His debt in buying the team is unlikely to be a 20 year payout. Carriage agreement, as we have learned, tend to be a 20 year proposition. If Crane were as short sighted as you make him out to be, he never would have been in the position to buy the team in the first place. As Major pointed out, local TV is a huge part of a team's revenue in MLB. As such, Crane has to be worried about the long term economic position of the Astros relative to other clubs. If he doesn't, all the armchair owners will b**** endlessly for the next two decades. I just do not understand why people are giving Les a pass for putting the Rockets media rights in the hands of others whose interests may not be the same as the Rockets'.
Now my broke unemployed arse cant go back to sleep riled up arguing about milionaires. sigh. I hope crane does better i respect the guy for climbing his way up and living his dream of owning a mlb club. he started at the bottom in his industry. i have hopr because despite his flaws he is a baaseball guy.
I don't think what the Rockets do is so unusual or particularly blame-worthy. Many pro teams sell their TV rights to RSNs. Unless the RSN is run and controlled by the team itself, the team is "putting its media rights in the hands of others whose interest may not be the same as the Rockets'." Back before CSN Houston came into place, the Rockets were dependent upon Fox and FSN Houston to reach carriage agreements. RSNs co-owned by a TV company and more than one sports teams are also not unusual (for example: CSN Chicago's part-owners include Comcast, the Cubs' ownership, the White Sox and Bulls ownership, and the Blackhawks' ownerhsip http://en.wikipedia.org/wiki/Comcast_SportsNet_Chicago). I am not sure it was unreasonable for the Rockets to expect that CSN Houston would somehow be able to function as structured. After all, I don't recall that other NBA teams are having their carriage deals blocked by their RSN partners coming from MLB.
Could someone break down the entire situation in a way an idiot (me) could understand? I read CSN Houston's Wiki page but still am not following everything that has gone on. I watch the Rockets via LP, so CSN has never been an issue for me. From what I gather: The Rockets and Astros had a long-term deal with FSN to have FSN Houston, they re-upped in 1999 and were able to negotiate deals in 2009. Comcast gave them the option to have a majority ownership in their new network, so that's how it all started. So the Astros and Rockets would make more money by owning a larger share of the network (CSN), than just sticking with FSN? I know Comcast is demanding crazy carriage fees from providers, but what else is the hold up? Is Comcast not lowering their demands just out of being dbags, or are they afraid the Astros sucking will mean less of a payoff? Why can't Comcast just settle on similar deals that they have with providers in Chicago and other areas? I also know the Astros blocked a deal, but does anyone know why?
And this really can be applied to any partnership. The other entity's interest is never going to be the same as yours. It takes some degree of "faith" in the partner, as wells as having trust that the other side is competent. Why the Rockets felt they had that in the Astros is beyond me.
The Rockets and Astros had been thinking about forming a new channel back in the 2000's, and strongly considered it in 2009 before re-signing with FSN. Then, after their contract with FSN was up, the teams agreed to start a channel. They looked at both direcTV and Comcast to host the channel... went with comcast because they have more RSN experience, and they figured it would be easier to get their channel on all the providers sooner since all the providers also have CSN channels from other cities. Both teams agree to an upgraded rights fee from CSN, where their overall profits has a chance to go up thanks to being part owners. Then comes the stalemate. This is not ALL on comcast like you are describing. Its likely the Astros who wanted the subscriber fees set at a higher level than anybody was willing to accept, in order to compete with other MLB teams who have similar setups. Comcast and/or Rockets likely would have been able to get a deal done with the other providers for less, but you need a 4/4 unanimous board vote (Comcast has 2 votes, Astros with 1, Rockets with 1), and they weren't getting that. Then, as no money is coming in, Comcast decides to start witholding the rights fees payments from the Astros (who as owners, weren't going to get their full rights fees anyways, as some of it had to be contingent on the network making a profit). The Astros try to get out of the deal because now they not only have no TV coverage, but they're starting to lose a helluva lot of money... and that's where Comcast files the bankruptcy claim to prevent this from happening. That's pretty much all we know. Crane/lawyer say that Comcast is not broke, does not fit the criteria for bankruptcy, and should be paying their rights fees to the team (even though again, as part owners, not sure how much the Astros are expecting to "make" in this deal). Comcast has offered to buyout the Astros and/or Rockets stake in the company (for a lot cheaper than what all teams originally bought into it for), and they'd likely be able to strike carraige deals at a similar rate to their other CSN channels that the other providers currently carry. Lastly, other providers have always been leery about adding CSN because they're (the satellite/cable subscribers... all of us) still paying a competitive price for FSN (even though FSN doesn't carry any notable local sports teams). If they somehow had an out clause to drop FSN after all its teams left, we may not be having this huge dispute today... but as of now, providers don't want to pass off the extra cost of another sports channel on its consumers, especially with FSN still on the bill.
