BY Art Thiel 07:00AM 04/17/2013

Thiel: Mariners’ deal a great one — so they say

Absent any details or explanations about how the pivotal new deal works between the Mariners and ROOT, they are saying, in effect, trust us. Really?

The crowds grow smaller at Safeco, but the TV income grows greater. / Wiki Commons

Perhaps the most intriguing element in the Mariners’ purchase of controlling interest in ROOT Sports is that the ballclub seems to have boxed in Chris Hansen regarding regional television options, in the way the baseball execs think the would-be Sonics owner has boxed them in with regard to his proposed arena location, just beyond the south end of the Safeco Field garage.

Unrelated, the Mariners claim.

For the next 17 years, the region’s only major league baseball team has partnered with the region’s only sports network, which means that the most valuable annual TV programming in U.S. sports, 155-plus baseball games, is locked up for the foreseeable.

Rivals such as Comcast/NBC, Fox Sports or anyone else, such as Hansen, who might have ambition toward creating an RSN in the potentially bustling Seattle/Portland sports market, simply can’t fill a network with remaining live-game programming, particularly since big-time college sports now have their own networks such as the Pac-12 Networks. Even 82 NBA games and 82 NHL games won’t have the same revenue value as MLB, particularly if MLB is in the house first.

Further, the Mariners are the only MLB team in five states, plus a part of Canada — the largest geographic monopoly in major North American pro sports. ROOT’s parent company is DirecTV, a satellite provider of many channels of programming. Because it has been around the region awhile, it is what is known as “fully distributed” — meaning any consumer in the region who wants its universe of programming, including ROOT, needs only to get a satellite dish and sign a contract.

Comcast, too, is a provider of many channels of programming, but is limited by the physical constraints of cable. It is a dominant provider in dense metropolitan areas such as Seattle, Tacoma, Spokane and Portland, but is largely unavailable in the remaining swath of the Mariners’ monopoly.

Comcast can, however, carry ROOT — for a fee. And that fee typically is passed on to many consumers, some of whom may not want it, but have no choice because it is typically bundled with other channels in an “expanded basic” package, prices for which keep inching up with niche programming such as RSNs.

Since cable hookups are in decline as “cord-cutters” and “cord-nevers” grow in the consumer marketplace, perhaps you see why the Mariners think themselves wise with a satellite company and not cable. In Portland, where Comcast has the rights to the Blazers, the team is said to have the most meager market penetration of its TV games in the NBA.

Regarding the idea of supplementing an NBA team in an RSN, ROOT is already carrying the lesser draws:  Sounders and Timbers MLS soccer, Gonzaga and West Coast Conference basketball and Big Sky football (remember the five states), plus some prep stuff. There is little else for Hansen, whenever he gets an NBA team to Seattle — and remember, DirecTV can keep its property, ROOT, off any rival provider.

(By the way, contrary to my characterization in a Tuesday story, a person familiar with ROOT’s operations said that company is profitable despite the absence of Pac-12 sports and the Mariners’ decline; otherwise, it would not be in position to make such a deal.)

So, Chris, here’s your new TV partners, the Seattle (“Rue The Day”) Mariners and ROOT the Redeemed.

“In our new role as a majority holder of an RSN, we want more professional sports teams in Seattle with a loyal fan base,” said Bob Aylward, Mariners executive vice president for business operations. “We’ve been open about our concerns for a SoDo arena, But it’s not going to impact any negotiations for broadcast rights. We believe the Sonics or an NHL team would provide very good programming.”

So they claim.

They also claim that the “significant investment” in ROOT will produce revenues akin to the huge new RSN deals obtained by the division-rival Angels and Rangers.

“The Mariners are in a better position than some of their rivals and competitive with their rivals in their division,” said Steve Greenberg of Allen and Company, a New York investment bank who advised the Mariners. “There were a number of options potentially available to the Mariners, one of which was going the route of some other clubs with a team-owned 100 percent RSN.

“What we ultimately concluded (was) if you can partner with a company like DirecTV, it’s more viable. We made the judgment that partnering with them was a less risky, more stable decision for the Mariners, than to go it alone.”

But what the Mariners claim, and what is true, is sometimes different. In this case, neither the Mariners or ROOT are divulging any costs or revenue projections that explain how this deal empowers the Mariners. They did say nothing will be changing in terms of content, staffing, sales personnel or on-air appearance.

The only disclosure came from Aylward when he said the conversations began in 2010, and bragged about how he was “amazed” how “far off the (media) radar” negotiations were.

