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Before the big trade, we've had many debates about what the Jays and Rogers should be able to afford and I've argued several times that it is very hard to know if you don't know what the deal is for tv rights. You can argue about profits beyond that, but on the books the Jays have a local tv deal with Rogers and unless you know what that is, it's very hard to make any kind of a guess at what they can afford to spend on players.

So, there's a new FG piece about the Dodgers monstrous new tv deal that's still being finalized and they included all the TV deals in it, including the Jays. Now I have no idea where their numbers come from, but I'll trust them until I hear otherwise.

I found it all very educational:

http://www.fangraphs.com/blogs/index.ph ... landscape/

If you can't be bothered, here's the relevant bit for us pulled out of a chart:

Toronto Blue Jays; $36m in 2012; adjusted year to year Rogers SportsNetRogers Communications owns the Blue Jays and Rogers SportsNet Year to year; no expiration

I think the Jays have the one of the highest viewerships in MLB but the TV deal doesn't reflect that. It's just one Rogers subsidiary paying the other one, so the amount doesn't really matter, and they'll just allocate it based on minimizing taxes.

I'd also like to find out how much they made on Jersey sales since switching back to the old logo, it's one of the best things that they have done here in a long time and they must have a really good profit coming in.

"Small to medium-sized?" Whoever wrote that article doesn't have a good grasp of what size the Toronto media market actually is or how many people are actually watching this team's games (numbers which will only grow in 2013, BTW, the Jays are a sleeping giant and we will see their force if the team happens to start winning).

And yes, Skin Blues is exactly right. If the Jays were getting fair market value for their TV rights from Sportsnet based on their huge viewership, it would be much higher than $36M a year (a total that I'd read before, I just can't remember where). Because Rogers owns both, the total doesn't matter. It seems that instead of the Jays making the huge profits here off TV, it's Sportsnet at a cheap price doing so through the advertising dollars.

Skin Blues wrote:I think the Jays have the one of the highest viewerships in MLB but the TV deal doesn't reflect that. It's just one Rogers subsidiary paying the other one, so the amount doesn't really matter, and they'll just allocate it based on minimizing taxes.

well all of canada (except those who are blacked out) are watching the jays. they got a whole country...

I'm backing off my criticism of Rogers after these latest series of moves. With a 120 million payroll now I see an intent to win and payroll will be linked to a large part to fan interest. I'm sure if we start to get 1990's level of gate and TV viewer ship we'll be at the top of the payroll heap as well.

I suspect that the sleeping giant with respect to this market, is waking up now.

Somebody on there pointed out that if you compare the ratings numbers the Jays media rights should be worth around 140 million per annum rather than 36. Rogers probably was hoping that never got out. The team isn't making money but the network is bringing it in hand over fist.

Until the CFL starts the Jays really don't have a lot of competition sports wise in this country in the summertime. I easily watch more baseball on tv than any other sport by far! And that has much to do with the lack of anything else on at the time.

It's OK to back off for now, but let's not assume that this is any kind of long-term organizational shift just yet. Don't forget that Rogers did much the same thing as this in the 2005 offseason before pulling back completely in the following few seasons after they didn't make the playoffs in 2006 (and a very Marlins-like fire sale in 2008/2009).

They've been pocketing huge amounts of money since they bought the team (especially in recent years with the rising Canadian dollar and increasing television revenue) and could have decided to try to contend like this at any time but simply chose not to. It may take winning immediately to make the investment worth it in their eyes.

Randle McMurphy wrote:It's OK to back off for now, but let's not assume that this is any kind of long-term organizational shift just yet. Don't forget that Rogers did much the same thing as this in the 2005 offseason before pulling back completely in the following few seasons after they didn't make the playoffs in 2006 (and a very Marlins-like fire sale in 2008/2009).

They've been pocketing huge amounts of money since they bought the team (especially in recent years with the rising Canadian dollar and increasing television revenue) and could have decided to try to contend like this at any time but simply chose not to. It may take winning immediately to make the investment worth it in their eyes.

Of course there is the question of whether they were taking the money out of the team to help other divisions, or if they were simply just war chesting the money. Stashing it in the bank in order to guarantee they stay in the black even if they decided to go all out for 4 or 5 years. Maybe not having the war chest is what caused them to bail on that brief bump in 05-07... Getting too close to negative numbers.

I agree the figure cited by FanGraphs is meaningless. A US TV network, lets say Fox in Southern California, has to buy the team rights, pay the distribution fee to the cable operators to get on the air, and pay all production costs. All of this is opaque with the Jays since they own the team, the channel, many of the cable companies, etc.

my quick math:

10 000 more butts in the seat?
that's around $40 Million in profit.
15 000? that's $65 million.
so, basically, make a huge trade, get butts in the seats and you've pretty much paid off the cost of salaries absorbed.
and that does NOT include TV revenue or merch sales.

Skin Blues wrote:I think the Jays have the one of the highest viewerships in MLB but the TV deal doesn't reflect that. It's just one Rogers subsidiary paying the other one, so the amount doesn't really matter, and they'll just allocate it based on minimizing taxes.

