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SBJ/December 7 - 13, 1998/No Topic Name
Yankees' deal talks hit a snag
Published December 7, 1998
The on-again, off-again talks between Cablevision Systems Corp. and the New York Yankees may be stuck in neutral, but few experts think the ultimate outcome will be anything other than the sale of the storied baseball team to the media giant.
The same trend that sparked the discussions prevails today: Broadcasters need sports programming. Media conglomerates from News Corp. to Walt Disney Co. to Cablevision are buying teams to keep a lid on surging sports programming costs.
And from the baseball side, rising player salaries are putting pressure on the profitability of even large-market teams like the Yankees.
"The overwhelming logic of this deal is so strong it would be extraordinarily difficult for the parties to walk away," said Dean Bonham, president of The Bonham Group Inc., a Denver sports consultant.
Buying the Yankees would give Cablevision programming control over New York's major league basketball, baseball and hockey teams and would preclude a competitor from entering the market by buying the Yankees or their cable rights.
By putting the Yankees under the company's Madison Square Garden unit, which controls the famous arena plus the Knicks and Rangers, Cablevision could spin MSG into a separate public company, raising billions of dollars.
From owner George Steinbrenner's perspective, Cablevision can pay up to 20 percent more than other potential bidders because of the advantages the company would gain from pooling sponsorships and advertising, Bonham said.
There is logic, however, and there is Steinbrenner. The outspoken owner, who bought the team for $10 million in 1973, is holding out for more management control if the team is sold, according to several newspaper reports.
One of the few factors not expected to be a holdup is the Yankees' price tag, rumored to be in the $500 million to $700 million range. Because Cablevision, whose contract to televise Yankees games expires in two years, would have to pay about that much anyway to renew rights for the team, money isn't expected to be a hurdle.