Charles Dolan, the reclusive chairman of Cablevision Systems Inc., has a crazy, scary, beautiful concept. He’ll buy all the New York sports teams he can get his hands on and the television rights to those he can’t. And then, well, every Joe Sixpack fan in the New York metropolitan area will have no choice but to pay tribute to the Dolan Empire if they want to watch their favorite millionaires spit, grab and bleed. For sheer chutzpah, you probably have to go back to the (old) Gilded Age, when New Yorkers Jay Gould and Jim Fisk managed to corner the nation’s gold market, a neat and lucrative trick that required federal action to undo.
Mr. Dolan’s latest jaunt down Monopoly Lane has taken him to Flushing, Queens, headquarters of the hottest team in baseball, the Mets. Less than a year after Mr. Dolan nearly bought the Yankees, he’s on the verge of putting down between $400 million and $500 million for the right to pay the rest of Mets’ All-Star catcher Mike Piazza’s 7-year, $91 million contract. Mr. Dolan, unlike Gould and Fisk, apparently won’t have to worry about pesky Federal regulators, even though he already has a corner on New York’s huge sports market.
The Mets’ owners since 1980 have been Nelson Doubleday and Fred Wilpon, old-fashioned athletic patriarchs who would think nothing of hanging around the batting cage and bantering with the well-paid staff. They are both hard-core baseball men, but by early August, they very likely will find themselves signing over the team to a man who regards baseball not in Ken Burns-like terms, but as a dependable source of programming.
“They’re a distributor looking for content,” George Daly, dean of New York University’s Stern School of Business, said of Cablevision. “This deal makes sense for them because it creates an assured source of programming supply.”
At 72 years old, Mr. Dolan is part of the new breed of athletic supporter, that is, a corporate-entertainment type who wouldn’t know how to talk to Mr. Piazza about the art of hitting behind a runner. Instead of passion, the new breed brings an acute sense of the money to be made by exploiting the obsessions of fans with disposable income and a cable connection. Mr. Dolan, who saw the potential of cable TV more than 30 years ago, certainly fits the profile, as does Rupert Murdoch, whose recent purchase of the Los Angeles Dodgers was hardly motivated by fond memories of the Boys of Summer. Wouldn’t you know-Mr. Dolan and Mr. Murdoch are partners in a series of Fox Sports cable channels in 22 big-league markets.
The specter haunting this purchase is that of pay-per-view, which many sports observers regard as inevitable as players’ salaries and other costs continue to escalate while cable TV moguls like Mr. Dolan purchase teams for their programming value. “There’s always been concern that as these prices for teams get higher and higher the only way to generate revenue is to look for something outside the historical model,” said Christopher Dixon, a media analyst for Paine Webber. “It suggests with Cablevision that you’re going to be looking at some kind of pay-per-view model.” So if you want to see the Mets on television in 2005, you may have to pick up the telephone and place an order. Just like PPV pornography!
The purchase of one of New York’s baseball teams would be the culmination of Mr. Dolan’s 20-year campaign to control the region’s sports programming. Cablevision already owns television rights to the Mets, Yankees, Rangers, Islanders, Devils, Knicks, Nets and Liberty-all the major teams in the tri-state area (sorry, professional soccer doesn’t qualify) except the two football teams. Their television rights are held by the broadcast networks that have deals with the National Football League.
But Cablevision’s $500 million deal with the Yankees expires next year. Last fall, Mr. Dolan decided that rather than pay even more to renew the rights, he would simply buy the team from George Steinbrenner and thereby secure the rights in perpetuity. It didn’t work out, and so he turned his attention to the other baseball team in town.
For Mr. Dolan and Cablevision, the deal is a no-brainer. Under its current contract with the Mets, Cablevision could pay the team as much as $450 million in television rights over the next 20 years. The same amount of money will buy the team outright. Said one analyst, “It’s like deciding where to live. Typically you’re better owning than renting. And there’s tremendous cross-marketing opportunities.” The deal would provide Cablevision with thousands of hours of programming for its two local cable sports channels, MSG Network and Fox Sports New York. Without baseball, a sports channel is forced to sneak by with weightlifting contests, arena football and stock-car races to fill in the hours between hockey and basketball games.
A Net Gain?
Mr. Dolan’s proposal to buy the Yankees for as much as $700 million hit a wall when Mr. Steinbrenner was reluctant to cede complete control of the team. Mr. Steinbrenner eventually spurned Mr. Dolan and merged the Yankees’ business operations with, of all unlikely partners, the New Jersey Nets, one of the National Basketball Association’s least-successful franchises.
