News Articles

Winning's less fun when you're losing

Disney, News Corp. and other media companies find sports are poor investment 10/20/2002 08:00:00 PM Eastern

Angels, Giants ratings washouts?

Angels, Giants ratings washouts?

Some network executives think this year's World Series (which started Saturday) could set a ratings record but not the kind Fox is looking for.

With two West Coast teams, one virtually invisible on the national scene (Disney's Anaheim Angels), executives believe this series might just be the lowest-rated of all time.

They cite the current holder of that dubious distinction: the 2000 "Subway Series" between New York's Yankees and Mets, which averaged a 12.4/21.

They also note that Fox's coverage of the League Championship Series (also devoid of teams from the East) was down 5% in total viewers and 2% in men 18-49 compared with a year ago.

Neither the Angels nor the San Francisco Giants have the national following of the Yankees, those executives argue.

However, even skeptics concede that a stellar performance by Barry Bonds, the current record holder for homers in a single season, could prove to be a national draw.

And Fox executives aren't buying the notion that the Angels and Giants spell ratings doom. "I think the country as a whole loves an underdog and loves a Cinderella story," says Ed Goren, president, Fox Sports. "We certainly have that with Anaheim. It's a great story and one that you don't have to be a hard-core baseball fan to adopt this team."

If the games are competitive, the ratings should be there, he says. "The length of the series has a far greater impact than the two teams that are competing."

—Steve McClellan

Michael Eisner must be going through a lot of Mickey Mouse ties lately, because he keeps getting doused with champagne. When Disney's Anaheim Angels blew the Minnesota Twins out of the baseball playoffs last week, The Walt Disney Co. chairman partied with his players in the locker room, as sullen Twins owner and banking investor Carl Pohland would have with his players. The difference between Eisner and Pohland is that the latter fought to keep Major League Baseball from booting the Twins out of the league while Eisner is dying to get out of the locker room to sell his Angels.

Sports for sale
Recent pro team transactions show the value of some sports franchises. But owning a team is not the plum investment media companies once thought it would be.
Team Year Buyer Price
Source: B&C research
Boston Celtics 2002 Stephen Pagliuca and Wycliffe Grousbeck $360M
Boston Red Sox 2002 John Henry $700M
Cleveland Indians 2000 Larry Dolan $323M
Washington Redskins 1999 Howard and Edward Milstein and Daniel Snyder $800M
Cleveland Browns 1998 Alfred Lerner $530M
Los Angeles Dodgers 1998 Fox Group $311M
Minnesota Vikings 1998 Red McCombs $250M
Texas Rangers 1998 Tom Hicks $250M
New York Islanders 1998 Howard and Edward Milstein and Steve Gluckstern $195M
Seattle Seahawks 1997 Paul Allen $200M

Eisner is not the only media mogul who has soured on dalliances with pro sports. What was supposedly the magic financial combination of pro sports teams and TV networks or stations is suddenly taking on the aroma of a day-old Shea Stadium hot dog.

Ailing AOL Time Warner has put its perennial pennant-contending Atlanta Braves on a list of assets it might sell, along with its Atlanta Hawks basketball and Atlanta Thrasher hockey teams. Executives at other NBA teams say troubled Cablevision Systems is considering unloading its New York Knicks and New York Rangers teams. Even News Corp. executives are studying whether they should hang on to their Los Angeles Dodgers.

"Increasingly, what these guys are finding is that running the teams, paying 25 guys to be mediocre, isn't good business," said Rick Burton, executive director of the University of Oregon's Warsaw Sports Marketing Center.

"I would sell those goddam things in a flash," said a senior executive at one TV company that owns teams. "They're a way of passing money from the fans to the players, sometimes with more thrown in from the owners."

Eisner has cut his asking price for the Angels from $300 million, and industry executives said he's hoping the World Series glow will make it easier to sell, even if Disney has to stay in as a minority owner.

Media companies' major goal in buying teams was to control local rights to broadcast their games. But team ownership offers no particular advantage when it comes to negotiating national rights deals. And the National Football League neither offers local TV rights nor allows corporations to own teams.

On the plus side, in an era of spiraling rights prices, a regional sports network wouldn't have to pay ever higher prices to the local Major League Baseball and National Basketball Association franchises. Also, a media company that owns a team doesn't ever have to worry about getting outbid by a rival, which could cripple a regional sports network.

That's why News Corp. forked over $311 million for the Los Angeles Dodgers in 1998. It shored up Fox Sports L.A., keeping the Dodgers games away from rival ESPN, the Disney subsidiary that was trying to establish a regional sports network. Disney bought the Angels in 1996, hoping to use the rights as the foundation of ESPN West. But the channel fizzled, and analysts say Disney's operating losses on the Angels and the National Hockey League's Anaheim Mighty Ducks exceeded $20 million a year, not counting $100 million in renovations for the Angels' stadium.

The Braves are no longer the foundation of AOL Time Warner's TBS Superstation. The network for years hinged on Ted Turner's co-ownership of the Braves and Atlanta UHF station WTBS, selling the feed to cable networks across the country.

But after Time Warner bought Turner Broadcasting System, the company cut a national rights deal with the league. That means that owning the team doesn't offer any crucial benefits other than great seats during the playoffs.

"I think it's more a function of the stock market than anything else," said Mark Cuban, owner of the Dallas Mavericks and start-up cable channel HDnet. "Sports teams can seem to be superfluous to the core competency of the company to investors, so they get pressured into selling them."

Minutes after the Anaheim Angels won the American League championship Sunday, Eisner compared the club to a hit movie. "We're in the business of blockbusters, and this is our blockbuster," he boasted as the players whooped it up in the clubhouse.

The difference, of course, is that Eisner is not trying to sell his studio, which makes money. He is trying to unload the team, which ranks in the lower end of baseball's economic scale. Not even a World Series victory, according to analysts and academics, is likely to reverse the Angel's financial losses.

In other words, the Angels' surprise season probably means more to long-suffering fans than it does to potential buyers sniffing around the club.

Angels, Giants ratings washouts?

Angels, Giants ratings washouts?

Some network executives think this year's World Series (which started Saturday) could set a ratings record but not the kind Fox is looking for.

With two West Coast teams, one virtually invisible on the national scene (Disney's Anaheim Angels), executives believe this series might just be the lowest-rated of all time.

They cite the current holder of that dubious distinction: the 2000 "Subway Series" between New York's Yankees and Mets, which averaged a 12.4/21.

They also note that Fox's coverage of the League Championship Series (also devoid of teams from the East) was down 5% in total viewers and 2% in men 18-49 compared with a year ago.

Neither the Angels nor the San Francisco Giants have the national following of the Yankees, those executives argue.

However, even skeptics concede that a stellar performance by Barry Bonds, the current record holder for homers in a single season, could prove to be a national draw.

And Fox executives aren't buying the notion that the Angels and Giants spell ratings doom. "I think the country as a whole loves an underdog and loves a Cinderella story," says Ed Goren, president, Fox Sports. "We certainly have that with Anaheim. It's a great story and one that you don't have to be a hard-core baseball fan to adopt this team."

If the games are competitive, the ratings should be there, he says. "The length of the series has a far greater impact than the two teams that are competing."

—Steve McClellan

March