The Globe and Mail’s Bruce Dowbiggin opens his latest column by admitting that:

Some parties disagree with our analysis of the Toronto Blue Jays’ TV revenue dilemma under Rogers Communications. Namely, the Blue Jays themselves and their acolytes in social media.

I don’t think I’m being too presumptuous in assuming that the snarky mention of “acolytes in social media” is in reference to this piece from the weekend, which refutes Dowbiggin’s connotation that Rogers Sportsnet is under cutting the Blue Jays on their payments for regional television rights.

Even though the newspaper writer states rather plainly that “increased market competition is resulting in enormous windfalls for MLB teams when they renew their regional TV rights,” he mischaracterizes arguments against his thesis as being based on the Rich Uncle Theory.

We’re a little tight for dough, but we have a rich uncle who we can tap for cash.

What Mr. Dowbiggin fails to address is that the very thing he credits with causing increased revenues from regional television rights deals doesn’t exist in Toronto. Despite the size of the Toronto and Canadian market, the level of market competition from television networks for the regional rights to Blue Jays games isn’t the same as it is for the Texas Rangers or Los Angeles Angels. In fact, that level doesn’t even exist for the Toronto Maple Leafs, who are surely a more enticing option for advertisers.

Mr. Dowbiggin seems to tire of his straw man counter arguments, shifting the focus of his column from television rights to bemoaning the state of a Blue Jays franchise that failed to attract free agent Jose Reyes this off season, before coming up with the following bit of baseless speculation.

With the Rogers mother ship now partially owning the Maple Leafs, Raptors and Toronto FC, the baseball boys are more likely to get lost in the shuffle – not get extra attention – than before.

Yeah, because it’s not like the corporate ownership of the Blue Jays has ever had to deal with overseeing multiple divisions of its products before. Oh, wait . . .

Rogers Communications does a fine job at looking after its wireless communications, cable television, home phone and internet services, as well as media outlets in print, radio and television. There’s absolutely no reason to believe that the addition of three other sports teams would have a negative impact on the baseball team. Such speculation verges on scare tactics.

Since the hiring of Alex Anthopoulos and the return of Paul Beeston, Blue Jays supporters have been promised a franchise that can win on a sustainable basis. The organization’s framework for making good on this promise doesn’t seem to include outbidding others on free agent contracts. Whether that’s a restriction from ownership or the plan of management, we don’t know.

What we do know is that attaining success isn’t likely to be hindered by television rights or other sports franchises under the same corporate umbrella.

I’d love to see immediate success for the Toronto Blue Jays as much as anyone else, but building the type of winner that fans have been promised isn’t accomplished by merely throwing a ton of cash at free agents in one go. It takes time to build an organization, and to me, it seems that what has been built so far represent steps in the right direction.

Comments (25)

  1. Terrible follow up article is terrible.

  2. how do we know that the competition isn’t there for blue jays broadcast rights when the rights aren’t put to an open bid? if, for example, the score could make a boatload of cash by bidding say $3-400k (or whatever) per game don’t you think they would be interested?

    the problem is we have no idea what the market value is because the jays rights haven’t been made a available for an open bid in quite some time.

    i for one have a hard time buying the idea that the angels and rangers TV rights are worth $150M per season while the blue jays TV rights are worth $36M. the blue jays probably have the biggest ‘local market’ (as defined by MLB) of any of the three teams.

    i suspect that the jays are generating tons of revenue for sportsnet because of that $36M figure… while at the same time the president and GM are suggesting that revenue will have to increase in order to increase spending. (i say this as someone who has no problem with the jays avoiding big ticket free agents at this point of their development)

    • If the Toronto Maple Leafs don’t make as much as the Angels or Rangers in what was essentially open bidding prior to the recent purchase, I don’t think that the Blue Jays would either.

      Also, it was mentioned in the previous article that MLB monitors such things, and the Blue Jays meet all requirements, which doesn’t guarantee fairness, but likely ensures that nothing completely underhanded is going on.

      • The Leafs play half the games that the Rangers and Angels do.

