Follow The Money…

Anthony Rendon signed on with the LA Angels for 7 years and $245M.  That is in line with Nolan Arenado’s contract (8 years and $260M) because Arenado, Rendon and Kris Bryant are the three best third basemen in MLB.  [Bryant may be a free agent later this offseason if he wins a grievance he has filed; if not he will be a free agent next year.]  Here are a couple of things that come to mind about this signing:

  1. The Angels already had a good offensive lineup; adding Rendon should make it a very good lineup.  Now folks will turn their attention to the Angles pitching and ask if it is well staffed.
  2. The Nats lost an important part of their infield and a big bat in the middle of the lineup.  The Nats’ philosophy appears to be to invest the big bucks in starting pitchers (Strasburg, Scherzer and Corbin) and not in position players.  In two off seasons, the Nats have lost Anthony Rendon and Bryce Harper from their lineup while spending big on a starting pitcher.
  3. I wonder why none of the baseball poets have called out Scott Boras today.  It was less than a month ago that Boras lashed out at baseball owners for failing to spend on free agents and accusing them of colluding to keep prices down.  The baseball press covered that story and commented on it.  Now Boras has signed 3 of his free agents to humongous deals in 3 days.  Why not at least ask him now if – just maybe – he was full of excrement when last he pontificated?

Since I am writing about huge sums of money, consider the current trend in franchise values in the major sports.  Sports franchise values have always been on an uptrend, but that uptrend has become a steep climb in recent years.  The Dallas Cowboys in the NFL are valued at $5B by Forbes and that same publication also says that every NFL franchise, MLB franchise and NBA franchise is worth more than $1B.  Naturally, this means that guys rich enough to have purchased those franchises in the past are sitting on a huge potential profit should they wish to sell – along with a tidy revenue stream so long as they continue ownership.

To say there is a “dark side” to all that expanding wealth and value would be an overstatement; but there is a shady spot.  If someone like Jerry Jones decided to sell the Dallas Cowboys, he would have to find someone who could pony up something in the neighborhood of $5B – and you could easily expect Jones to seek a purchase price higher than that.  The fact is that there are not a lot of people on the planet who can do that; and if you then throw out all the folks who can afford such a thing but do not give a rat’s patootie about the NFL or US sports, the universe of potential buyers is small.

I have no intention of getting you to cry crocodile tears for franchise owners here, but lest you dismiss this as a trivial matter, consider that the NFL is considering a rule change to expand the number of potential buyers for franchises.  Currently, NFL bylaws set the debt limit for an NFL owner – the amount of money he can borrow against the team as an asset – at $350M.  That is not the total debt he/she is allowed; it is the debt limit against the team.  That number was set back when franchises were much less valuable.

In my outrageous example where Jerry Jones tries to sell the Cowboys and his asking price is a modest $5.5B (merely 10% over the Forbes valuation), it would mean that a potential buyer would have to come up with $5.15B of his own capital – along with only $350M of borrowed money – to close the deal.  The league is considering a change that would raise the debt limit to $1B in situations where the larger debt burden would exist for the purpose of buying an existing franchise.  As I understand it, this increased debt limit would not apply to current owners; those owners would not be permitted to increase their debt pledged against the franchise; the NFL is not looking to give owners a way to “pull money off the table” by this mechanism.

The NFL is not alone in this sort of thinking.  The NBA raised its debt limit from $250M to $325M about a year ago recognizing the explosion of franchise values in that league.  Recall when the NBA “forced” the sale of the LA Clippers, the valuation was set at $750M – $800M and Steve Balmer came in with a bid of $2B to acquire the team.

