Name of the Game

by Ed Botti

January 12, 2023

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Last week, Wednesday to be exact, information crossed my desk about a pending business transaction involving two names I know very well. Madison Square Garden Corp (“MSG”) and the Yankee Entertainment and Sports Network (“YES”). Sure enough on Thursday the press release hit the major Media outlets telling us that two of the three New York area major Regional Sports Networks, (“RSN”) YES and MSG, are uniting to commence on a 50-50 joint venture that will be known as Gotham Advanced Media and Entertainment “GAME”.

I’ll say one thing; I do like the name.

Since that point in time I have seen and read many articles and analyses on the joint venture and listened to the talking heads on these very same RSNs praise the deal (you think there is a conflict there?).

Quite a bit of information has been thrown out there regarding the internal benefits each RSN will yield when this deal is consummated.

But the one piece of information I and many other consumers were interested in learning has not been discussed, yet.

More on that to come.

In a nutshell the new digital joint venture’s main objective is to cross market and sell streaming distribution services and technology that MSG and YES have secured from their own evolving online presence.

The CEOs of each RSN, Jon Litner of YES and Andrea Greenberg of MSG will co-chair GAME’s board of directors, with both organizations shouldering equal representation among the directors.

GAME will be positioned to take advantage of shared technology and operational collaborations associated with YES' and MSG's streaming services.

However, it’s not just selling content to consumers, GAME will also offer out of the box and white label digital content distribution services such as platform technology, operational sponsorship and all-inclusive data analytics to third party digital content proprietors pursuing development of their own streaming services so they can then sell live streaming of games to subscribers of cable networks.

The streaming products will be adaptable and capable of distributing locally branded content to meet a client's particular needs.

All good by me. Great business plan!

YES and MSG kicked off direct-to-consumer subscription services in 2023 and will now join forces to market a white-label turnkey platform for other leagues, franchises and broadcasters.

This all sounds great and innovative for GAME.

GAME has not received outside investments to date and have stated that additional leadership appointments are expected in the near future.

Again, sounds great for GAME.

MLB formerly managed MLB Advanced Media (“MLBAM) that offered a similar suite of services to other sports industry content developers, such as March Madness streaming, NHL digital operations, the WWE Network, CBS, HBO and PGA Tour Live, to name a few.

As the industry evolved, MLBAM was spun off as BAMTech, with Disney acquiring a majority stake in 2017. Disney eventually acquired 100% of the property in 2022 at a cost of $3.8 billion.

GAME will focus on direct to consumer distribution services, but is positioned well to diversify to other products, services and features to offer the rapidly evolving digital space.

The two NY RSNs have provided us fans with years of exciting games and memorable moments for the Yankees, Rangers, Islanders, Devils, Knicks, and Nets.

So, what haven’t they told us yet?

Well let’s start with two of my favorite business words; “how” and “much”?

How much more will we be asked to pay to watch our teams play?

As Phil Mushnick of the New York Post eloquently stated this past weekend “Put it this way: If this new alliance between formally hostile and hateful rivals were a bargain, one that would cost us nothing or just a few cents more, that info would have been heralded at the top of the announcement. Instead, all consumer cost considerations were entirely omitted.”

Which is exactly my point.

In my business when we see inequitable situations and distributions in contractual relationships I tell my team “If the words don’t add up, it usually because the truth wasn’t in the equation”.

This situation is a little different, we are not searching for non-compliance or even fraud. But lack of transparency and information more often than not leads us to some form of deception.

Telling us how great something is going to be without telling us the cost is always a red flag.

I am not at the point, and I don’t see it happening any time soon, of cutting the cord and leaving cable TV for streaming. It is all just too foreign to me. Hey, I grew up in the 70’s. Fast cars, great music and baseball games on regular TV. If not, turn the radio on!

Times have changed, but some habits are hard to break.

But what I always look for are trends.