        Can you site your sources/numbers for total value of the current Leaf TV rights? I don’t think we saw that number in your previous column and I’m curious to see exactly how much it’s worth.

        As for competition, you’re essentially dealing with the same players in hockey as you are in Baseball. Namely, the CBC, TSN and SportsNet.

        National exposure for the Leafs is limited even with the CBC unlike the Jays.

        As for the Jays rights themselves, competition or no competition, just like the Yankees and Sox, the revenues generated don’t change. Any bump they might have gained from an extra competitor is easily cancelled out by not having a middleman like CBC, FOX or TSN get their hands on those advertising dollars. The net effect is further boosted for a company like Rogers because they get the full benefit of any spill over effect. Chances are better people will stay on the same channel before and after a broadcast. Since they own the station, that spill over is all theirs and not the CBC’s or TSN’s, therefore creating a positive effect for the entire network.

        As for the monitoring aspect, I think I showed that others like Maury Brown have said just how much of a sham that actually is when it comes to RSN’s. Of course there’s a basic value assigned to the rights, but obviously that’s is far as it goes. It’s a prime reason for the changein determining who gets revenue sharing to market size from reported revenue.

        Regardless of this, you weren’t wrong in your original rebuttal of Rogers dropping the ball (at least as things currently stand) for a couple of reasons. Value of the TV rights just isn’t one of them imo.

      • parkes, i’m not trying to suggest that the jays TV rights should be equal to the rangers or angels… just that they are probably worth significantly more than 24% of the AAV of those deals.

        i would suggest that the leafs and jays rights on the open market would be alot closer than what they are valued currently… in part because mlb defines the jays ‘local’ TV market as all of canada. that said, i would suspect the leafs local rights to be worth more.

        • The Jays may have one of the largest ‘potential markets’ but I think we should be talking about TV ratings for games. I definitely think it’s possible that the Blue Jays draw 24% of the viewers that the Rangers did last season. And when the Jays become better, and more viewers tune in, then the $36MM will probably go up – if it doesn’t, then we’ll have a right to complain.

          • Actually you couldn’t be further from the truth. The Jays were drawing good numbers last year as reported by SportsNet here:

            http://canadiansportsfan.wordpress.com/2011/10/04/blue-jays-audiences-up-17-in-2011/

            The Rangers on the other hand had numbers like this:
            http://rangersblog.dallasnews.com/archives/2011/08/thursday-nights-rangers-game-h.html

            While those numbers are primarily local, Fox Sports Southwest broadcasts to a population of roughly 38.7 million people but it’s not an exclusive market by any stretch of the imagination. At best they have access to a market the same size as the Jays do but again it’s not solely theirs. Extrapolate the Rangers numbers and you might possibly get numbers that are similar to the Jays levels. Just remember they share Texas with the Astros and have the Royals, Cardinals and Rockies to the north, Diamondbacks to the West and Braves to the east. The Cardinals are likely to have far more fans in those States to the east and north based on their success and the length of their history.

      • Parkes – you mentioned in your last piece that the Leafs TV rights to which you keep making reference cover 2/3 of their games – so around 55 games or so. The Jays’ local rights would cover almost three times as many games.

        Moreover, unless I’m way off, it seems to me that the number of commercials that air during a baseball game far exceeds the number aired during a hockey game. I presume that, in combination with viewership numbers, commercial opportunities would figure prominently into the valuation of rights.

        All of which is not to say that the comparison to the Leafs’ rights fees is irrelevant; just that it’s far too imprecise to be of much use in this discussion. In my view, the comparison to the Angels and Rangers rights is far more relevant, and those figures certainly suggest that something is likely amiss.

      • You can’t compare the Leafs broadcast rights to the Jays. The NHL has this crazy idea of “regional games”, that just shouldn’t be available in other parts of the country. I think its an effort to push people towards a Center Ice package, but who the fuck knows what goes through Gary Bettman’s mind.

        The point being its not a fair comparison. If I’m a Jays fan in BC, the prairies, the maritimes, wherever, I can watch any Jays game. If I’m also a Leafs fan in those places I can’t.

