Since the Winter Meetings, it’s been on. Albert Pujols and C.J. Wilson hold a combined salary of $331.5 million over the life of their agreements. On December 18, the Rangers won the rights to negotiate with Yu Darvish for over $51.7 million and just inked him to a 6-year, $56 million deal. And, while Jon Daniels said the club was done spending, you wonder if that really is just a ruse to allow them to land Prince Fielder.
From Maury Brown's piece at Baseball Prospectus on how the Angels and Rangers are turning into the Yankees and BoSox of the A.L. East, thanks to big TV deals.
4 months ago
Adam J. Morris
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$3B
In speaking with one of the principle negotiators of that television deal, he believed then, as he does now, that the $3 billion rights extension with FOX was a game changer.
Ok, so Brown has a source intimate with the details of the tv deal that says $3B is the number? I like reading that. We’ve seen a lot of variance in reporting the numbers of the deal, and I believe the Rangers are perfectly happy to have their be some doubt about how much money they are getting. But this makes me think the $3B number is closer to the the truth than the $1.6B that was also reported.
Some see a glass half empty, some a glass half full. I see a glass that's twice as big as it needs to be. - George Carlin
My guess
$1.6 billion is the present value of the future income stream over the next 30 years or however long
by Adam J. Morris on Jan 23, 2012 1:14 PM CST up reply actions
sounds right
The thing I don’t like about the deal is the inordinate length.
Some see a glass half empty, some a glass half full. I see a glass that's twice as big as it needs to be. - George Carlin
So what you're saying is... we should sell the rights to the revenue stream for $1.4B
And sign Prince Fielder?
I thought it was a 20-year deal.
Wouldn’t a $1.6B NPV on a $3B deal be sort of astonishing?
Garoon: Banned on LSB. Available Only Via Supplement.
That is my initial impression also,
but then again, long term inflation always seemed like magic to me anyways.
"I’d love to walk in and hug everybody every day, but that’s not critical to us winning." - Jon Daniels
by GhettoBear04 on Jan 23, 2012 1:46 PM CST up reply actions
(I'm so far removed from my corporate finance courses...)
Garoon: Banned on LSB. Available Only Via Supplement.
No just time value wise
But, I did the present value of $3B… I should look at the annuities, gimme a second.
Yeah: we don't want the value of $3B in 20 years,
because there’ll obviously be payments starting in 2015.
That 2015 start-date would have to be taken into account, as well, I imagine, but then there was also an up-front payment that was reported at some point…?
Garoon: Banned on LSB. Available Only Via Supplement.
Spreading out the payments over 20 years
I assumed 150M a year. If you discount those back to 1.5M you have to use 7.8%
by Dirk Diggler on Jan 23, 2012 1:53 PM CST up reply actions
Should say discounting back to 1.5B not 1.5M
I didn’t factor in any up front payments though
by Dirk Diggler on Jan 23, 2012 1:55 PM CST up reply actions
PV
The present value of $150,000,000 per year for 20 years starting now, using a 5% discount rate, is $1.869 million.
If we start it three years out, the present value using a 5% discount rate is $1.602 million
by Adam J. Morris on Jan 23, 2012 1:56 PM CST up reply actions
Yeah that could be it
We’re all guessing about the discount rate though of course. Plus we don’t know the amount of any upfront signing bonuses, etc.
by Dirk Diggler on Jan 23, 2012 1:59 PM CST up reply actions
Right -- I guess the question is whether a 5 percent discount rate makes sense.
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Without knowing their cost of capital
it’s really hard to say. I know my company uses a 14% discount rate, but others in our industry are higher.
My gut tells me that seems low though.
by Dirk Diggler on Jan 23, 2012 2:02 PM CST up reply actions
Is WACC the appropriate value to use in this case?
Garoon: Banned on LSB. Available Only Via Supplement.
I hope that's right
$150M of cash flow is what we’re primarily concerned with, right? That’s what will affect our future payroll—the revenue. It seems weird to calculate the present value of that and then consider it in turns of average annual payment after the present value calculation.
