Rather than waiting around until 2015 to reopen their 10-year contract with broadcast partner ROOT Sports, the Mariners re-opened it in a big way Tuesday — they bought controlling interest in the flagging regional sports network.
The cost of the deal was not announced, but a press release said the contract to televise Mariners games runs through 2030. DirectTV, the owner of ROOT, will be a minority partner and continue to provide its assets and operate under the ROOT brand. It will provide coverage of “other professional, collegiate and high school sports programming,” the release said.
Apart from cost, the deal is significant for the future of the franchise for at least three reasons:
- It allows the Mariners to keep their own broadcast revenues, rather than take a flat fee of $45 million annually from ROOT over the contract’s 10 years, a deal that looked good in 2010 but weak in 2013;
- The Mariners control their regional-game-broadcast fate, which can include building out their own sports network. Or it could sell the rights to the highest bidder, such as Comcast/NBC, which has the rights in Portland to the NBA Trail Blazers, or to Chris Hansen, the investor who proposes to build a basketball/hockey arena next door to Safeco Field to house the return of the Sonics, which could be decided Friday;
- Should the club’s 55 percent owners, Hiroshi Yamauchi of Japan and Nintendo of America in Redmond, decide to sell the franchise, owning the broadcast rights substantially increases the club’s sale value.
“This is great news for the Mariners and for sports fans in the Northwest,” said Bob Aylward, Mariners executive vice-president for business operations, in a club release. “We are excited to continue our partnership with DirecTV Sports Networks in this new way. We are investing to own a majority share of the new venture, and committing our rights well into the future, confident that this will maximize the value of our television rights and, more importantly, provide the resources to remain competitive on the field for many years to come.”
DirecTV Sports Networks President Patrick Crumb said, “This is an opportunity to strengthen and extend our relationship with the Mariners for decades while continuing to leverage (our) overall resources and expertise for the benefit of our new partnership with the Mariners. This new structure will truly align our interests and allow us to work together to maximize the potential for the network and our coverage of Northwest sports.”
The release said New York investment bank Allen & Company advised the Mariners on this transaction, led by Steve Greenberg, who has extensive experience in the sports television industry. Greenberg said, “With the formation of this new regional sports network partnership, the Mariners have taken a significant step forward. MLB clubs that own a substantial stake in their own RSN’s tend to be among the strongest and most stable franchises in the league.”
The deal struck now clarifies the future should the Mariners be sold. The likeliest outcome is a shift of shares among current owners, as opposed to selling to outsiders. Chris Larson, who joined with Yamauchi in 1992 to buy the club, has highest portion of ownership, about 30 percent, among the 16 American minority owners. However, a divorce has curtailed his ability to buy the majority interest.
The owner who is likeliest to emerge is John Stanton, a wireless-industry kingpin and chairman of the board of Clearwire. Stanton also served as chairman and CEO of VoiceStream Wireless, which was later sold to Deutsche Telecom and became T-Mobile USA.
He purchased 10 percent of the Mariners from original owner John McCaw nearly a decade ago. He has the wealth, passion and acumen to make the Mariners successful.
“He’s in the Nordstrom mold of owner,” said someone who is acquainted with Stanton, referring to the widely praised original owners of the NFL Seahawks from 1976-88. “He’s smart, he’s low-profile and he loves baseball.”
As for ROOT, it was hit by the loss of all Pac-12 programming when the conference created its own network in August, and hurt by the long decline of the Mariners’ baseball fortunes, which included last-place finishes in seven of the past nine seasons. ROOT has had numerous layoffs in recent years. It produces little of what’s known as “shoulder” programming around live-game telecasts, and has a minimal online presence compared to other RSNs run by Comcast and Fox.
ROOT is one of three RSNs owned by DirecTV. The others are in Denver and Pittsburgh. But RSNs don’t really fit with DirecTV’s corporate direction as a content-delivery system, not a content creator or owner. A minority position in Seattle would create a passive role for DirecTV.
Since current Mariners CEO Howard Lincoln, 73, owes his position to Yamauchi, 85, who has never seen a Mariners game, he would probably retire upon sale. But for now, he has helped to negotiate a shrewd maneuver that puts the Mariners in a better position to exploit the TV-rights fee bonanza that has already benefited three rivals in the AL West: Anaheim, Texas and Houston.
And it means that if Hansen wants to help create a dynamic RSN for the Sonics, whenever they return, he likely would have to knock on the door of the Mariners and their valuable 162 games of programming. The club steadfastly opposed the location of Hansen’s arena, saying it would worsen an already bad situation with traffic and parking.
It might be a different story with the Mariners if Stanton were in charge. He owned a significant portion of the Sonics when they were sold to Clay Bennett in July 2006. He voted against the sale, but Howard Schultz won the board vote 5-4, which led to the Sonics departure to Oklahoma City after the 2008 season.