The Yankees and Nets announced yesterday their plan "to
merge into a company called the YankeeNets and promised that
each team would continue to operate separately," according
to Richard Sandomir of the N.Y. TIMES. Howard Rubenstein,
spokesperson for Yankees Owner George Steinbrenner: "George
Steinbrenner has made it clear that he won't run the Nets.
If he's asked his opinion, he'll give it." Though a
definitive agreement has yet to be signed, both teams signed
a letter of intent to form the YankeeNets, "in which each
team will be equal partners in a company designed" to
maximize the sale of local cable TV rights, sponsorships,
luxury suites, tickets and advertising. In their 50-50
partnership, the teams will exchange some stock, and the
Nets owners "will contribute at least" $350M from outside
investors. The capital will originate from two sources, the
first being a group led by investment firm Allen & Co. and
the second possibly being real estate developer Tishman
Speyer Properties. Allen & Co. Chair Donald Keough and
Tishman Speyer President Jerry Speyer have been named to the
YankeeNets Board of Directors. Sandomir called the deal
unprecedented in sports, the "first instance of two teams
merging into one company." The "main benefits" of the
merger for the Yankees "seem to be the cash from the new
investors and the leverage a second team could create in
talks to renew" the teams' cable TV deals with Cablevision's
local sports channels MSG (Yankees) and Fox Sports NY
(Nets). Sandomir adds that the creation of YankeeNets means
the end to talks about Cablevision buying the Yankees, "at
least for the foreseeable future." (N.Y. TIMES, 2/26).
WAIT UNTIL THAT DEAL COME ROUND: Officials from both
teams declined to discuss specific financial terms of the
merger, but sources of Stefan Fatsis of the WALL STREET
JOURNAL also said that Allen & Co. and Tishman Speyer "would
contribute several hundred million dollars to the new
company to bridge the gap in value of the two franchises."
The Nets were acquired in December for $150M by a group led
by Lewis Katz and Raymond Chambers, and the Yankees have
been valued at over $500M. The deal must still clear
several "hurdles," as MLB and the NBA have yet to approve
it. Also, "it isn't clear what percentage of the separate
ownership of the Yankees and Nets would be transferred in a
deal, [or] whether the majority control of either team would
change" (WALL STREET JOURNAL, 2/26). The Bergen RECORD's
Vial & Fitzgerald report that the deal values the Yankees at
$700M and the Nets at $150M. They add that Nets officials
"did not give any indication" that the new partnership would
cause either team to relocate (Bergen RECORD, 2/26). In
N.Y., Kerber, Hardt, Elsen & Kuntzman write that Katz and
Chambers will have to pay "an estimated" $200M to buy into
the deal. On Wall Street, Cablevision shares dropped 3 3/16
yesterday, closing at 63 13/16 "on concern that the company
will face steep bills to keep the Yankees in the fold" (N.Y.
POST, 2/26). Pilson Communications CEO Neal Pilson
estimates that Steinbrenner will seek a $1B rights fee for a
10 to 12-year TV deal for the Yankees (DAILY VARIETY, 2/26).
BOARD WALKERS: Members of the YankeeNets' Board of
Directors include: Speyer; Keough; Lester Crown; real estate
developer Jerry Cohen; former ABC Chair Thomas Murphy;
Rubenstein; Harold Steinbrenner and Stephen Swindal, George
Steinbrenner's son-in-law (N.Y. DAILY NEWS, 2/26).
REAX: The Bergen RECORD's Bob Klapisch writes that the
deal "isn't done," and that broadcast-industry insiders
"consider it possible for Cablevision to reenter talks to
buy the Yankees, now that Steinbrenner has made CEO Chuck
Dolan jealous" (RECORD, 2/26). In N.Y., Joel Sherman notes
the name YankeeNets, and writes, "let us hope they put a lot
more thought into this union than the name." Sherman adds
the Nets provide the "NBA cache and cash potential, without
any threat to Steinbrenner's power base" (N.Y. POST, 2/26).
In N.Y., George Vecsey: "Now George [Steinbrenner] has been
rescued from his major problem of needing instant cash. ...
[he] can settle his estate and still leave half the team to
his heirs" (N.Y. TIMES, 2/26). Also in N.Y., Mike Lupica
calls the merger a "marriage of convenience," and writes:
"Steinbrenner gets the new money he craves. Chambers and
Katz buy themselves into society. And both sides think they
end up with a ton of leverage" (N.Y. DAILY NEWS, 2/26).
Also in N.Y., Phil Mushnick writes that while details of the
merger are slim, "One thing is for sure -- You're gonna pay
for it" (N.Y. POST, 2/26). Also in N.Y., Bob Raissman
reports that Charles Dolan and Steinbrenner "parted on good
terms," and that the deal means Steinbrenner "will remain in
complete control of the Yankees, something that eventually
would not have been the case if he sold the team to Dolan"
(N.Y. DAILY NEWS, 2/26). In NJ, Adrian Wojnarowski writes
that people in and outside the Nets "were incredulous over
the ability of the Nets to court Steinbrenner." One Nets
exec: "We thought our owners had a lot of clout, but we just
found out how much" (RECORD, 2/26). Yankees P David Cone,
when asked how the deal was received in the lockerroom: "Go
around the room, and 98% of the players here won't know what
the hell this [deal] is about" (RECORD, 2/26). FSN's Keith
Olbermann: "Just to clarify: the Yankees will continue to
play baseball, and the Nets will continue to do whatever it
is they do" ("Fox Sports News," 2/25).
