Duquette on Sirius XM Today

[Roll Tide]

Nobody can say for sure without seeing the financials of the Yankees, YES, and other related companies but I am fairly confident you are over simplifying things here. The Yankees and YES are separate companies. They Yankees simply don't dip into YES cash to pay for their team payroll. They use the set TV rights fees they receive from YES in any way they see fit (including on payroll) but those are set annual fees. You are the one who is mistaken if you believe that the Yankees have unlimited access to YES funds to pay for payroll. This is not how these things work in any line of business when we are talking about a separate company structure. Do you think NewCorp is just going to sign off on YES paying dividends to the Yankees whenever the Yankees need additional money for payroll?

MASN is no different. Angelos cannot just decide he needs more money for the Orioles and take a money out of MASN (outside of the set TV rights fees) as needed. There are a variety of reasons that cannot happen, the biggest of which is there are other owners of MASN (including the Nats).

Check out this article http://itsaboutthemoney.net/archives/2010/11/29/money-to-burn-more-on-the-yankees%E2%80%99-budget/

Basically agrees with you out multiple owners to Yes ...But all the companies lead back to the Steinbrenner family.

Interesting line

It might be more accurate to say that the Yankee budget is whatever it takes to maintain the value of the Yankee business enterprises.

[weams]

Check out this article http://itsaboutthemoney.net/archives/2010/11/29/money-to-burn-more-on-the-yankees%E2%80%99-budget/

Basically agrees with you out multiple owners to Yes ...But all the companies lead back to the Steinbrenner family.

Interesting line

The landscape has changed since then. News Corp alone owns half. And Yankees Global stake is down to 25%.

As part of the deal announced Tuesday, YES Network’s current owners — Yankee Global Enterprises, the holding company for the Yankees, Goldman Sachs, Providence Equity Partners and others — will reduce their ownership in the cable channel. Yankee Global’s share will drop to 25 percent from 34 percent, according to a person with knowledge of the deal, who spoke only on condition of anonymity.

When News Corporation assumes an 80 percent stake three years from now, it will be based on a valuation at that time of about $3.8 billion, the person said. Yankee Global will continue to hold a minority stake.

The Yankees and YES have 10 years remaining on the current deal to show Yankees games, with three five-year options to follow. YES now pays the team $85 million a year, with built-in 4 percent annual increases that are to climb to 5 to 7 percent late in the contract.

News Corporation will make a payment of $420 million to the Yankees that exercises the three five-year options and adds another five-year extension, according to the person with knowledge of the terms. In effect, the deal secures Yankees games for YES Network through 2042.

http://mediadecoder.blogs.nytimes.com/2012/11/20/news-corporation-completes-deal-for-stake-in-yes-network/

[paulcoates]

I would like to hear from anyone that heard the interview. This what I get out of Paul's notes:

5) on Reynolds, we turned down an 11mm option on him. We could bring him back, but if not, we have in house options

Sounds like Reynolds will be non tendered. That saves 8-9M. They could bring him back at a lower salary (5-6m) if no one else signs him. Chris Davis will be the 1B.

6) We have told clubs we are looking for a 1b, LF, or DH, and one that would preferably be a MOO bat

and

10) Then we have Britton, and Steve Johnson "who other teams like"

Sounds like Britton and Johnson for Willingham as a MOO bat. Those two surely will not get Butler.

11) We are going to look for more pitching because you can never have enough

Sounds like DD will be in on Saunders

14) McLouth - real good last couple months for us and we want him back. Buck likes him. He would be a good compliment to Reimold

Sounds like DD really wants McLouth back. (Hold up may be length of contract and may be playing time related)

How close do you think I am to what DD is trying to do?

I gathered teams were more inquisitive of Johnson and not Britton. I probably should have broken those points apart

[paulcoates]

I really like the talk of not overspending on guys, but being active in free agency. That means plenty of low cost, high reward, minor league free agent type of signings. Guys like McLouth and Gonzalez last year. Someone like Grady Sizemore this year. Also found it interesting that Urrutia came up. Sounds like they are high on him.

And just for the record, Duquette brought him up out of the blue. The interviewers did not ask about him. So Duquette must really like him

[Mr Snuffleupagus]

Without reading the whole thing, let me guess... This thread became a big argument about what the team payroll should be?

[LookinUp]

It seems like everyone has moved on, but I still think Chase Headley is the ideal fit here. MOO bat. Great defense. Moves Manny to SS. Trade Hardy in a separate deal (or the same deal) to help get the assets needed for Headley.

[El Gordo]

It seems like everyone has moved on, but I still think Chase Headley is the ideal fit here. MOO bat. Great defense. Moves Manny to SS. Trade Hardy in a separate deal (or the same deal) to help get the assets needed for Headley.