Exactly. I'd be more interested to see how much the Jays broadcasts make off advertising revenue.

The $36 million figure isn't really worth talking about much.

To tell you the truth I'd be suprised if Rogers wasn't making the most profit of TV compared to any other team in the league. And, that is including the Dodgers ~$250mm.

Rogers is making $ on both sides here. Normally if a television station wants to buy the rights of these teams they are still leaving room to make a profit for themselves. Plus the team makes a profit by selling the rights. Rogers gets both sides and they are doing it in a very big television market.

xAIRNESSx wrote:

Skin Blues wrote:I think the Jays have the one of the highest viewerships in MLB but the TV deal doesn't reflect that. It's just one Rogers subsidiary paying the other one, so the amount doesn't really matter, and they'll just allocate it based on minimizing taxes.

Exactly. I'd be more interested to see how much the Jays broadcasts make off advertising revenue.

This is the right thinking. From the same link check out this part:

But the owners of the Yankees and Red Sox — and now Mets, Orioles, and Nationals — continue to rake in millions of dollars in profits from the operation of their RSNs. And again, as noted, these profits are not subject to revenue-sharing.

This is for the YES Network (etc) where the team owns the station, but I imagine this is the same business model. Artificially low tv rights lead to low incomes for the team, but super cheap profitable content for the network. The team revenue is subject to revenue sharing within MLB, Sportsnets profits are not. The parent company makes a ton of money, and can spend that on "propping up" the sports franchise.

The added benefit for the ownership / league of this model is that in the event of labour trouble with the players, they can all speak to low/non-existent profits

I'll tell you why I think this is slightly more interesting than many in here seem to think. IMO it's data rather than speculation. Of course Rogers makes lots of money with their uber control. Sportsnet buys the rights to Jays games on paper for less than they might otherwise and Rogers gets the cable rights to sportsnet for less than they might otherwise and they get the advertisers cheques direct to them on top of it all (with discounted advertising for their other products as well). They own an entire chain so they get the wholesale and the retail profits on the same product. That's a better set-up than anywhere else in sports. Like if the company that owned the Yankees and YES also owned by Comcast and AT&T (and MSG sports now too).

But, before the big trade, the argument was that Rogers never spent any money on the Jays and now there's a real number and it was not supremely low-ball. It was actually quite a decent upper/middle number for the previous paradigm of local TV deals. How this perennially negotiated deal will be affected by the new style of tv deals (the 20 year monsters at the top of the article) may be playing a huge role in current spending patterns. We still don't have answers, but a single data point is better than no data and if others are to follow can lead to us having a more reasoned discussion (it'll still be wildly speculative, but at least it won't be the hyperbole we get plucked out of the clear blue sky that we've had to date).

This number matters (to me) because Rogers is many different companies packed into one and they make extra profits because of that synergy (a privilege they pay billions for, so I don't think their opinion would be that they owe the Jays anything for their role) but each division has its own books and its own budgets and the cellphone division doesn't give the Jays extra money because Rogers wants a winning team. Barring extraordinary circumstances (and with this bit of data we may be able to find out down the road if they're doing that) the Jays live and die by their own budget, not at the largesse of Rogers other companies.

What I find interesting about the number and the recent change with the Jays in payroll status is where the money needed for the new players will come from. Was the extra fan interest from last year and anticipation for next year enough to do this to the Jays' books on its own? How much more attendance and rating boost do they need to justify the added expense? Will MLB payroll eat into the Jays amateur signing budget? Does the national money play-in or will the local go up dramatically because of the other monster deals being signed?

If we can find out what they pay for local rights next year again, with this as a baseline it becomes so much easier to roughly evaluate what's going on with the Jays revenues and costs, but without it we've had many arguments where people just blindly make up a number they think it should be. In this case, I'd be fascinated to find out if there's some Rogers altruism being fed into the Jays this year or if they've been given the greenlight on the expectation of larger revenues, or if the new TV numbers have caused them to increase it a lot next year (for instance, the fact it's re-negotiated yearly is something I didn't know and is very interesting to me).

Anyway, I think I'm going around in circles trying to make a pretty small point and failing at it, so I'll shut up now, go out, and get a little tipsy.

The problem with the $36m annual contract is that its a related party transaction. Therefore, the value of that contract is questionable. What would be the FMV of that deal? Not sure unless we see viewers in comparison to other channels.

satyr9 wrote:I'll tell you why I think this is slightly more interesting than many in here seem to think. IMO it's data rather than speculation. Of course Rogers makes lots of money with their uber control. Sportsnet buys the rights to Jays games on paper for less than they might otherwise and Rogers gets the cable rights to sportsnet for less than they might otherwise and they get the advertisers cheques direct to them on top of it all (with discounted advertising for their other products as well). They own an entire chain so they get the wholesale and the retail profits on the same product. That's a better set-up than anywhere else in sports. Like if the company that owned the Yankees and YES also owned by Comcast and AT&T (and MSG sports now too).