Perhaps that’s because the Mariners lied about it. In a lengthy interview with Sportspress Northwest on Oct. 12, mostly about the club’s fierce opposition to Hansen’s arena location, I asked Mariners CEO Howard Lincoln and chief counsel Bart Waldman about the TV sports marketplace. Here was the question and their answers:

Q. Are you considering operating your own RSN?

A. Lincoln: I can answer that – no.

A. Waldman: We aren’t a made-for-TV sport. We don’t want an empty house and all our fans sit at home.

I don’t take much offense. Reporters have been lied to by presidents, generals, CEOs, priests, cops and newspaper publishers. No news there. Certainly, I’ve been lied to by better than the Mariners.

What I do take from that response is that I have no plans to trust what the Mariners executive branch says. I’m confident they care little. If the choice was either lying to protect their pending windfall, or maintaining integrity with a reporter and the public, I know that outcome 100 times out of 100.

Did I expect Lincoln to say, “Yes, we’re talking with ROOT about that very thing”? No. But could he have said, “We’re gathering information . . . no option is off the table . . . we’re not there yet”? Sure. He and many leaders are practiced at the art of the non-answer answer. But to lie and then have one of his deputies later tee-hee publicly about deking the media tells me what I need to know.

One of the best aspects of this new arrangement is that it uncouples the franchise from the ROOT teat of guaranteed annual money, no matter how dreary the seasonal outcomes. In this partnership, both parties’ revenues will rise and fall with the team’s fortunes. Which will make ownership something it has never been — accountable to an entity that can make demands, like a business partner.

The Mariners organization has not been accountable in any meaningful business way to taxpayers, politicians or shareholders, even though they had the public build the stadium. Despite a dismal decade and a profound decay in the fan base, they still managed to make money operationally, or lose little, every year while experiencing great gains in equity appreciation.

In this latest development, they have chosen to live by their wits. They are off to a bit of a dubious start: By choosing not to provide even the broadest details of how this wonderful, unprecedented arrangement will work, the two monopolists are making an audacious ask:

Trust us.

I choose to trust something else: The standings.

My wish is to hear nothing more from management about ventures, partnerships, revenues, fences, marine layers, “the plan,” basketball arenas, ingress and egress until Sept. 30, when Lincoln erases his lie by announcing in the pressbox the pitching probables for the first round of the playoffs.

And if ROOT demands anything less, they have made a bigger mistake than Kim Jong-Un thinking he was talking to Barack Obama instead of Dennis Rodman.

 


YourThoughts

  • Matt712

    Jeez! Did ya get much sleep last night, Art? ‘One of the more scathing pieces I’ve ever read from you. The passing jab at newspaper publishers almost made me spit-take my coffee.

    Regardless of business acumen, I am continually amazed by the Ms lack of PR acumen. That aside, I think this move is a huge salve for my trust issues with this organization because it means I don’t really have to trust them anymore. All I have to trust is the good ol’ American greenback. RSNs are like shopping malls: you need ‘anchor’ tenants to keep people coming in. It wouldn’t surprise me at all if we never hear another peep from the Ms about SoDo congestion and and arena locations.

    • art thiel

      Sleep is so 20th century.

      Regarding trust, I think that is a large deal with many fans. They desperately want to believe the Mariners. Just can’t.

  • Matt

    Nice recap, Art, though I’ll quibble a bit with the referencing of the Sounders as a lesser draw. Their reported TV ratings surpass the Mariners, to say nothing of attendance. Hansen could try to put together an RSN minus the M’s by including the Sounders, Storm, minor league baseball and even arena football (Hansen/Seahawks formed team for arena) as spring/summer programming, but I doubt it’d be as lucrative as partnering with the M’s and ROOT.
    The bigger problem, as you noted, would be carriage agreements. The problems between the Blazers and CSNW are such that even the Timbers, Winterhawks and the former Portland Beavers chose ROOT as their partner rather than Portland based CSNW.
    While the M’s and ROOT say nothing much will change, I hope they’re simply being coy. ROOT needs a rebrand, new programming, new/additional personnel and a relevant website. Much to do…

    • art thiel

      I’m told the TV ratings aren’t as good as Mariners. But the Sounders’ in-house event is much more compelling.

      Someone might re-invent the RSN that can work without the 162 of baseball, but DirecTV wouldn’t carry it. So you would be stuck with the Portland scenario here.

  • Michael Kaiser

    I bet if MLB put a team in Siberia it would have even a greater geographic monopoly than the Mariners.

    • art thiel

      Are you making nominations?