To get Headley the O's would have to give up the heart of their pitching, and maybe Manny as well.

[sangar]

Without reading the whole thing, let me guess... This thread became a big argument about what the team payroll should be?

Well, I did read the whole thing. These multiple page arguments are not as entertaining as they were when SG was calling people "moron" and "beyond stupid." Nevertheless, lots of interesting points and thought provoking opinions.

[Bradysburns]

2) we will be active in the free agent market

Love this! Sizemore, Feldman, a lot of guys can be impact contributors in right scenario. Wonder what return we can get for Britton or S. Johnson. Also, like pitching part. You never can had enough pitching. That's why we need to explore market for cheap but solid pitcher arms.

Personally, I hope the return we get on Britton is watching him pitch himself to the top of our rotation. I hope we don't trade him - unless it's for a true MLB-ready hitting prospect. He's going to be a good one, IMO. If I had to pick one shocker for the 2013 season, it would be Britton leapfrogging Tillman and company to become our ace.

[mcinww0]

The main thing that bothers me his he always cries poor and thinks we're all stupid enough to believe it/disregard the fact that they make money from a regional network and just made a crap ton of money because of attendance increase.

I was appalled at the lack of significant additions DD made last year, but it turned out OK. We are a mid market team and our payroll generally reflects that; call it penny pinching but we've been in the middle third for most of the past 10 years and still are. Additionally, spending doesn't really correlate to winning. When you look at a graph of payroll and wins there is hardly a recognizable trend at all, certainly not statistically significant. The market is still so inefficient that guys like Beane and DD can do more with less money by allocating it better.

[DrungoHazewood]

I was appalled at the lack of significant additions DD made last year, but it turned out OK. We are a mid market team and our payroll generally reflects that; call it penny pinching but we've been in the middle third for most of the past 10 years and still are. Additionally, spending doesn't really correlate to winning. When you look at a graph of payroll and wins there is hardly a recognizable trend at all, certainly not statistically significant. The market is still so inefficient that guys like Beane and DD can do more with less money by allocating it better.

That's wrong. There's a strong (r=0.70) correlation between payroll and wins.

[LookinUp]

To get Headley the O's would have to give up the heart of their pitching, and maybe Manny as well.

Perhaps, but cheap young pitching is valuable. You could play the odds and be right most of the time, but I had dismissing ideas without thorough consideration. That's for DD, not us of course, but if we think we can trade for a Billy Butler type than the difference could almost certainly be made up to expand to a Headley type of deal. That might not be worth it, but it is worth considering.

[Ohfan67]

That's wrong. There's a strong (r=0.70) correlation between payroll and wins.

I love that study, but as an O's fan that graph is so brutal! The problem for the past dozen or more years wasn't that the O's didn't spend, the O's were just such poor spenders for over a decade. Just brutally inefficient.

[Ohfan67]

That's wrong. There's a strong (r=0.70) correlation between payroll and wins.

That graph also suggests that we should raid the Cardinal's organization for front office talent. What a job they have done!

[B-more]

The 29M is the right's fee's the team is guaranteed. I used that as a low end estimate. But, I would be willing to bet the O's make much more then that. The Padres are a similar market, and they were paid 200M up front plus 50M a year in revenues in their TV deal. I'd feel comfortable betting the O's pull in atleast 50-60M a year in profits from MASN. But you are correct, we really don't know how much MASN is figured into the current payroll. I do know, that the O's were a team that carried roughly a 75M payroll before MASN. So, I don't think a payroll that's consistantly in the 105-110M range is unrealistic. And that doesn't include the 25M that starts in 2014. I'd say 120M would be sustainable then, but I expect to at the least see this team operating at a 110M.

I am just going to use your numbers. One flaw is that a 75mill payroll before MASN also included TV rights fees the O's got from Comcast. You need to factor in the difference between what Comcast was paying the O's for the TV rights versus what MASN now pays the O's. So it is not a lump 29mill additional revenue like you are talking about. Assuming Comcast paid the O's about 15 to 20 mill a year for the TV right, the O's may have only added 9 to 14mill a year in additional revenue when they switched to MASN, not necessarily an additional 29mill. The same can possibly also be said about the MLB TV Revenue it is paying to every team. What was MLB paying each team before and is the 25mill a year a fully additiona l25mill in revenue or did MLB pay each team something like 10mill a year and with the new TV deal it is increased to 25mill a year. Again, I do not have the exact numbers and I am just using these numbers as an example.

My main point is to also consider what the team was making before from the same or similar revenue stream like TV deals and we can't necessarily assume the new amount is all additional revenue.

Also the additional revenue may be spent on other things such as paying back debt the team may owe, additional money in scouting and draft budgets and/or international free agent budgets, coaches and addtional front office pay, etc.