I’m with Snark, that the main concern should be inflation once you know the actual revenue.
Well,
I just set up a simple Excel file, but for 20 years of $150M payments using i=0.05 and t starting at 3 in the formula R(t)/(1+i)^t, running it 20 times and summing it, I get $1.695B total.
But I may well have done something wrong.
Garoon: Banned on LSB. Available Only Via Supplement.
Yeah that's correct
Same #‘s I got. I just don’t know that 5% is realistic
by Dirk Diggler on Jan 23, 2012 2:23 PM CST up reply actions
Yeah.
I agree with you, it seems low — but maybe not.
Garoon: Banned on LSB. Available Only Via Supplement.
With regards to inflation
I wonder if the Rangers either backloaded the contract, or will not use the full revenue streams in the early going.
At an average annual inflation rate of around 3.5%, the $150M revenue 20 years from now is more like $75M in value.
Not that I’m particularly worried about what happens down the line, we’re likely going to be crushed financially by other teams in 15 years from now, by teams signing new tv deals at that time.
Also, whose discount rate would we be using?
I mean, I assume that Fox and the Rangers wouldn’t have the same discount rate, and that they wouldn’t know each other’s? Maybe that’s not a good assumption.
Garoon: Banned on LSB. Available Only Via Supplement.
In my experience
The two sides of a transaction do not know the others discount rates. I haven’t negotiated media deals though — only corporate M&A stuff.
I’m not sure which rate you use matters though, at least not for us. The more important thing to know is whether or not the stream of payments is $80M per year or $150M per year.
by Dirk Diggler on Jan 23, 2012 2:31 PM CST up reply actions
Well, if they were $80M per year
There’d be no way you could get the $3B figure that Maury Brown seems sure of.
maybe the 20 years part is wrong
I don’t trust anything on this deal anymore.
Some see a glass half empty, some a glass half full. I see a glass that's twice as big as it needs to be. - George Carlin
Well, Brown's reporting 20 years alongside that $3B, so if we're going with him...?
I’ve also seen reporting (again by Brown, I believe) that the deal included an ownership stake in FSSW — contrary to a report in the LA media. If that’s the case, then the $1.6B could be, say, the annual average payment, but not include other items like the up-front payment, the ownership stake, and so on.
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Yes,
plus I assume that there are incentives involved, I just don’t know how much or how difficult they are to achieve.
"I’d love to walk in and hug everybody every day, but that’s not critical to us winning." - Jon Daniels
by GhettoBear04 on Jan 23, 2012 1:53 PM CST up reply actions
That's something I didn't remember hearing
and would make sense. Cash payments are part of the deal, along with expected return on a stake?
Some see a glass half empty, some a glass half full. I see a glass that's twice as big as it needs to be. - George Carlin
That's how I understand it.
The Shaikin and Baxter article makes it sound as if there’s an annual rights fee that’s paid — and that’s where the $80M per year comes in — as well as the other parts of the deal, including (say, for the Angels) a stake in FSW.
Garoon: Banned on LSB. Available Only Via Supplement.
Idk sometimes I had trouble with those problems
"Look if you want a journalist hire a UT grad. If you want a doctor you pick a Baylor grad. If you need a vet you see an Aggie grad. And if you need a pizza you call a Tech grad." -BUBacker
Beware of Trolls: b.pate, jonthefon, K.S.B., Panorama, Robert L. Bishop, TideNTexas
I kinda understand time value of money but not the abbreviations
NPV? I’ve also seen another regarding the Yu bid I don’t know.
Football can go to hell. The Rangers aren't ready for football season and neither am I.
by WyoRanger on Jan 23, 2012 5:08 PM CST via mobile up reply actions
They're annualizing the total value
A more accurate figure for the Fox Sports Southwest-Rangers deal, reports a TV executive in the know, “is somewhere between $1.5 billion and $1.6 billion.” That translates into the neighborhood of $75 million to $80 million a year.
by Adam J. Morris on Jan 23, 2012 1:58 PM CST up reply actions
Either way
Why would someone correct them by giving the Present Day Value. Do we ever do that in sports? Does anybody express Albert Pujols’ contract in present day terms?
