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

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.