This does sum up the situation. Part of the blame is to be laid on MLB for approving such a poorly financially situated ownership group to purchase the team. MLB should have been fully aware of the way the RSN was structured. Yet they let what was relatively speaking a broke dick fly by the seat of his pants owner buy the team knowing full well he had to run the team differently than the revenue from the RSN would let him
Can anyone explain why it's short-sighted to not take guaranteed losses now for some mythical profitability in the future based on Comcast promises (which already failed once)? Can anyone explain how CSN-H would suddenly become profitable in 10 years? The carriage deals (their revenue) would be locked in for 20 years. Their expenses (media rights) go up annually.
For max, the issue being overlooked with regards to the $200 million loss is what the expectations going in we're when the network was formed. Did the network project a profit year 1 when it was assembled? Or did it always project a loss short term? A five year loss for a startup is not the end of the world if it has the capital to survive until it goes green.
I would like to know this as well. I would guess they did project some profits (or if not, projected huge profits in the next 2-3 years) in order to get the deal done. If they projected huge profits in year one, then this was a crap deal to begin with. One of those "sounds to good to be true" things. Crane isn't the sharpest tool in the shed, by far. It wouldn't surprise me if he took the deal thinking he will make huge profits in the first year. Does any of this "Astros had highest profits" that Forbes put out earlier in the year have anything to do with this?
So if the deal was never going to be profitable, why didn't Crane just project the losses out over the 20 year contract?
How about this question as an explanation, Has Crane's plan worked so far??? Exactly... Also, he's taken losses since day 1 as an owner and for the foreseeable future will continue to take losses without a multi-TV deal. Per bankruptcy CSN-H, the only provider, hasn't paid the Astros a dime. BRILLIANT!!!!, his plan includes taking losses all the while complaining about taking losses. Now he'll want to recoup which means we'll get even more screwed as he holds out for his original deal + losses. So Crane has been taking losses, still has no multi-provider deal, has kept the astros and rockets off of majority of fans tv's, his team is historically bad, and the fan bases of both the rockets and astros are pissed for many reasons including, move to AL for 35 million, no TV, no radio (left 740 for 790), lowest payroll by far, bad performance, blocking downtown view with horrible billboards, his whining since day 1 of loosing money, etc... I'm sure I'm missing a few of his shining moments as owner.
But wouldn't it make more sense to do what he's doing now? Take the losses for 2 years instead of 10 or however long it would've been?
he overvalued his franchise and providers didn't flinch. and guess what they won't because he literally bought his team at the worst possible time just as providers dug there feet in the sand to fight regional sports networks. the providers will win and get their deal, i have no doubt. his only hope is the astros make a run (early) next year and this puts pressure on the providers and he'll get something close to his deal. based on performance do you really think the astros are close?
Yes it would have. People that invest lots of money into franchises, stocks, business, etc do not expect a huge profit in the first few years. In fact, they will likely lose money at first. Especially in a START UP. I just wonder if Comcast told Crane he won't lose any money and he will actually profit in the first years so he wants his money. If that is the case, Crane is a pretty dumb individual and was suckered by a big company which happens all the time. That or he just had no knowledge of what he was doing.
I don't think he was suckered...didn't Barron tweet yesterday that Crane actually tried to restructure the deal last October? He knew he could take the losses for a year or two, which is better than 10. If the judge lets the Astros look elsewhere and he finds a deal to his liking, it'll work out well for him.
He might have, I didn't see the tweet but I haven't really looked all of them either so you are probably right. I just think there is something missing in the whole scheme of things. MadMax did a good job explaining this a few pages back. I have a feeling Crane is just a lackadaisical business man and not very bright and Comcast told him everything he wanted to hear and he just went with it.
haven't read a few a pages. i apologize for yesterday, i just wasn't in a good mood. anyway. i really like all the research in the thread from everyone
But a $200 million loss after 10 years? That's crazy. If those are the numbers Comcast brings you, you reject them every time....Crane would be NUTS not to reject that deal I don't care about losses in the first couple of years..sure, you take your medicine. But 10 years in you're agreeing to $200 million in losses? No effing way.
Excellent question. But if we know $200MM in losses over 10 years would be essentially locked in, and we assume that Crane is making that number look as bad as possible, then we can assume the breakeven point is around the 10 year mark. CSN has already provided the Rockets/Astros bad information once. Is it short-sighted of Crane to question the fact that, 10 years from now, this thing becomes profitable based on CSN's projections? And given that, that it would be profitable enough over the final 10 years to undo $200MM in losses?