As I said, I don’t want you to pity the poor people who own sports franchises that they want to sell because they cannot find a buyer.  I merely want to point out that in this case, an old adage needs to be seen from a different perspective:

  • Every silver lining has a cloud around it…

Regarding the latest Patriots’ controversy involving a film crew taking pics of the Bengals’ sideline during a game, I think that some of the folks writing and commenting on this matter need to clean up their language.  I have read and heard multiple folks call this action “illegal”.  Take a deep breath folks; the investigation here is not being conducted by the FBI or the local police; if and when wrongdoing is uncovered, the perpetrators will not go to trial and hence to jail if convicted.  This is a violation of NFL rules and it is the NFL doing the gumshoe work; if and when wrongdoing is uncovered, the Pats will pay a fine to the league at a minimum and perhaps lose a draft pick at the most.  Clean up the language here…

Finally, Scott Ostler of the SF Chronicle is clearly not sanguine about the direction of the SF Giants:

“Are the Giants a jinx ship, sailing into the Bermuda Triangle, a Flying Dutchman with the Titanic skipper at the helm? Quick look at the box score for the last year: Lose beloved skipper Bruce Bochy, who grows more beloved by the day … Jump into analytics with Farhan Zaidi … Hire manager Gabe Kapler, a man with a tan and baggage.”

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



8 thoughts on “Follow The Money…”

  1. Read in this morning’s Inquirer that NFL rules committee is evaluating video review rules. This I believe is due to the horrendous officiating this year (Not saying earlier years were any better). To me one of the issues surrounds pass interference. I don’t believe the players, coaches or officials know what constitutes pass interference. It’s such an important call since big chunks of yardage are awarded in many cases when called. To remove some of the angst over PI, why not change the rule to a fixed yardage penalty and not award the ball at the point of the foul, but 10 or 15 yards, and first down from previous scrimmage? That would seem to assuage the offended team. Fifteen yards is a huge penalty used only for the most egregious kinds of penalties.
    It’s really arguable in many cases that the receiver would make the catch if not for the interference. In my view, when an outcome late in a game is decided by awarding huge chunks of yardage, with no assurance a catch would result is inequitable. The teams play for 57 minutes show their shortcomings then only to be rewarded on a judgment call of dubious surety.
    In my judgment, this rule would recognize the true value of time played and quality of the team’s ability. I wanna throw a shoe at the TV every time a PI is called late in the game, awards huge yardage and is a factor in the game outcome.
    I don’t pretend to be an NFL aficionado, but have been watching for over 50 years and still can’t accept the PI penalty as equitable.
    Your thoughts!
    Be kind, please, I’m old.

    1. Willie Jones (Puddinhead):

      Welcome aboard! And you must be old if you remember Willie (Puddinhead) Jones and any of his other buddies on the Whiz Kids.

      I agree that pacing the ball at the spot of the foul has become too severe a penalty in most cases. However, in the case where the receiver has two full steps on the defender and is surely going to score absent an interference call, that would seem to give the defender an incentive to commit the penalty. And one should never try to make the commission of a rules infraction beneficial to the one committing the infraction.

      If I were in charge, I would make pass interference a 15-yard penalty and an automatic first down and live with the situation outlined above.

      However, I would make it a point of emphasis for the officials to look far more closely at offensive pass interference – particularly where the receiver initiates the contact or the so-called “hand fighting”. And I would make the penalty for offensive interference the same as the one for intentional grounding – – 10 yard penalty and loss of down.

      Hope that helps…

  2. Every silver lining has a cloud around it…

    Could this be the Curmudgeon mantra of 2020?

    The referenced NFL debt limit could be framed in terms of stadium cost: In 1976, Seattle’s Kingdome was built for $40 million. The 2020 Las Vegas boondoggle is rumored to approach $2 billion.

    Carroll Rosenbloom must be turning over in his grave.

    1. Tenacious P:

      The stadium plus the rest of the development under construction in LA was supposed to be $4.5-5B when it was designed but I read somewhere recently that costs are likely to go north of $6B for the whole deal.

  3. Re: Franchises. The mismanaged Mets, whose payroll last year, discounting the insurance they got back for Wright and Cespides was lower than those huge market Milwaukee Brewers, announced this month they were selling 80% of the team.

    When the current owner (then a minority owner) bought into the team, it was a record price of 21.1 million dollars.

    This month they reached an agreement to sell 80% of the team…. for 2.6 BILLION. Over 100 times what they paid in 1980.

    And even that 21 million is more than double what the yankees brought in 1973.

    1. Ed:

      It is far too much work to do the research, but I wonder if any owner in the history of MLB, the NFL and the NBA ever lost money when they sold a franchise they had previously purchased. None leap to mind…

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