Or if they do...they set "triggers" ahead of time to force resolution on issues they KNOW will be contingencies going forward. Carl Herrera - turning your media rights over to a broadcaster is to be expected. Signing a 3-party deal that requires unanimous consent without predetermined triggers with a partner who has entirely different interests is just flat out dumb. There's no way around that.
FSN already had carriage agreements. Or you can give yourself out clauses if the network doesn't get the agreements they want. Or you can get yourself guaranteed payouts regardless of carriage (like the Longhorn Network). There are lots of options - the Rockets and Astros prepared for none of them. And they joined a network that had less than a year of working capital to survive. And they gave each other veto power over the agreements. The whole thing wass poorly designed. Their structure may be different so no one entity has veto power. Or they may have had contingency plans if everything didn't go according to plan. Or they may have agreed in advance to a more reasonable carriage fee. Or they may have just gotten lucky - the CSN-H deal was fine if - and only if - everything went according to plan. The problem is that you shouldn't plan your business model around a best case scenario.
Chicago is also a much more diverse sports town; more viewers, more in demand teams, and likely more leverage for the teams to go to another sports network of choice (or form a different RSN )if a channel falls through. In Houston, it's either FSN (formerly HSE, then Prime) or local tv. There is no superstation.
major league baseball is going to have to do something with its financing structure. if small market teams can't count on the value of their station because its a small market then they are screwed. these carriers seems to have taken a stand on paying these ridiculous fees to carry broadcasting that doesn't hold an entire day let alone an entire year. I mean who watches these stations outside of the games, well espn has decent talk show like programming. but that is it.
Been that way for years...and yet Pittsburgh, Cincy, and Tampa represent nearly half of this year's playoff teams. You can be competitive in smaller markets. You have to be smart about organizational development though.
Tampa is the perfect example. Their in a market in which it does not matter how good the team is...people still will not come to their games. And yet, they've been very successful over the past 6 seasons.
Tampa has no business playing host to a MLB franchise because of that. Team has been very competitive...and their attendance is dead last or next to last. Terrible. Their stadium (it's not a ballpark) sucks too. There has to be a market out there that would support baseball better than that.
There is plenty of blame to go around all three actors. I have been retained to write contractual agreements with Comcast.... I wouldn't enter into an agreement with them.
I understand the Astros' strategy of building through the draft/minor leagues after the prior ownership's strategy resulted in them being stuck in the middle. But if you are telling fans "wait a few years before we are good," then you need to understand fans going "then we'll wait a few years before tuning in" and spend their current money/time on other entertainment options-- the Rockets, the Texans, the Dynamo, the Kardashians, Duck Dynasty, p*rn, whatever-- instead. And if you are telling the TV carriers "pay us good money because this is a good market and will tune into our channel once we are good," then the TV carriers may be excused for being skeptical and say "we'll pay you when the numbers show that people actually tune in." Consider this: If you are a TV carrier and is asked to commit to paying long-term (20 year or whatever) money for Astros games (plus other content, of course), won't you have to consider the risk that Crane might just take the now largely guaranteed money and pocket it instead of spending it on the team for a compelling product? After all, if everyone know that Crane treats this team as a business and sees profit generation as paramount, wouldn't permanent cheapness (to one degree or another, maybe not at the level that it was this past year) even with a favorable TV deal be a rational profit-maximizing strategy.
Has Crane complained anywhere about people not watching or going to games? I think he fully knew and expected that going in.
He probably should also fully know and expect that a TV carrier might be reluctant to pay big $ to carry his team when his ownership hasn't shown an ability or interest in putting out a product that would draw viewers yet. The carrier have argued that they won't pay what CSN demanded because their research show that not enough fans are clamoring for, and making their TV decisions based on, the programming. Maybe it's just posturing, but it may also well be the truth given the TV ratings and attendance. If people really wanted the Astros (and the Rockets and the Dynamo) badly enough to leave them for Comcast in droves, the carriers would likely have accepted the higher asking price for CSN.
