Baseball Prospectus - Chat with Maury Brown

Chat: Maury Brown

Welcome to Baseball Prospectus' Thursday September 06, 2012 3:00 PM ET chat session with Maury Brown.

BP business expert Maury Brown takes all your questions about the financial side of the game (and all the other sides, if you ask him).

Maury Brown: Hey all, Hope your Thursday is rockin'. Let's get this party started. Remember, you can catch my Bizball articles each Monday here at BP...

Mitch (Portland, OR): I am interested in going to the winter meetings to network and possibly interview for positions with executives who I have kept in contact with, but don't want to have to enroll in the job fair. Would I still be able to attend?

Maury Brown: Great question... The answer is, there's nothing really preventing one from going to Nashville and hanging out at the Opryland Hotel. Now, getting an interview with an exec is a different matter. You'd have to set that up yourself and meet that way. And, while the job fair does have some MLB job postings, the majority of MiLB. In other news... lot's of BPers will be there, I for one. Make sure and look us up when you get there!

Ashitaka1110 (Houston, TX): I've heard conflicting reports about the Astros' financial situation. Some say they're fine and, aided with new RSN money, could add $30-$50 million in payroll this off-season. Others say Jim Crane took on a ton of debt and has doomed the whole franchise to pauperdom for the next ten or fifteen years. Help?

Maury Brown: Well, as strange as this sounds, both are correct. There is a good sum of RSN money that will come in. It's also true that the sale from Drayton McLane to Jim Crane was highly leveraged. So, you get into this question... "How much of the RSN money is going to pay down debt?" To which I answer, "You'll have to ask Jim Crane." While there's nothing preventing it as part of the CBA, the league frowns on new money being used to pay down debt. You can look to Tom Hicks and Frank McCourt who tried to ink broadcast extensions to pay down debt only to have Selig shoot that down.

baseballjunkie (CA): Is this just the tip of the iceberg of the Dodger spending spree, and do you think they will regret the moves they have made so far in 2012?

Maury Brown: "Regret" isn't something that seems likely. "Regret" only comes if there's not a calculated risk involved, and in talking with Stan Kasten, the club understands those risks. The answer on the day of the trade was, "We're just trying to put the best team on the field that we can." Now, whether this trade does that is debateable. As to whether they're "done"... that depends on what happens the rest of the season. If they see a need to be agreessive in the free agency space, I would expect it.

Alex (San Diego): What do you think the red soc wil do this off-season with the extra payroll flexibility they just achieved through the trade with LA. Do you see them going after Hamilton of Grienke(even with concerns of these two guys personality issues)?

Maury Brown: The free agency crop isn't the greatest, so moves will likely come through trades. For them to retool quickly, pitching is a concern. And, the issue there is, you're seeing more and more clubs wrap-up talent to longer contracts, which extends seeing some of the best players in the free agency space. They could get aggressive, but one might ask if they can get retooled in sweeping moves in one off-season. I'd say, no.

schmuckdonald (Liverpool, UK): Any chance John Henry et al look to pull out from the Red Sox?

Maury Brown: This one is easy... No.

baseballjunkie (CA): Other than San Jose, are there any markets that could support an expansion team or a relocating franchise?

Maury Brown: Tough question that needs clarification... There are markets that on their own could support clubs. The issue is the ability to garner shiny new stadiums at mostly or all taxpayer expense, plus being able to get around the nasty issue of infringing television territories. Moving within a club's territory is easier than moving out of them. There's a reason that the A's and Rays haven't aggressively mentioned places like Portland or Charlotte. Besides having market size issues, difficulty in landing stadium funding, etc, the Mariners would pitch a fit in Portland, and in places like Charlotte, you get into the Nationals and Orioles. And, don't ask about Vegas... there are six clubs that call the market theirs. It's a mess, and causes real problems.

scareduck (Los Angelish, CA): Are there some shafts of daylight emerging in the long, dark night of MLB's absurd blackout rules? Why doesn't someone point out that MLB Gameday Audio doesn't interfere with local radio revenues?

Maury Brown: The timing on this question is impeccable... The answer appears to be yes... and no. In that I mean, this is a video clip that has MLBAM CEO Bob Bowman interviewed. In news that should make any diehard fan happy, he says they are working to stream games, without blackouts! That means that MLB.TV could see blackouts lifted. But, I expect that the blackout issue will remain on television. As to the blackouts lifted for streaming video, check the 2:30 mark http://youtu.be/Lvbpl8-eghI

Ashitaka1110 (Houston, TX): Can you give us a brief rundown of the hubbub in Oakland over their new stadium? What are the chances they're allowed to build it in San Jose, or elsewhere?

Maury Brown: I wish I could answer this one definitively. I wish the situation were over, quite frankly. It really boils down to the territorial rights that the Giants now have with Santa Clara Co. and whether they feel there's any indemnification that will make up for losing San Jose. To date, that answer has been no, and the owners don't seem in a hurry to press that issue. As one exec put it, "If it can happen to the Giants, what's to keep it happening elsewhere like Northern New Jersey?" The fact that we've come back to investigating Oakland near Jack London Square means that there are efforts. But, the location has concerns, and to date, there's nothing solid on that front... I'd say we're still asking these questions when the season starts next year.

