Wednesday, January 18, 2012

Why Reyes wasn't traded and why Wright won't either...

I went to one of Carlos Beltran's last home games as a Met against the Cardinals and there was a large contingent of fans in right field, in fact the crowd was larger then what had become normal in June/July.

Many have questioned why Jose Reyes wasn't traded at the deadline, most feel we would have received more in return from a trade then the two picks.  The same rumblings are beginning to stir about David Wright, should he be traded or should they attempt to re-sign him.

Unless things change drastically, I believe we'll see David Wright go down the exact same path, keep him till contracts end and make a feeble attempt to re-sign, while hoping someone gives them an excuse by over paying.

I believe Fred Wilpon said it himself when he called attendance the lifeblood of the Mets, in a bad season who do the non-die fans come to see, the home grown stars.  Beltran was different because of the injury risk but I believe Reyes was kept for his draw and I believe they will do the same with Wright.

It's not that the Mets aren't a valuable commodity in fact Forbes ranked them the 44th most valuable sports team which puts them #5 amongst baseball teams ( Yanks, BSox, Dodgers, Cubs).  It seems that they're cash broke and their revenue flow wasn't constructed properly.  So even if they aren't squirreling money away for a settlement or supporting their struggling real estate entities through the Mets, if the Wilpon's stay they are constructed to be cash broke.

Most teams will rank their sources of cash revenues, in order of TV, naming rights/sponsorship/merchandising and then attendance/concessions.  But just like the team maybe valuable, so is the TV station, we've all heard that SNY in it's own right is a very appealing commodity but that doesn't mean it's earning the team cash flow.

Apparently the way the Wilpon's set up the contracts regarding SNY they won't receive TV revenue shares from the league the way most teams get much need infusions of cash, while the stock value of the network goes up the cash flow doesn't.

Supporters of the New York Mets should be jumping for joy at the recent surge in television rights values. After all, other than perhaps the bankrupt Los Angeles Dodgers, who may get much more than $200 million a year for their next television deal, no team could use a pile of cash more than the Mets. The team lost $70 million in 2011 net of debt payments, could not afford to sign their best player, Jose Reyes, are slashing the team’s payroll for the upcoming season, and are trimming their minor league operations.

But Mets fans will not get the halo effect of surging tv fees because team owners Fred Wilpon and Saul Katz also own 65% of SportsNet New York (Time Warner and Comcast own the remainder), the RSN that televises Mets games. As a result of the deal that was put in place at the inception of SNY, the revenue stream from SNY to the Mets is set for at least the next 20 years, according to someone who has seen the contract, regardless of the appreciation in the value of those rights. No opt out for the baseball team here. Wilpon and Katz will enjoy a big increase in their equity value in SNY, but Mets fans will only see modest increases in television money that goes towards payroll. The New York Times reported that local broadcasting revenue, most of it from SNY, will only increase from $68 million in 2011 to $83 million in 2015. source Forbes

Couple that with the fact that as the team brand is impacted negatively by consecutive years of poor on the field results, merchandising revenues decrease and sponsorship offers become less lucrative.

Which is why such an emphasis is placed on attendance revenues and while many are planning to boycott attending, what will put people in the seats when a bad team is being fielded, home grown stars.  In two years when Wright's contract is up, there hoping the farm will produced a winning team and they will have Ike Davis as the face of the franchise.