Financial News Today …

The Alliance of American Football (AAF) may be only two weeks old in terms of on-field action, but the league has already undergone a huge transformation. reported yesterday that the owner of the Carolina Hurricanes of the NHL, Tom Dundon, made a $250M investment in the league and will become its chairman.  There had been some reports that the AAF was in dire financial straits and that this money was a “bailout” of sorts; the AAF denies that reporting.  The following statement from Dundon would seem to indicate that this influx of cash was not a desperation measure:

“I’m impressed with The Alliance’s stunning growth in-stadium and across TV, mobile and social media in just these first few weeks.”

The inaugural weekend for the AAF was a TV success.  It went head-to-head with an NBA regular season game featuring James Harden and the Rockets – – and the AAF game drew more viewers.  If the TV ratings for the second weekend have been released, I have not seen them yet.

Dundon’s investment has to put the AAF on safe footing for now.  Obviously, the biggest expense for the league is player salaries.  So, let’s do some math:

  • There are 8 teams with 43 players on each roster.  Given injuries and the like, let’s say each team has 50 players on the roster for the season.  That is 400 players.
  • Let’s pretend for a moment that all the teams keep all their players for the entirety of their 3-year contracts.  That won’t happen of course, but if players lost are replaced by other players with the same standard contract, the financial burden is pretty much the same.  So, each player over the 3 years of their deal is going to earn $250K.
  • That means the total salary paid to all the players in the league is about $100M over the first 3 seasons.  Mr. Dundon’s investment of $250M would seem to cover that expense nicely.

The other big financial story from yesterday was the Padres’ signing of Manny Machado to a 10-year contract worth $300M – – with a opt-out clause after 5 years.  I have never been a fan of 10-year deals – – because such a large fraction of them turn out to be albatrosses around the necks of the franchises that sign on to them – – but this one just might make a bit of sense.

  1. With Machado and Eric Hosmer, who signed a long-term deal with the Padres last year, the team should improve markedly over its 66-96 record from last year.
  2. The Padres’ farm system is regarded as one of the best in MLB.  If 3 or 4 of those prospects mature in the next year or two and make it to the Padres’ 25-man roster, they will provide the team with talent at a low cost for about 4-5 years.
  3. That means the Padres have the opportunity to make a run at the playoffs in the next 5 years or so without having to sign onto another humongous free agent contract if they want to take that route.
  4. The Padres are the only major sport in town.  Even with last year’s dismal record, the Padres drew more than 2 million fans to their home games; they ranked 17th out of 30 MLB teams in home attendance.  If the team evolves to become a contender, there is plenty of potential to increase attendance significantly.  On average, Petco Park was only 63% full last season.

MLB teams all find ways to have special days in their seasons where they celebrate something related to the team.  Sometimes they bring back the living members of the roster that won the World Series 40 years ago; sometimes they honor a player who just got inducted into the Hall of Fame.  We have all seen and heard about these celebratory events.  Interestingly, the Arizona Diamondbacks have a celebration event planned for this season – – on May 18th to be exact – – that might put a lot of pressure on one of the current D-Backs’ players for that night.  Here is the deal:

  • On May 18, 2004, D-backs’ pitcher and Hall of Fame inductee threw a perfect game in Atlanta against the Braves.  This year will mark the 15th anniversary of that accomplishment.
  • On May 18th 2019, the D-Backs will have Randy Johnson in the house.  The first 20,000 fans to show up will get a Randy Johnson “figurine” featuring the starting lineup for his perfect game 15 years ago.
  • They will show some video highlights; there will obviously be some speeches; I would not be shocked to learn that Randy Johnson tossed the ceremonial first pitch of the night.

So, a good time will be had be all; this is an unadulterated feelgood moment – – unless of course you are the starting pitcher for the D-Backs on May 18th 2019.  After all the hoopla about a perfect game on this date, the starting pitcher takes the mound for the top of the first inning; think there is any pressure?

Finally, there is an AAF franchise in Salt Lake City where Brad Rock of the Deseret News plies his trade.  Here is one of his observations in his Rock On column from about a week ago:

“A Detroit Free Press article on the fledgling Alliance of American Football called it ‘The eight-team league, based in eight warm-weather cities …’

“Salt Lake a warm-weather city?

“Yeah, maybe … if you’re from Detroit.”

But don’t get me wrong, I love sports………