Some of the same issues that stopped the Yankee deal are complicating negotiations over the Mets. Mr. Dolan’s offer has become an emotional issue for Mr. Wilpon, who insists that he and his family retain control of the team’s day-to-day operations of the team. Mr. Wilpon’s brother-in-law, Saul Katz, is on the Mets board of directors, and Mr. Wilpon’s son Jeff is the team’s senior vice-president and is in charge of Mr. Wilpon’s dream of building a new stadium adjacent to 35-year-old Shea Stadium. According to one report earlier this month, talks broke off when Mr. Wilpon felt he would not be getting significant control of the club. Shortly thereafter, however, Mr. Wilpon reconsidered and returned to the negotiating table. Now a deal is set to be announced following the major league trading deadline on July 31.
Mr. Wilpon declined to comment on the status of the talks. Dave Howard, the Mets’ senior vice president of business and legal affairs, said only that “we’ve had a series of discussions. Talks are ongoing.”
Like a lame-duck politician, Mr. Wilpon seems to be thinking about his legacy as Mets’ co-owner, and a large part of it will take the form of the proposed replacement for Shea Stadium. Mr. Wilpon had a hand in its design; not coincidentally, the Mets’ new park is a recreation of the legendary home of the Brooklyn Dodgers, Ebbets Field. Mr. Wilpon is a Brooklyn native old enough to remember boyhood trips to Bedford Avenue to see the borough’s legendary team. The new stadium would have the intimacy of Ebbets Field, along with a retractable roof and natural-grass playing field built on a tray that would slide under the grandstand to accommodate non-sports events.
The Mets will need considerable financial help from the city to build their ballpark, which they’ve budgeted at $500 million. “We are in negotiations with the city and city officials,” Mr. Wilpon said. “I would say we are hoping to finalize something by the end of the year. The contribution from the city would be consistent with what other places around the country have received.” City and state governments have typically shouldered 75 percent of the total cost for new stadiums.
A Field of Dreams
The new stadium has become something of an obsession for Mr. Wilpon, who unveiled the design the day after Mayor Rudolph Giuliani announced a plan to spend $600 million on new stadiums for the Mets and Yankees. That would likely require the Mets to come up with $200 million on their own. And that could be where Mr. Dolan comes into play. Marc Ganis, a Chicago-based sports business consultant, noted that “Cablevision would have a much easier time in securing financing. They can take more of the cost and they can borrow at a lower interest rate,” he said. “But $200 million would be a problem” for the current Mets’ ownership, he added.
And then there’s the supposed brittle relationship between Mr. Wilpon and Mr. Doubleday. Mr. Wilpon, whose father ran a funeral parlor on Coney Island Avenue in Bensonhurst, is a street kid who was a pretty good ballplayer in his youth. He jumped at the chance to buy 13 percent of the club in partnership with Mr. Doubleday in 1980. The team’s price tag was a quaint $21 million, which these days would pay for the services of three All Stars for one year.
While Mr. Wilpon is tied to the game as a player and fan, Mr. Doubleday is tied to the game’s reputed founder, Civil War general Abner Doubleday. Mr. Doubleday’s grandfather, Frank Nelson Doubleday, founded the Doubleday publishing empire in 1897.
Upon becoming a co-owner, Mr. Wilpon immediately established his presence in the day-to-day operations of the club. Mr. Doubleday seemed more content to remain in the background. Mr. Wilpon is more conservative with his money, while Mr. Doubleday had no problem approving and encouraging last year’s budget-busting $91 million offer to Mr. Piazza. When Mr. Doubleday attends a game he sits in a field box or in an owner’s box above the loge section on the third-base side, while Mr. Wilpon sits on the first base side.
In 1986 an already uneasy relationship between the owners grew more tense when Mr. Doubleday’s company, Doubleday & Company, was bought out by the German company Bertelsmann A.G. As a result of the deal, Mr. Doubleday was forced to sell his company’s shares to himself as an individual. But Mr. Wilpon’s lawyers caught Mr. Doubleday on a technicality, noting that their ownership agreement stipulated that if one of the partners sold his share of the team, the other would have right of first refusal. As a result Mr. Wilpon upped his stake in the club to 50 percent. Mr. Doubleday reportedly never forgot the slight.
Mr. Wilpon disagreed with that interpretation. “That’s completely erroneous,” he said. “In 1986 I urged Nelson to be an equal partner of the new ownership. At first he didn’t know what he wanted to do. At that point I urged him to be a 50-50 owner with me. He did and it’s been a successful partnership.”
But it may be about to end.
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