    • The Rangers and Angels TV rights are not worth 150M per season now. The Rangers got a 3 billion 20 year deal starting in 2015. If you peg increasing values at 5% above historic inflation (something anyone with excel can do in like 10 seconds), their 2011 rights were worth about 48 million by the new contract’s valuation (that’s 295k per game instead of 225k for the 36 million in the article). Of course that 5% above inflation is just me talking out of my ass, but I think it’s pretty safe to assume there’s something in there for the value of TV rights going up year over year between now and 2034 when the deal ends.

      Combine that with the totally weak attribution for the 36 million Bruce used and if he’s off just a bit or even if that number is right and based on a contract worked out a few years ago as values have risen more in the last 3-5 years than anyone would’ve predicted, then there’s hardly anything untoward going on at all. Rogers got a good to very good deal, but it’s not some borderline criminal enterprise to defraud Jays fans of budget room for Prince Fielder and Yu Darvish’s salaries. Which is exactly what people angry at Rogers are trying to make it out to be with this 36 vs. 150 argument.

      And all that being said, Rogers can eat a hairy fat one for all I care. Give my Jays 80-100 million a year for TV rights or feel my fandom wrath! But Mr. Dowbiggin’s piece and follow up are both weaksauce.

      • I agree. Facts, schmacts. Just sign a frikkin starter and another bat, that’s all I want.

  3. Was the possibility of Reyes to the Jays really even a thing? I keep seeing it pop up in these types of newspaper columns like Digbigger’s.

  4. I was expecting you to accept the fact that single ownership of complementary entities vs split ownership of those same entities simply doesn’t change the dollar value ultimately created by them. It is an obvious economic fact, and your analysis ignored it before, and ignores it again. Market competition doesn’t matter to the revenue generated from broadcasting rights.

    You can’t just broadly compare the Leafs to the Jays either. We don’t know how much the Leafs generate in the first place (and that would be good info if that is your comparison), and we also don’t know the average number of viewers that the Leafs have in comparison to the average Jays broadcast. And night_manimal is right that the difference in games played as between sports also needs to be accounted for.

    Most of the writing on this site is great, and most often you guys really intelligently break down the assumptions and claims of the mainstream Toronto media. This is a clear exception unfortunately.

    • Let’s assume that a broadcaster forecasts potential advertising revenue of $100 if it secures a team’s broadcasting rights.

      Without market competition, the broadcaster might be able to negotiate a deal where it only pays $10 for the rights. Of the $100 value in the rights, the team stands to make $10, and the broadcaster stands to make $90.

      With market competition, the broadcaster now has to pay $50. From the team’s perspective, it is obviously good to have market competition. They increase their revenue by $40 dollars. From the broadcaster’s perspective, market competition is a bad thing, as their revenues decreased by $40 (90 to 50).

      One can clearly see that to the extent that market competition benefits the team, it hurts the broadcaster in an equal amount. When the same entity owns both, market competition is therefore a moot point.

      The broadcasting rights of the Jays are worth a certain amount in the hands of a broadcaster. For Rogers, owning the rights means they can realize that amount. Owning the team means they don’t have to share that amount with any independent entity.

      I understand that MLB has rules to ensure some notion of FMV is transferred from the broadcasting owner to the subsidiary team. The point night_manimal has made, or rather the point the articles he cited made, is that this process still allows teams to retain revenues that would otherwise go to the team in a situation of split ownership.

      Whether you agree with that argument or not, you have to agree that the process is an opaque one. You’d also hopefully agree that market competition means absolute shit.

      • Exactly. The fact that Market competition doesn’t exist doesn’t mean a thing in this discussion if the reason is because Blue Jays ownership is choosing for that market competition to not exist.

        This would be like owning a painting that could be sold for fifty million dollars at auction and claiming that it’s only worth ten because that’s all your brother is willing to pay.

