guncurug

This quarter's baseball meetings will be memorable for Bud Selig upsetting the natural order of things as he caught the realignment bug from the NCAA.  In order to create more inventory for baseball's television partners, Selig forced the Houston Astros to move to the American League West,  more on that in a moment, added a new wild card team and fundamentally altered inter-league play. What additional inventory did the TV networks gain? One playoff game in each league between the two wild card teams.

The Houston Astros were the designated franchise for realignment because Selig had the power to force the Astros to move.  The sale of the Astros has been pending since early Spring and has been held up until the additional playoff game could be worked out with the players' union.  Once the owners got the green light, the sale was ready to be approved but only on the condition that the franchise move to the American League, a prospect which doesn't particularly thrill the fans.  That move cost Drayton McClane, the selling owner $70 million, as the price was reduced to entice Jim Crane to go through with the sale and the league switch.  I don't know if that is a reflection on the American League or, more likely, the  long history of the Astros in the National League. 

Interleague play will now take place every day during the season.  Since each league will now have 15 teams, in order for all teams to be playing everyday, one interleague game must be played.  So, rather than the three or four windows that fans could anticipate and teams could design marketing plans around, interleague games are likely to become just another game.  That's a prospect that I don't think is particularly beneficial to baseball, especially when it's done in return for a single playoff game in both leagues. 

The Wilpon brothers, who are majority owners of the New York Mets are in final negotiations with billionaire hedge fund manager David Einhorn to sell a 30-33% interest in the team to him for a reported $200 million.  The deal supposedly includes a provision allowing Einhorn to purchase an additional 27-30% in three years, so that he would then own 60% at the same valuation. The Wilpons can avoid the latter sale and retain majority ownership of the club by repaying the initial $200 million to Einhorn, in which case Einhorn retains his 30% interest for essentially nothing while receiving a $200 million cash return on his $200 million investment.  So, the question presents itself is how should Mets fans react to this sale?

It's no secret that the Wilpons, and their business and team ownership partner Saul Katz, have been distracted lately.  It's also no secret that they and the franchise are in desperate need of cash.  Both issues stem in part from the fallout of the Bernie Madoof saga, as the trustee for the victims in the Madoff affair are suing them for a $1 billion.  As if that were not enough, the club is said to be hemorrhaging cash and is on pace to lose $70 million this season.  Anything that can ease both situations, as this sale will do, has to be a positive for the team's performance.  The idea that the Wilpons may be gone in three years probably brings new joy to the clubhouse - especially following principal owner Fred Wilpon's interviews in the New Yorker and Sports Illustrated last week.

There is another reason Mets fan should have reason to hope.  The track record of hedge fund owners in professional sports is generally a good one.  Whether it's the application of lessons learned in the hedge fund business, the ability and willingness to spend the necessary time to lead the organization - since most of them are billionaires and have the luxury of time, or it's the knack for picking the right personnel, the track record holds up across sports.  In baseball, there is John Henry, whose Red Sox broke an 86 year drought two years after he bought the team.  In basketball, there is James Pallotta, a member of the ownership group of the Boston Celtics.  In hockey, you have Philip Falcone, who owns part of the Minnesota Wild.

Which brings up a somewhat unrelated topic, but interesting nonetheless.  I'm sure many of you are aware of the Stadium Effect; the negative effect on stock price and financial performance of companies that enter into naming rights agreements for stadiums and arenas.  There may be a corollary to that rule emerging and it would indicate that investors in Greenlight Capital, the hedge fund managed by David Einhorn,  should be wary.  This curse applies to investors in hedge funds whose managers acquire sports franchises.  There appears to be a negative correlation between fund performance and franchise ownership.  Whether due to distraction or market luck is hard to say, just that the correlation is apparent.

Most Americans, if asked, would tell you that either the New York Yankees or the Dallas Cowboys were the most profitable teams in professional sports and either of those would be a good guess for an American centric audience.  However, those guesses don't take into account the worldwide phenomenon that is global soccer. No sport captures the imagination of sports fans around the world in quite the same way as soccer.

Just in case you have a little time on your hands and want to escape the crush of relatives this weekend, or live in the Midwest or Europe and need a respite from the snow storms, here are a few stories that caught my eye this week that I think you will find interesting:

Sorry for my absence from the blog this week.  I came back to the Bluegrass from a brief visit to Chicago to visit relatives and immediately upon returning to the Ohio Valley Steamroom was felled by some ailment caused no doubt by the thick layer of ozone that has been hanging over the Valley for the last couple of weeks.  I know the Northeast got 100+ days this week, but we've had something like 25 90+ degree days since June 1 with no end in sight. The humidity has been hovering around 90% and it's not safe for man or beast out there.


Enough complaining.  I'm finally returning to some semblance of a normal life so it's back to the blog.  I know you struggled through The Decision without me but I'm sure you managed better than Dan Gilbert did.  Someone must have taken his lithium away.  Good luck to the Heat - if they don't win a championship this year, there will be hell to pay in South Beach.

I haven't been able to keep up with much this week, so here's a few links to carry you through the weekend:

Why not a seventh Canadian team for the NHL, a TSN, Globe and Mail series (TSN, Globe and Mail)

Is there a sinister bias for calling fouls in soccer? (Paul Kedrosky)

ACC lands a new media deal with ESPN for about $1.86 Billion though 2022-23. The deal should double each school's current television revenue.  (News&Observer, ACC)

Fatwa issued in UAE against  vuvuzelas above 100 decibels (The National via Bloomberg)

How different are major league baseball stadiums - at least those without roofs? (Snippets)

The liquidation of the Tom Hicks sports empire took another step closer to reality yesterday when the Texas Rangers filed a pre-packaged Chapter 11 bankruptcy petition in an effort to get approval to sell the club to a group led by attorney Steve Greenberg and Nolan  Ryan.  The group already has the approval of Major League Baseball Commissioner Bud Selig.  An interesting graphic from the Wall Street Journal attempting to illuminate the transaction is below:

Now this is something I didn't expect to see and I suppose it's another example of the changed focus of the Cubs new owners.  The Cubs and the White Sox have gotten together and found a unique way to sell naming rights to the annual Crosstown Classic played as part of interleague play each summer.  The teams play two three game series, one in each stadium.

Expect to see fewer schedules of English Premier League games in favorite newspaper or online site in the coming days as a British High Court has ruled that the fixtures are copyrighted by the English Premier League.  The EPL and four other bodies  brought the case against companies including Yahoo over their unlicensed use of fixtures (schedules to Americans). 


The ruling is contrary to one from the European Court of Justice, which in 2004 ruled against protection of fixture lists, but the High Court found that compiling the fixtures required sufficient work to warrant protection.  To compile the fixtures, the scheduler has to take into account television, of course; making sure that no teams played at home in the city on the same day and making sure that dates were left open for European competition, while still ensuring that the clubs competing in Europe and the domestic cup competitions.


I'm not too sure an American court would agree.  Given the 2007  from the Eight Circuit Court of Appeals in the case involving Major League Baseball and the operator of fantasy sports games, in which the Court uphheld a District Court decision that the operator's First Amendment right to free speech trumps the players and MLB's right to publicity and MLB cannot control the use of game results or a player's name and statistics.  Major League Baseball's  petition for certiorari was denied on June 2, 2008, so the Eighth Circuit decision stands today as the law of land at least in Missouri and several neighboring states.  The various players in fantasy sports are now treating the case as the basis for their bargaining, which is another reason why I don't think you would see the same result her.