That's what I'm saying
It makes sense from Fox Sports’ perspective, I suppose, but not really from the Rangers perspective.
Just throwing darts here
maybe quotes like that stem from the tv people being reluctant to acknowledge the Rangers got a stake as part of the deal, and the Rangers are fine having people think they’re just getting $80M instead of more.
Some see a glass half empty, some a glass half full. I see a glass that's twice as big as it needs to be. - George Carlin
Maury Brown said that in an article I think.
"I became an optimist when I discovered that I wasn't going to win any more games by being anything else." by Earl Weaver
I do feel for the small smarkets a little bit.
Murdoch isn’t worth $7 billion because he loves giving away equity. But he knows he will have to take on more MLB teams as partners to keep the programming. While big market teams like the Dodgers can get around 35% ownership of the RSN, mid-market teams can expect only around 15%. And small market teams like the Kansas City Royals? They can expect nothing.
OK then, this may be the deal?
The team gets a straight payout of $80mil a year from FSSW, and any advertising revenue/viewership rating above a certain threshold pays the Rangers X amount. I think this may be where some of the “bonus” language is coming in to play.
Makes sense to me anyhow, but I have zero knowledge of TV deals.
We’re not about sending messages. We’re about winning ballgames.-Wash, 04/03/11
Hell to the fucking no. -Wash, 10/07/11
Which is why I'm wondering if the $1.6B is just the average annual rights fee.
Take Bill Shaikin and Kevin Baxter with a grain of salt (because if Brown’s correct, they’re not), but on the Dodgers deal — rumored to be $3B, 20 years as well, they noted:
the rejected Dodgers’ deal had an average annual rights fee of about $85 million
Garoon: Banned on LSB. Available Only Via Supplement.
Best Sports Headline Ever
http://sports.yahoo.com/mlb/news?slug=ap-madoff-mets
"the PGT isn’t about alerting drunk guys on their mobile as to what the score was." --goET 7-24-11
"Replace Ace? Done. Ace's was too long anyway." --Micah 1-17-12
I had a good laugh at that yesterday.
by Wemedge on Jan 23, 2012 1:28 PM CST via mobile up reply actions
Hey, Lupita, settle an argument for us. What do you call the thing between the dick and the asshole?
"It has been said that democracy is the worst form of government except all the others that have been tried."
"The best argument against democracy is a five minute conversation with the average voter."
your nuts?
Some see a glass half empty, some a glass half full. I see a glass that's twice as big as it needs to be. - George Carlin
Its a quote from the show Weeds
They are calling it a taint or a runway lol
sorry should have the quotation marks
I call it a taint myself
"It has been said that democracy is the worst form of government except all the others that have been tried."
"The best argument against democracy is a five minute conversation with the average voter."
I was reading Discovery magazine
And they were talking about how perineum size is a secondary sex characteristic in mammals.
My wife is sitting there, and I said, “This is interesting…there’s an article about how taint size varies by gender in mammals.”
After a long pause, she said, “Discover Magazine is using the term ‘taint’ in an article?”
by Adam J. Morris on Jan 23, 2012 1:57 PM CST up reply actions
That makes sense, considering birth canals and all that.
"...out of the shadows of unprecedented success, the sun shines down upon this team waiting to thrill anew." - ghostofErikThompson
Did you tell her that's the scientific term?
by lost in space on Jan 23, 2012 2:02 PM CST up reply actions
It's insane, this guy's taint!
"Those cocksuckers asking me if I thought we were gonna go up there and try to work his fuckin’ pitch count ‘cause he’s on three fuckin’ days rest…you know what I told those cocksuckers? He pitch ball, ball cross plate, we gonna knock the shit out of it."
- Wash
Coffee table!