  5. bad premises are bad.

    it doesn’t matter what #s rogers trots out publicly. look at what they charge for roaming fees or for extra bandwidth…those practices have nothing to do with the real costs/revenues they are related to.

    at stake is simply: how much money will rogers RISK to make the jays a top-tier baseball team? the answer seems to be somewhere between nothing and not much. unless, you can show that the jays have every LOST money in the years since rogers took over.

    anyone that knows anything about “sustainability” knows that it generally means going beyond the current understanding of “the system” in order to maintain a degree of ‘stability’ measured some way or another. those focused on the jays’ farm system today clearly miss the fact that their hitherto method under AA is no longer “sustainable”, likely meaning that “sustainability” will probably need to become the result of rogers opening their cheque books more readily in the future, unless AA is somehow able to game the system better than the 29 other teams which are all currently trying to do the same thing in the post-moneyball world.

    by “sustainable” i’m talking about the 2022 Jays and beyond, not the 2017 Jays. the yanks and bosox pretty much never “rebuild” – and if the jays want to be one of those teams they’re eventually going to need to spend like them. beeston’s 120million/yr even with 50K fans/game just ins’t going to spell “sustainability” any way you slice it.

  6. Who else bid on the Texas Rangers rights? Surely you would know this if making a definitive statement that it was more competitive than the Blue Jays. What about MASN paying the Nats $60mm? Is that competitive? Anyone can plainly see that $36mm isn’t fair market value given the ratings and demographics of the respective markets. Do you not think one of the Bell family of networks wouldn’t want to horn in on Rogers territory? Of course they would if it was open bidding for “exclusive” content. You are simply wrong about this and keep posting items without backing them up with facts or logic. The best argument for the apologists is simply that its Rogers team and they can spend what they want to so fuck the fans. That is a logical argument and they can benefit from the foresight of buying the content before the spike in value due to internet and wireless streaming, HDTV etc. The problem with this is that Beeston keeps saying the team will spend when revenues go up. Well its abundantly clear that the market value of the TV rights is more than $36mm and more abundantly clear that directionally that value has gone up substantially in the past 5 years.

    • well said. even if parkes went to the trouble of wading through rogers’ financial statements he would soon realise that he might as well look at the prince fielder book by scott boras for some objective information. rogers’ 36million dollar figure is the veritable RBI of financial statistical representations. i’m still surprised that many who spend so much time searching for better ways to represent baseball events in stats are so quick to take the corporate masters’ words/#s at face value.

      • haha…shhh…if the numbers support the argument then there is no need to examine them further. Watch and learn grasshopper.

    • BTW you are totally right that the Jays getting lost in the shuffle with Rogers purchase of Leaf is absolute bunk. I was debating that over at Drunk Jays last week. It makes absolutely no sense for a number of reasons, namely MLSE is already a very mature and very profitable venture. The MLSE purchase isn’t a turnaround situation that involves a big investment – outside of the original purchase price, to get it back on it’s feet. You’d figure one of the business writers over at the Globe would have pointed that out to Dowbiggin by now.

  7. Oh ya, for some perspective. After reporting what were generally considered mixed earnings last night, Rogers stock was up 38c or 1% today, roughly $200mm in market value which is of course nearly the value of the entire contract of one Prince Fielder!

    • That’s an interesting comment, but I have to ask what you mean by it. Should Rogers liquidate itself to get that 1% value that it’s up on the day in order to afford Prince Fielder? This doesn’t sound like a sound business decision to me, but if it does to you, I can probably find you a great bridge for sale.

  8. 1. Cali has pop of 35 mil
    2. Texas has pop of 26 mil
    3. Ontario has pop of 13 mil
    4. Baseball is not our popular sport.
    5. Canadians read more.

    Book it…

    • There are 5 teams in Cali
      There are 2 teams in Texas
      Leaf fans don’t watch Senator games
      Oiler fans don’t watch Flames games. They are split markets, Ontario is not, Houston is the biggest city in Texas as well, that would be like having Ontario without Toronto.
      Point 5 was hilarious
      $36 million is far too low for an inventory of 162 games, no amount of talking gets around the only point that matters. Good on Bruce for bringing it up.

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