Ashitaka1110 (Houston, TX): How are the teams in the competitive balance draft lottery selected? How the heck did clubs like the Reds, Tigers and Cardinals get in on this but not the Astros or Twins?

Maury Brown: The 13 teams entered into the first-round lottery were the D-backs, Orioles, Indians, Royals, A's, Pirates, Padres, Rays, Reds, Rockies, Marlins, Brewers and Cardinals. That was based on the 10 smallest-market teams and 10 lowest-revenue teams. I'm guessing St. Louis gets a break by market size. We can debate whether that's equitable

comish4lif (Alexandria, VA): Maury, the market reset between the Nats, Orioles and MASN was supposed to be resolved months ago. Have you heard anything about this? Off the top of your head, how much do you think the Nats will get from MASN? How much would they get in an open market without the MASN encumbrance?

Maury Brown: I haven't heard anything other than a panel continues to try and figure out a solution. The Nationals have a "reset" provision and they're looking at the market now and saying, "Hey, we'd like about $100 million annually." The problem is, the Orioles also get a reset, and with it, MASN is probably woozy trying to figure out how to get approx. $200 million in rights fees to the two.

As to the open market... I'd say between $2-$3 billion total over 20 years. It's going to likely be a bit less than the what the Rangers and Angels pulled, but above the Astros and Padres deals.

Brad (Orange): If you are the Angels do you pick up Haren's option for next year?

Maury Brown: It's a $15.5 million club option with a $3.5 million buyout. Haren's WARP last year was 3.0. So far this year? 0.8. WHIP was 1.34 last season.... 1.40 this. I don't pick up the option.

Charlie (San Francisco): How do you see the battle over San Jose between the Giants and A's playing out? Do you think the commissioner will ever step in on this matter?

Maury Brown: Not unless there's consensus with the owners. Bud's not going to call a vote if the votes aren't there, and they're not. Bud can only try and steer owners in a particular direction. Remember, it's the owners that control the destiny in this matter. It requires them to approve the move, no matter which way Bud leans. Now, Selig has pull, but for the time being... not enough to force a move to San Jose.

Chris (KC): Would you expand just a bit further on the A's / Giants / San Jose situation? Why would there not be enough votes amongst the owners? And, at the risk of asking a naive question, why would they not feel that this is the best thing for the A's and baseball?

Maury Brown: You're asking whether the league's owners are willing to say, "We're now willing to force a move into a defined physical territory. We now will never worry about this happening to us." In other words, when you do a move such as force the move, you're asking whether that precedence will come back and bite you.

Ashitaka1110 (Houston, TX): Apparently there's now a set floor in terms of payroll that all teams must meet, and as it stands, it looks like the Astros would be well under that if they stood pat this off-season. How much payroll would they have to add (roughly, given the uncertainty of the arbitration guys)? Do you see them trying to fill some holes with lower-cost signings like a Joe Blanton, or getting splashy?

Maury Brown: The set "floor" is the minimum payroll with the exception of how much less a player can get in a new contract. The Astros are going incredibly skinny here, but there's nothing stopping them. I'd expect this to be a lull that's actually 3-years in the making (remember, the player payroll shedding occurred before the sale to Crane to make the sale easier on him).

19bravesyy (Pensacola, FL): With what you just said about expansion, where would you move a team ?

Maury Brown: Well, I was speaking to relocation (expansion doesn't seem likely anytime soon). Based upon the thorny situation with television territories, I would be forced to move within my own territory. That makes things very limited.

One more question, then I have to run...

comish4lif (Alexandria, VA): Doesn't the MLB franchisee rules (or whatever they are called) specify what clubs get as their areas of exclusivity. Why would the Nats/Orioles be able to have any influence on a team moving to Charlotte (for example)? I read that to mean that a team has exclusivity in the county/city it is located in and any city/county that touches the same. Shouldn't everything else be at the discretion of MLB?

Maury Brown: You hone in on a little-known area... There are defined physical territories that are outlined in the MLB Constitution. But, as witnessed with the relocation of the Expos to DC, club owners guard their broadcast territories like grim death. And, it is now harder than ever. Look at these TV deals... Rangers and Angels ($3B ea), Astros and Padres (approx $1.6B), Dodgers will be $4-$5 billion. These are based on the territory they broadcast into. And, now you have a club wanting to cannibalize that? Of course clubs are fighting it. It's why the blackout issue continues to languish. It's one important reason why expansion in the US is almost impossible. Television is a great benefit, and a curse to the likes of the A's and Rays.

Maury Brown: Thanks everyone. It was a great chat. I hope to see you in Nashville at the Winter Meetings, or at a postseason game. Until next time... keep the lights on for me.