyly went 7-12 in a career-high 30 starts last season in Tampa, but won five games from July 30 to the end of the season after starting out 2-11. From May 21 to July 18, he lost seven straight starts.

“Pitching’s tough, you know,” Smyly said. “To manipulate the ball, to make it do different things, to put it in the strike zone with hitters that know what they’re doing. … I just had a rough stretch but I show up at the field every day, play catch and work on my craft and you know, that’s going to turn around one day.”

The 32 home runs Smyly surrendered in 2016 figure to be reduced in Seattle’s pitcher-friendly Safeco Field.

“It can only help,” he said. “But it’s still going to be up to me to execute pitches and pitch well.”

Smyly is set to join the U.S. World Baseball Classic team shortly. Before that, he’ll make his first spring training start in the middle of next week.

“It’s an honor to be able to put your country on your chest and play with some of the guys on that team,” he said. “I’m looking forward to it big time.”

NOTES: Servais plans to roll out what figures to be Seattle’s opening day lineup in the spring training opener Saturday against San Diego. It’s OF Jarrod Dyson, SS Jean Segura, 2B Robinson Cano, DH Nelson Cruz, 3B Kyle Seager, OF Mitch Haniger, 1B Dan Vogelbach, C Mike Zunino and OF Leonys Martin. … Servais said Cano and Cruz will play a little more than is typical for early spring games, as the two will depart for the World Baseball Classic in early March. … LHP Ariel Miranda will start Saturday, then RHP Chris Heston Sunday, RHP Yovani Gallardo on Monday and ace Felix Hernandez on Tuesday.

Mitt Romney’s sons are trying to buy a stake in the Yankees

TAMPA, FL - AUGUST 30:  Tagg Romney son of Republican presidential candidate, former Massachusetts Gov. Mitt Romney gives an interview during the final day of the Republican National Convention at the Tampa Bay Times Forum on August 30, 2012 in Tampa, Florida. Former Massachusetts Gov. Mitt Romney was nominated as the Republican presidential candidate during the RNC which will conclude today.  (Photo by Chip Somodevilla/Getty Images)
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Mitt Romney built his professional life in Massachusetts and was once the governor of the state. As such, it is not surprising that he has long identified as a Red Sox fan. So this has to be troubling to him from a fan’s perspective. From Jon Heyman:

The Romney family is bidding to buy a small stake in the Yankees months after their try for the Marlins stalled. If the deal goes through, it is expected to be $25 million to $30 million per percentage point and thought to be interested in one or two percentage points. The Yankees are valued around $3 billion or more.

The effort is being led by Mitt’s son Tagg, one of his brothers and their business partners. Mitt’s spokesman tells Jon Heyman that he has nothing to do with it personally. Tagg Romney is reported to have been planning a bid for controlling interest in the Marlins, but that has fallen through.

I find this interesting insofar as the M.O. for the Steinbrenners has, for years, been to buy out minority shareholders in the Yankees, not seek more. Indeed, when George Steinbrenner bought the Yankees back in 1973 he held just a bare controlling interest and there were a ton of silent partners, most of which were back in Ohio and knew Steinbrenner from his shipping business. I’ve personally gotten to know some of them over the years as there are a handful of them in Columbus and I crossed paths with them in my legal career. They have almost all been bought out in the past couple of decades. They still get season tickets and World Series rings and stuff. You can tell them by their personalized Yankees plates and the fact that, within the first ten minutes of meeting them, they will tell you that they once owned a piece of the Yankees but got pushed out.

In light of all of that it’s interesting that the Steinbrenners are once again accepting bids for small stakes in the team. Especially from someone whose interest in controlling the Marlins suggests that they do not consider it to be a mere vanity investment. Makes me wonder what the Steinbrenners’ long term plans are.