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.