I like pretty dark haired women and breakfast food. - Ron Swanson
by Axe Em Rangers on Jan 23, 2012 2:10 PM CST up reply actions
Callis on Yu
Though I’m still leery of the track record of Japanese imports, I’d take Darvish over Pineda. Darvish has a better body (6-foot-5 and 225 pounds vs. 6-foot-7 and 260), better fastball life and command and a deeper repertoire.
Pineda isn’t far behind Darvish, however, and at 23 he’s two-plus years younger. He throws a consistent mid-90s fastball and mid-80s slider, and he struck out 173 in 171 innings as a rookie last year. He also will cost a lot less, as he won’t be eligible for arbitration until after the 2013 season. Meanwhile, the Rangers will spend $107.7 million on Darvish over the next six years (between his posting fee and major league contract).
That said, if I ran the Yankees and had their financial resources at my disposal, I’d prefer to spend the money on Darvish and keep Jesus Montero rather than saving cash by using Montero to get Pineda from the Mariners. New York did make an astute move by getting hard-throwing teenager Jose Campos in the Montero/Pineda trade
Getting Jose Campos
That smacks of a JD move. He seems to always get the other team to throw in a very young high risk, high reward player in what could otherwise be considered pretty even trades.
"JD gets complete blame or credit for what happens in 2010 and I think Nolan wants it that way. JD is paid to be a real GM and needs to start performing like one." - Josey Wales
by Michael Cave on Jan 23, 2012 2:08 PM CST up reply actions
Beau Jones
is not " young high risk, high reward player"
When we got Feliz
he was projected as a reliever. They were both live arms. Only Goldstein was on the Feliz bandwagon early
compare Jones with Feliz
is an insult to Feliz
What about Melo?
comparing Feliz to Melo is fine, right?
This is all tyler’s fault. He thinks it is fun to act idiotic and then idiots join in.
Yeah that makes all kinds of sense
At the beginning of 2007, Feliz was C+ and Jones was a C according to Sickels.
Melo was 17 in 2008 and wasn’t on any lists.
Not really.
Higher risk, lower reward.
by LiamP on Jan 23, 2012 4:28 PM CST via mobile up reply actions
This is so wrong I'm wondering if you're doing this just to get a rise out of Tyler.
Jones’ velo dipped into the 88-91 range as a 19yr old and had crept back into low 90’s when he was traded. If he was explosive, Feliz and his future 80 FB was what, Hiroshimaesque?
Jones was in no way high reward. He was just a dude who gets thrown in at the back end of these deals. He was probably the 35-45th best prospect in the Rangers org at that time.
by LiamP on Jan 23, 2012 4:10 PM CST via mobile up reply actions 1 recs
Jason Cole had him #40 in his end of season 2007 ranking.
You’re dug in on this abysmal opinion for some reason I can’t understand.
by LiamP on Jan 23, 2012 4:22 PM CST via mobile up reply actions
You called Beau Jones' FB explosive.
You’re asking me what I’m smoking?
by LiamP on Jan 23, 2012 4:23 PM CST via mobile up reply actions
I remember people saying he had a good arm
People said he had a plus fastball and better curveball. I wasn’t exactly way off.
And it’s weird to look at 2007 end of the year rankings because Feliz’s stock took off that year and Beau Jones was stagnant.
And
Ty called Melo’s fastball explosive, not Feliz’s. Melo was throwing in the low 90’s with good movement, right? (could have that wrong). And Melo probably came into the org around the late 30’s, though into a deeper farm system.
This is an interesting point to dig in on, imo
What did you read that made you think Beau was a highly regarded prospect? Newberg didn’t even mention him in this extensive write-up about the trade.
Really, the issue is that he was 19 when we got him
Not sure anybody really thought about starter vs. reliever #1 vs. #3.
And how is Jones getting flac and not Carlos Melo? Melo was projected as a #1 at some point?
Okay, I'll give this one to you..
If he can master control problems that have plagued him in the past, this is another high-ceiling player in a system that added plenty of them at the trading deadline.