Again, the $36M number was reported before, though. And it's just as meaningless as the first time I read it because Rogers owns both entities and the current contract isn't a representation of its fair market value. If it was, the Jays would be getting TV contracts that rank with teams like the Angels, Rangers, and Yankees based on their viewership numbers.

What I find interesting about the number and the recent change with the Jays in payroll status is where the money needed for the new players will come from. Was the extra fan interest from last year and anticipation for next year enough to do this to the Jays' books on its own? How much more attendance and rating boost do they need to justify the added expense? Will MLB payroll eat into the Jays amateur signing budget? Does the national money play-in or will the local go up dramatically because of the other monster deals being signed?

One would hope it will come from the major profits they've been reaping off this organization for the better part of 12 years. They've always had the ability to spend more money, especially in recent years as TV revenues and the Canadian dollar have climbed. There really hasn't been any good excuse not to for some time now.

satyr9 wrote:I'll tell you why I think this is slightly more interesting than many in here seem to think. IMO it's data rather than speculation. Of course Rogers makes lots of money with their uber control. Sportsnet buys the rights to Jays games on paper for less than they might otherwise and Rogers gets the cable rights to sportsnet for less than they might otherwise and they get the advertisers cheques direct to them on top of it all (with discounted advertising for their other products as well). They own an entire chain so they get the wholesale and the retail profits on the same product. That's a better set-up than anywhere else in sports. Like if the company that owned the Yankees and YES also owned by Comcast and AT&T (and MSG sports now too).

But, before the big trade, the argument was that Rogers never spent any money on the Jays and now there's a real number and it was not supremely low-ball. It was actually quite a decent upper/middle number for the previous paradigm of local TV deals. How this perennially negotiated deal will be affected by the new style of tv deals (the 20 year monsters at the top of the article) may be playing a huge role in current spending patterns. We still don't have answers, but a single data point is better than no data and if others are to follow can lead to us having a more reasoned discussion (it'll still be wildly speculative, but at least it won't be the hyperbole we get plucked out of the clear blue sky that we've had to date).

This number matters (to me) because Rogers is many different companies packed into one and they make extra profits because of that synergy (a privilege they pay billions for, so I don't think their opinion would be that they owe the Jays anything for their role) but each division has its own books and its own budgets and the cellphone division doesn't give the Jays extra money because Rogers wants a winning team. Barring extraordinary circumstances (and with this bit of data we may be able to find out down the road if they're doing that) the Jays live and die by their own budget, not at the largesse of Rogers other companies.

What I find interesting about the number and the recent change with the Jays in payroll status is where the money needed for the new players will come from. Was the extra fan interest from last year and anticipation for next year enough to do this to the Jays' books on its own? How much more attendance and rating boost do they need to justify the added expense? Will MLB payroll eat into the Jays amateur signing budget? Does the national money play-in or will the local go up dramatically because of the other monster deals being signed?

If we can find out what they pay for local rights next year again, with this as a baseline it becomes so much easier to roughly evaluate what's going on with the Jays revenues and costs, but without it we've had many arguments where people just blindly make up a number they think it should be. In this case, I'd be fascinated to find out if there's some Rogers altruism being fed into the Jays this year or if they've been given the greenlight on the expectation of larger revenues, or if the new TV numbers have caused them to increase it a lot next year (for instance, the fact it's re-negotiated yearly is something I didn't know and is very interesting to me).

Anyway, I think I'm going around in circles trying to make a pretty small point and failing at it, so I'll shut up now, go out, and get a little tipsy.

One of the best posts I've read on Realgm in a while.


A couple points though. (and forgive me if I ramble a bit as I have a wicked cold, and am hopped up on cold medication).

I do not think that it is altruism to give the Jays more money, or that each division (such as the Jays) has their own books to balance. They are a 100% owned subsidiary, so the goal should be to maximize the bottom line of the parent company (Rogers). If you have each company acting independently then you really aren't taking advantage of the potential synergy here. Yes, each division of Rogers has their own budget, but it is a piece of a Rogers' master budgets, and those are the ones that matter.

For example, if Parent x, owns subsidiary y, and subsidiary z. They would prefer sub y to make $0 profits, and sub z to make $200mm instead of each sub making $50mm each. So, if the Jays were to only break even on this year (for arguments sake), but it caused a significant increase in profits in other divisions of the company (advertising revenues, cell phone purchases [due to increased advertising exposure, and public perception], etc...) then it would be worth it as long as the marginal profits from other divisions are greater than the marginal decrease in profits from the Jays.

So, from that standpoint I don't think they are being altruistic. Altruism implies that they are doing it out of the kindness of their own hearts for the sake of others. I'm sure this decision is still borne out of self interest of the parent companies bottom line. They just now think total increasing profits throughout their whole conglomerate justify the increased expenses to the Jays, resulting in a net profit.

In all honesty though I think if the Jays were their own distinct entity, separate from Rogers, they would be showing huge profits from year to year. So, I think there would be reason to think that they could support this players expense budget all on their own. If that would result in increased profits is a whole other discussion of course. The problem is that with the accounting, due to it being a subsidiary, it is difficult to really tell how profitable they are on their own.