  • bobscrat

    Great piece Art! Here’s to hoping they make one more business move that will transition the club to a caring owner, and lead to some new blood in the front office.

    • art thiel

      Let’s hope that the Mariners aren’t making up the revenue projections.

  • bugzapper

    My head hurts. Or is it my ass?

    First of all, this guarantees humongous pay raises for the worst two front office clowns in all of professional sports. (Go ahead, challenge me. I dare you.) It also guarantees they will NEVER leave or sell. We’ll have to bury Lincoln and his succubus Armstrong before we are ever rid of them. And how the F are we ever going to lose Sims the Clueless?

    But worst of all it guarantees that for the next 17 years we will be cursed with ROOT’s 14-second delay. Remember, “Turn down the sound on your TV and listen to Rick and Dave on the radio?” Ever since ROOT showed up it’s been, “Turn down the sound on your TV and we’ll be well into the home half before you see Felix throw his final strike in the top of the 6th.”

    It’s 5:00 in my man cave, and I’m drinking for 47,116. This franchised is cursed.

    • art thiel

      Yow, bug. You’ve cheered me down.

      Think of it this way. 17 years will go by in a snap. Remember, it was just 17 years ago that the Sonics played the Bulls in the Finals.

      Wait a minute . . . that made my ass and head hurt.

  • jlj

    As the Ms continue their relentless pursuit of total cluelessness, I ask nervously, they wouldn’t be so stupid as to take ROOT of cable. Would they? Oh and Art, you’re still funny as hell!

    • art thiel

      Thanks.
      Not totally clueless. I like the scoreboard.

  • 1coolguy

    Lincoln and Armstrong – until they are both gone, I don’t buy a Mariners’ ticket.
    After so many miserable years under their management, that they have jobs is beyond me. They are completely out of their league in the positions they are in. If not for Gillick, the misery would stretch back 20+ years.
    Boy, wish I could find a well-paying job where my performance didn’t matter.

    • art thiel

      What do you mean? The Mariners just got Felix a run.

      • bugzapper

        On their way to losing the game 2-1 in 14. 48 strikeouts in three games, losing two consecutive shut-outs to Texas, scoring all of 19 runs in 10 games. And oh yeah…you know that 1997 trade I mentioned?

        “Derek Lowe pitched four hitless innings in relief of injured starter Nick Tepesch.
        The 39-year-old right-hander allowed only one Seattle batter to reach when
        he hit Kendrys Morales with a pitch leading off the third. Lowe needed only 31 pitches to record 12 outs.”

  • Jamo57

    ROOT Sports coverage has always had the tone of a Mariners Infomercial. At least now it can’t be diguised as sports ‘journalism’.

    • art thiel

      Jamo, no broadcast partner of a pro sports team purports to journalism. It’s entertainment. ROOT has never made a claim otherwise. Hence, the name.

  • Trygvesture

    The first reads on this a couple of days ago looked like a moth-eaten sweater just pulled out of the closet– lots of holes that indicated it would have a typical M’s backstory of, well, deceit. I thought of the ‘hot seat’ promises a few years ago, and had to gate my memory to stay off the track of recalling more Bad Howard, Bad Chuck, Bad-M’s episodes.

    It’s really good to see what a spade may be called given the right opportunity– they have been and are the most duplicitous and conscientiously unaccountable to the providers of their windfall equity-appriciation one could imagine ( stadium, political hand-holders, public, and the legacy trust they’ve been handed to perpetuate the Game). Delightful to see immunity recalled, the fracturing of the cone of silence regarding public discussion of their authentic back-room character. The fly on the back room wall likely heard toasts and guffaws at Hansen’s expense when the deal was done. They hold a public trust; they have no right to shadow- hidden immunity.

    Right. Feet to the fire for the Baseball trustees — prove it on the field or publicly see the FO on display, piloting the Clownship in those new emperor’s clothes.

  • Manny

    Late to the party, but wanted to type that this is GOOD news. More likely than not, this means more $$$ for the Mariners. They’ll be down one less excuse on doing what it takes to win and in baseball that is $$$. Also, I’m not depressed as some are that this means the Mariners aren’t selling. On the contrary, as this article points out there is a lot of uncertainty on how this arrangement will work. Why not sell while the future looks bright and let someone else worry about achieving it? Given the disinterest and financial woes of the current ownership, cashing out makes a lot of sense. The new scoreboard, a team with a dearth of long-term contracts (excepting Felix), and the big, red bow of the new RSN all drive the sales price higher.