Showing posts with label Rogers Communications. Show all posts
Showing posts with label Rogers Communications. Show all posts

Sunday, August 12, 2012

Were the Blue Jays doomed from the start?

What went wrong?


The Jays season looked promising enough: a great spring training at 25-7, with good performances by a number of starters, good performances by the starters, and a fairly healthy team, with McGowan the only culprit with a sore foot. The team was stronger than last year, with Brett Lawrie being the regular third baseman, a decent hitting Adam Lind, and a strong Colby Rasmus in center field. Bautista was back, and Encarnacion was also hitting well. Arencibia was back for his second full season, defensively much better. Anthopoulos went out and got proven bullpen in Darren Oliver, signed Casey Janssen to a two year extension, got back Jason Frasor, and acquired Cordero who had 37 saves for the Reds last year, and Sergio Santos who had 30 saves for the White Sox. Things were looking up.

And the fans bought into the hype too, buying 22% more tickets than last year (the rest of the league is up 4%) on the hopes of a team competing in the AL East vs a hurt Red Sox, a rebuilding Tampa Bay, and a mediocre Orioles team.

The team really received a one-two punch that did them in for the season. The one punch was losing three of their starters in one week, which I believe led to the demise of Ricky Romero due to the intense pressure for him to perform (the pressure he put on himself -- after the win at Miami on June 22, he has yet to win a game. The bats came to life however and left the team around the .500 mark with hope really slipping away game by game as they stayed roughly five games back of the wild card mark.

But the #2 punch happened on July 26th, when Arencibia broke his hand and Lind left the same night with a sore back. From that point, the team has hit a breaking point. Add to that outages by Brett Lawrie and Colby Rasmus and you have a team full of not-ready-for-prime time players to fill the spots. It is easy for good pitchers to pitch around a team when you have only four major league players in your line up. Snider's trade away didn't help team morale either.

Now the fans are blaming AA and Rogers for not spending the money on the Jays. Clearly, Rogers is afraid to sign blockbuster agreements. They dumped Vernon Wells' contract (fantastic move) and Alex Rios (good move). Bautista and Encarnacion's contracts are steals and most MLB analysts thing that those contracts are extremely good values for the Jays. They traded away Halladay. And I've explained in another post that the Jays activities represent about 1% of the total action within Rogers Communications, Inc, but the expectation is that they will be profitable. So, the fans are right. The only way that the Jays will spend some money is to build up the team slowly through value, and the team has indeed been making strides in that direction with their payroll slowly on the uptick to correspond with their revenue. The blame is fair, but do you want the Jays to be the New York Yankees? Do you want to spend an average of $63 for a ticket (current is $26)?

My view is that AA took a risk in not signing a veteran onto the pitching staff -- the rotation was too young, with three rookies and new rookies, and a fragile Ricky Romero and Brandon Morrow. His gamble failed. A veteran might have not been a good value on paper, but might have stabilized the rotation. I can't fault AA with the initial bullpen choices. Having both Santos and Cordero imploding was not predictable -- it was just bad luck, and it took Farrell time to realize that Janssen and Oliver was up to the task of closer/setup after giving Cordero a reasonable amount of time to prove himself (and fail). Add to that Perez's season ending injury which complicated matters. The depth at relief also took time to resolve, and the Jays pretty much tried everybody on the AAA and AA farm to see if they were ready -- all kinds of relievers came up from AAA and went back down. Chavez, Beck, Carreno, Coello, Andrew Carpenter, Crawford, Pauley, Richmond -- none were ready. Finally, the Jays settled on Loup and had to trade for Lincoln, Delabar, and Lyon -- because no one from the farm was able to step up to the task in the bullpen. And on the starting rotation, Cecil and Laffey make decent #5 starters to replace Drabek and Hutchinson, but there really was no one of Morrow's calibre that was able to step up to the task.

On the hitting side, Lind failed until his return from AAA. He went on waivers and no one claimed him. No one stepped up to the task of being a star left-fielder, and just went it looked like Snider was up to stay, he was traded for the necessary relievers. There were slow starts by Rasmus, Arencibia and Bautista, and both Escobar and Johnson have be somewhat lacklustre. Only Edwin has really really impressed.

Let's face it though -- the injuries would have been insurmountable to any team. I am sure the Yankees would be on a major slump if they lost Cano (their best hitter), A-Rod, Texiera, Granderson, and Russell Martin. The injuries are the culprit here.

And it is clear that the depth of the farm is not there. Many have come up from AAA and AA to pitch and have failed, necessitating AA to go out and trade Snider and Thames. The AAA hitters who have come up have all failed to impress with the exception of Moises. Had the farm been ready with major-league ready relievers and hitters, the Jays would be all right.

So, you ask the question, did AA make bad acquisitions and overhyped the farm system, or did the players fail the Jays in their performances in the MLB? I would blame the players. The farm system has improved vastly over the years in their records and their independent ranks as prospects. But really, the end indicator of the value of a player is their performance in the majors. So, I can't blame AA for the farm acquisitions, but I will blame the players as a whole for failing to step up at the major league level.