Well. they can't/don't want to pay the luxury tax though
We’re not about sending messages. We’re about winning ballgames.-Wash, 04/03/11
Hell to the fucking no. -Wash, 10/07/11
Pineda
Purely eye-based evaluating, but I think we’ve pretty much seen Pineda’s cieling.
Baseball's hard, guys. I mean, it really is. You can love it but, believe me, it don't always love you back. It's kind of like dating a German chick, you know?
It depends if he can develop a third pitch.
"I’d love to walk in and hug everybody every day, but that’s not critical to us winning." - Jon Daniels
by GhettoBear04 on Jan 23, 2012 5:35 PM CST up reply actions
Like Donkey Kong
"Look if you want a journalist hire a UT grad. If you want a doctor you pick a Baylor grad. If you need a vet you see an Aggie grad. And if you need a pizza you call a Tech grad." -BUBacker
Beware of Trolls: b.pate, jonthefon, K.S.B., Panorama, Robert L. Bishop, TideNTexas
x
Texas Rangers @Rangers
Cuban LHP Gerardo Concepcion worked out for the Rangers in the Dominican Republic on Monday … atmlb.com/wBFyRM
Ever been in a boardroom, or a gang fight? Ever save a life? Ever won a court case against the odds? Ever held a dying buddy in your arms?.- jackanape on "perspective," 11/8/2010.
"do you a jet ski rental place would work here" - Mike E, 5/10/2011.
I asked Badler and he said he would not put Concepcion in the Rangers top ten prospect should they sign him.
Ever been in a boardroom, or a gang fight? Ever save a life? Ever won a court case against the odds? Ever held a dying buddy in your arms?.- jackanape on "perspective," 11/8/2010.
"do you a jet ski rental place would work here" - Mike E, 5/10/2011.
Asked him the same question about Soler and he said "absolutely."
That was pretty obvious, though.
Ever been in a boardroom, or a gang fight? Ever save a life? Ever won a court case against the odds? Ever held a dying buddy in your arms?.- jackanape on "perspective," 11/8/2010.
"do you a jet ski rental place would work here" - Mike E, 5/10/2011.
Hmmmm.
Josh Hamilton is likely to get an extension that would have been impossible just three years ago.
Garoon: Banned on LSB. Available Only Via Supplement.
Who said that?
I mean, trust you and all. Just curious who said it.
Heavy is the head that eats the crayons...
LSB-Come for the baseball, stay for the Dirkatron raping!
"He’s a Ranger, we’re Rangers." -bigtill2002
"EVEN THE WNBA HAS THEIR FINALS DURING PRIMETIME." -hornedfrogs45
.
It’s from Maury Brown’s piece at Baseball Prospectus on how the Angels and Rangers are turning into the Yankees and BoSox of the A.L. East West, thanks to big TV deals.
Garoon: Banned on LSB. Available Only Via Supplement.
Ah
Nobody look at me I’m a moron!
Heavy is the head that eats the crayons...
LSB-Come for the baseball, stay for the Dirkatron raping!
"He’s a Ranger, we’re Rangers." -bigtill2002
"EVEN THE WNBA HAS THEIR FINALS DURING PRIMETIME." -hornedfrogs45
I'm thinking "extension" is the bugaboo there.
Ever been in a boardroom, or a gang fight? Ever save a life? Ever won a court case against the odds? Ever held a dying buddy in your arms?.- jackanape on "perspective," 11/8/2010.
"do you a jet ski rental place would work here" - Mike E, 5/10/2011.
Right
A part of me hoped the 3 years ago part meant that Josh wouldn’t have accepted the contract 3 years ago.
I quickly realized that’s not what it meant. I hope it’s not too large. I will be extremely sad if he gets a 7/120 type deal.
Hopefully, Maury is blindly speculating because of the fact that the Rangers were negotiating with Hamilton..
This is encouraging
posted tonight:
Rangers slugger Josh Hamilton says he hasn’t heard anything from his agent in regards to a long-term contract extension with the club.
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