Look no further than the last 12 months. Suddenly (it seems) we lost many Friday night Yankee games to a Peacock. We were asked to pad Amazon’s deep pockets further by putting more of our games on Amazon +, and let’s not forget the debacle of games on Apple TV.

We see the same greedy trend in the NFL. After peppering the entire country with non-stop close ups of Taylor Swift at Chief games, putting the Chiefs on many national televised games, and giving us a taste of what the playoffs might look like, we are now told to pay up again if you want to see Saturday Night’s Chiefs – Dolphins playoff game.

The game will be exclusively on the Peacock app. If you don’t have it, you don’t see the game.

Thanks, NFL.

Not that I would expect anything less from Roger Goodell and his perpetual hands in our pockets approach, even this threw me for a loop.

Keep in mind, Goodell and the NFL have been charging the Department of Defense for those military tributes. You know, those scenes with the gigantic American Flag covering the field?

Thank you for your service. Now pay up!

Classy Move, Roger!

I guess the $18.6 billion U.S. dollars in 2023 revenue wasn’t enough to honor our troops or let us see Mahomes and Kelce vs Tagovailoa and Hill on Saturday Night!

Regrettably, I can see MLB following in those footsteps, or darn near close to it. How long before the World Series become a pay per view?

Next time you hear someone say “Why do I care what they pay the players”? Remember this, someone has to pay those salaries. Any smart business person will look under every stone to find additional revenue and even “gray area” tactics such as deferring monster contracts for 10 years, to cover those ridiculous salaries.

However, at the end of the day the buck will always stop at the feet of the fans. As the owners’ costs of doing business rises (i.e. payroll), so does the fans costs to consume the product(s).

Streaming is just the newest method to achieve the same.

That is business 101 and it will never change.

How much more are you willing to pay so our players can make the money they “deserve”?

For me, zero. I pay plenty already.

Speaking of Ohtani, when his Dodger contract was announced and we learned that almost 98% of it would be deferred for 10 years, one of my first thoughts (besides “this is a scam”) was what do the powers that be in Sacramento, CA think of it?

California has nine state income tax brackets, ranging from 1% to 12.3%, depending on income.

Mr. Ohtani clearly falls within the highest bracket.

The State of California bears the burden of losing out on a significant amount of tax revenue from Ohtani's contract should he relocate after the contract expires in 2033, inasmuch as the substantial majority of disbursements are prospective.

According to the California Center for Jobs and the Economy (https://centerforjobs.org/), the tax loss for California would be $98 + million.

If you know anything at all about California, they like their taxes.

Right on cue, the California State Controller, Malia Cohen, released a statement this week in which she called on Congress to address this matter.

Of course she did.

Whether or not the Controller’s plea for congressional involvement will materialize and amend Mr. Ohtani's future tax status is unknown, to date.

Couple that with the fact that Commissioner Manfred has signed off on the A’s leaving the state for the greener pastures of Las Vegas, and all of a sudden MLB is costing the Golden State quite a bit of revenue.

I am sure that did not sit well with the California Department of Finance.

One has to wonder what sort of back office deals were cut with Manfred and Governor Newsome.

I am not a gambling man, but I would bet the odds on that are pretty high.

A couple of 2024 dates to mark on your calendar.

June 7-9: Dodgers @ Yankee Stadium.

August 18: Tigers vs. Yankees @ Williamsport, PA for the Little League Classic (Tigers are home team).

Finally, can the “has been” and over rated Jonathan Papelbon please go away. You looked like a fool when you shot your mouth off at Bryce Harper before he clocked you, and you still haven’t learned to keep your mouth shut. If Alex Verdugo and Alex Cora have a problem with each other, let them settle it like men. No one outside of Faneuil Hall barely remembers you or cares what you have to say.

Only 32 Days until Pitchers and Catchers report to Tampa on Valentine’s Day! Lets hope some of those Pitchers reporting to Tampa are yet to be acquired by the Yanks! Because as is, their rotation does not scare anyone in the American League.

RIP Bud Harrelson.