In the end, the Jays season went wrong due to a vast and unheard of number of injuries. And the players really didn't step up before the pitchers went down in mid-June. Besides Anthopoulos acquiring a veteran pitcher in the offseason, I really can't fault him for doing anything wrong. And as long as Rogers continues ownership of the Jays, and they will for a long time, their spending will be conservative in nature. I really believe that the Jays will pull the trigger at the trade deadline if they believe they will make the post season -- the increase in ticket sales, playoff games, and ratings will recover the cost -- it makes economic sense to do so. But it makes no sense to Rogers Media to spend $150 million on player salaries when the team is only pulling in $160 million in revenue. Until that point in time, expect AA to stay the course and make spending decisions based on value, not on emotion.

Thursday, August 2, 2012

Rogers Media and the Boo Jays

Blue Jays and Rogers Media: a connection you can't ignore


Many years ago, media companies began merging into oligarchies. In the United States, for example, General Electric bought NBC. AOL became AOL Time Warner. MicroSoft teamed up with NBC to form MSNBC. Viacom, who owned CBS, bought Paramount, which owned Canada's Wonderland, and for a while, you would watch commercials for Viacom properties while you waited 45 minutes to get on the Bat. Alas, I digress.

Rogers Communications inc. started in the early 1960s as a radio company based in Toronto, starting with CHFI (98.1 FM) and CFTR (680 News). By the late 60s, they expanded to television, and in the early 80s they expanded to Wireless (remember Cantel?).

Then, in the 90s, Rogers bought MacLean-Hunter, and finally, in 2000, they bought the Toronto Blue Jays.

The Blue Jays haven't made the playoffs in the past 11 years.

Today, Rogers has really three divisions that are all tightly related: a wireless division (we all know Rogers Wireless and Fido), a cable division, and finally Rogers Media. Based on last year's results, Rogers Wireless is extremely profitable, with 3 billion in operating profits on 7.1 billion dollars of revenue based on 9.3 million subsctibers. Those of you who say your wireless bill is too expensive are right. The problem is that Bell and Telus won't lower their prices either (the oligarchy). Rogers Cable is pretty profitable too, with 1.6 billion of profit on 3.8 billion in revenue (of course, the competitors won't compete in Canada either) based on 3.75 million subscribers. And finally, there is the Media area, which has just 180 million dollars of operating profit on 1.6 billion dollars in revenue,

What is Rogers Media?

Well, they own and operate CityTV and OMNI (which is why you see commercials for CityTV while watching the Jays). They own 9 specialty channels (including SportsNet) and own pieces of four other TV stations. Television produces 41% of operating revenue in 2011. The Shopping Channel produces 16% of operating revenue as well.

They also produce 54 consumer, trade and professional publications including of course Chatelaine and MacLeans. Publications produced 17% of operating revenue in 2011.

And there's radio with 50+ radio stations across the country, including the beloved Fan590 and the rest of the Fan Radio network, but also 680 news in Toronto.

And finally, there is a division called Sports Entertainment, which are the Blue Jays and Rogers Centre which produced the final 10% of operating revenue.

So as a whole, the Blue Jays and Rogers Centre had about 160 million dollars of revenue of the total of 14.5 billion dollars of revenue, a little bit over 1% of the entire Rogers empire.

One point of all of this is that the Blue Jays operate as part of the great whole of Rogers, and the goal of Rogers, and therefore the Blue Jays, are to be profitable. The Jays are not going to operate at a loss. In fact, they are probably expected to have a profit margin similar to other divisions at Rogers Media. That precludes management from spending big bucks like the Yankees and Red Sox. In fact, the only other corporations that owns an MLB club is Nintendo's majority ownership of the Seattle Mariners and Lerner Enterprises' ownership of the Nationals. What this means is that the people responsible for the pursestrings of the Jays are not really connected to the Jays. The Jays report to Rogers Media. Rogers Media reports to Rogers Communications, and the Jays are really a small part (1%) of the entire picture.

The other point of this is the synergy that exists uniquely within the Blue Jays. The Jays broadcast on the Fan Radio network and on SportsNet exclusively, both Rogers properties. Opinions on the Jays are broadcast primarily on Jays owned media outlets. This stifles the independent voices of the club. Radio analyst Mike Wilner was censored for a weekend for criticizing Cito Gaston. For all other clubs, radio rights are given to a radio network who are free to make comments without fear of censure. The same is true for television rights with the exceptions of YES (Yankees). As a result, the Jays broadcasters are encouraged, whether directly or indirectly, to stay on message, and if they aren't, there is always the suspicion that they are. The Blue Jays radio network and SportsNet will prop up the Jays, as a positive outlook gets more customers, and more customers mean more advertising revenue for Rogers Media, which is the company's mission. Once again, the goal of the Toronto Blue Jays is not to win a World Series. It is to be profitable. Shi Davidi, Mike Wilner, and Scott Carson are paid shills of Rogers, as are the Blue Jays themselves. They're all part of the same club, with the same goal.

For myself, that means that I take everything that comes out of Sportsnet.ca, the Fan 590, or Sportsnet TV with a very critical eye.

Once you realize that the goal of the Blue Jays are to win profitably and that most of the opinions that you hear on radio and TV are just part of the Rogers empire messages, you might understand the workings of the Jays more. Alex Anthopoulos won't buy big talent because it isn't profitable in the short term to do so. The Jays will always sound better than they actually are because the television and radio outlets prop them up.