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New York Yankees TV Network Might Fetch $2 Billion
03/08/2007 |
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The New York Yankees television network, valued at $850 million when it started almost six years ago, may be sold for as much as $2 billion.
Yankees Entertainment & Sports Network is owned by the Major League Baseball team, Goldman Sachs Group Inc. and former New Jersey Nets owner Raymond Chambers. Goldman is running ``a limited check'' on the market, spokesman Peter Rose said. ``We would only consider selling if we received what we believe is a price reflecting its real value,'' he said, declining to put a dollar amount on the network. Yankees President Randy Levine said the club had ``no intention'' of selling its interest in YES.
The YES network generated about $340 million in revenue last year based on 11.4 million subscribers, according to John Mansell, a media industry analyst. The Boston Red Sox-owned New England Sports Network produced $125 million last year with four million subscribers, he said.
``What is going on is, on the fifth year anniversary of YES, a testing of the market to see what the value is,'' Levine said in a telephone interview.
Chambers didn't immediately return a call.
Bids are due by Aug. 10, according to a person with direct knowledge of the negotiations who declined to be identified because he wasn't authorized to talk about the matter. Fortune magazine first reported the proposed sale this morning.
$2 Billion
A sale of the entire network might raise as much as $2 billion, Mansell said. The Yankees, which Fortune says owns 36 percent of YES, sold a 40 percent stake in the network to a group of investors including Goldman for $350 million in September 2001. Complete ownership details of closely held YES have not been made public.
The network, which began broadcasting in March 2002, also shows Nets games.
``The YES network is different from everything else, it's so huge and it's such a money maker,'' said Mansell, president of John Mansell Associates in Great Falls, Virginia. ``It has prospects of higher revenue, particularly on the advertising side.''
Bidders might include Time Warner Inc. and Comcast Corp., the cable-television providers that own a stake in the New York Mets television network; News Corp.; Cablevision Systems Corp.; Walt Disney Co.'s ESPN; and private equity companies, according to Mansell and Steve Solomon, a sports media consultant and former ABC Sports Executive.
Cablevision spokesman Charles Schueler, News Corp. spokesman Andrew Butcher, Time Warner spokesman Ed Adler, Comcast spokeswoman D'Arcy Rudnay and ESPN spokeswoman Rebecca Gertsmark declined to comment.
A new investor in YES would spend more money on the network, said Harvey Schiller, a former president of the holding company that owned the Yankees and Nets. ``They increase branding because they want a greater return than even what they paid for,'' he said.
The Yankees started the season with a $190 million payroll, the highest among baseball's 30 teams. The franchise lost money last year because it paid $105 million in revenue sharing and luxury taxes, Forbes magazine said.
Most Valuable Team
The Yankees are baseball's most valuable team at $1.2 billion, according to Forbes. Since George Steinbrenner purchased the franchise for $10 million in 1973, its worth has soared because of global popularity stemming from six World Series titles, league-leading attendance and the creation of the sports network.
In its history, the team has won 26 World Series titles, more championships than any other franchise. The Yankees had a 58-49 record after last night's games and trailed the first- place Boston Red Sox by seven games in the American League East Division.
The team is building a $1.2 billion ballpark complex that's scheduled to open in 2009 and will replace 84-year-old Yankee Stadium.
Steinbrenner, once known for his public rants and propensity for firing managers, has been subdued since fainting during a memorial service in December 2003. He issues statements through spokesman Howard Rubenstein, who denies speculation that the 77-year-old owner is in poor health.
No Successor
It's not yet known who will succeed Steinbrenner. Steve Swindal, who was once deemed the next in line to take over the team, is out of the mix due to his pending divorce from Steinbrenner's daughter Jennifer.
Hal Steinbrenner represented the team during this week's unveiling of the logo for the 2008 All-Star Game, which will be played at Yankee Stadium. Steinbrenner's son Hank is a senior vice president with the team, as is his son-in-law Felix Lopez.
Schiller said he the network being shopped isn't a precursor to the team being sold.
``You are seeing the sons and others getting more and more involved,'' Schiller said. ``I know right now, you are talking about the network, not the team, if they are talking about it at all.''
(Source: Bloomberg.com)
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