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Tuesday, March 10, 2009

Al Yellon On MLB's Fiscal Black Hole

Al Yellon starts with a story that was overlooked in this corner because it involves basketball, and extends it to ask whether MLB is in financial dire straits. The NBA took out a collective $200M line of credit, and half the teams in the league availed themselves of that credit line. It's not the big-market teams that are in trouble; the Mets, Yankees, Cubs, White Sox, Dodgers, and Angels will get along fine. Similarly, he thinks small-market teams, by virtue of having to pull the plug on so much payroll lately, have shed enough to keep their bottom line in the black, or nearly so.
It's what we might call, in an analogy to college sports, the "mid-majors" -- markets that are larger TV markets, but don't have large, dedicated fanbases -- that may be in the most trouble. This includes teams like the Braves, Astros, Tigers (who raised ticket prices after having a terrible season in 2008 and being in a very depressed market -- idiocy, in my view), and others. Will MLB be forced to ask for a similar line of credit soon? And, given that MLB's TV contracts don't last as long as the NBA's (they expire in 2013), would they be able to secure as much money?
I have wondered this for some time now. The deals negotiated with Fox were done in much happier times; whether Fox can make money on them is anybody's guess, but I would be willing to suggest News Corp. is going to be in some serious trouble through 2010.

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Hey, Rob... thanks for the link. I did mention the Red Sox, not the White Sox, as a team that should be OK during the recession. The White Sox, if they don't contend... could be in trouble.

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