MLB commissioner hints at Montreal, Mexico City expansion teams, someday

MLB commissioner Rob Manfred was asked about baseball expansion on Thursday (on a White Sox broadcast, for some reason), and said “growth businesses tend to expand” but that “I would love to see us expand” and “my personal, sort of, frontrunner would be Montreal or Mexico City.” Which, naturally, got people in Montreal and Mexico City all excited.

Manfred did say he wanted to settle on a new labor agreement and resolve the Oakland A’s and Tampa Bay Rays stadium situations first (for those not following along: the situation is that the A’s and Rays owners want new stadiums, and nobody’s offering to pay for them/provide land for them yet), which all makes sense. Still, you’d normally think that a league commissioner would be more hesitant to identify frontrunners without demanding that stadium deals be in place first. Possible explanations are: Things are so preliminary around expansion that Montreal and Mexico City need carrots more than sticks at the moment; MLB is more excited about potential expansion fees (and/or wooing TV partners with the possibility of expanding into new markets) than about shaking down cities for maximum stadium money; or Manfred just isn’t very good at this whole extortion racket.


78 comments on “MLB commissioner hints at Montreal, Mexico City expansion teams, someday

  1. So what’s the problem here?

    I mean, what could possibly go wrong with building a stadium in Montreal?

    • You’re right, the last stadium we built in Montreal (Saputo Stadium) and the last one we renovated (Percival-Molson Stadium at McGill) were great success and are amazing stadium within budget.

      And if we follow Quebec city Videotron Center Master Plan, the construction costs are under the original budget.

      So what could possibly go wrong?

  2. Montreal is a no brainer. The mayor of Montreal has already given his “business” case to Manfred exactly a year ago in a closed meeting – citing location and potential financing plan for the new stadium. In addition, investors for the team have also been identified. The plan for Montreal is in-flight… either relocation or expansion.

  3. I think also the fact MLB still profits off Expos merch and the success of the Blue Jays pre-season games also helps show them theres still money in Montreal. Thats why I think he even named Montreal: to make the fans think they can still get back the team (so they keep spending money on MLB), and get potential owners the belief they can have that team (for the right price)

  4. Montreal would make a very good MLB market — would probably slot in as a lower-mid-sized market in terms of fan support and TV money, though exchange rates will play a factor there, obviously.

    The question is whether MLB sets the expansion fee so high that Montreal owners feel like they can only recoup their investment if they get public funding of a stadium, which isn’t likely to happen. I have as much affection for the Big O as anyone, but even I don’t think it’s a viable MLB stadium.

    • Neil, you need to spend more time in Montreal.

      1. The stadium site will be next to Bridge-Wellington REM (Electric Light Train) station in Goose Village, a $5.5B investments from CDPQ and Federal/Provincial governments. I repeat, I-N-V-E-S-T-M-E-N-T-S (subordinate capital, Finance Value Captation, …) with ROI. And that only Phase 1 of REM project. Stay Tuned!

      2. REM needs people (people using the train) in order to make it profitable. So CDPQ and governments needs investments around all 24 REM stations in order to make sure the train is profitable. A baseball stadium is an example of such investment required in order to add more people to use the train.

      In Dix30, they already announced a $1B investment that will be around the REM station (private investment).

      It’s all about ROI. For private company and for governments.

      3. Who said in Montreal that a stadium must be funded by public money? You did. I didn’t.

      There are several funding scenarios on the table (immigrant-investors, subordinate capital, crowd funding, …), most of them could be used for infrastructure around the stadium (not for the stadium itself on Goose Village site, next to Peel Basin on the other side of Griffintown), none of them is a public funding one like most US cities are involved with.

      Finally, remember one important thing: only 20% of the information regarding the baseball/stadium project in Montreal is available in the English media in Montreal/Canada/USA. 80% of the information is in french and barely covered by english media. That’s a fact and this is why lot’s of people dont really understand what is going on even if they think the RELIABLE information source told them something.

      • If Montreal wanted to use immigrant-investor money (or crowd funding? Really?) on a baseball stadium in lieu of taxpayer money, that would be fine.

        However, baseball stadiums are among the lowest-return “investments” on the market these days, because MLB owners expect that the revenue generated in the stadium–regardless of stadium ownership–will go to the team/team owner.

        Building a baseball stadium to (maybe) make a public transit system closer to breaking even isn’t a good use of public (or private) funds. Sounds like the development is great and the right thing to do for ridership is to develop the stadium parcel to have even more people and everyday activities there–not just 80 days of stadium activities.

        • As I wrote, the REM investment (phase 1) is $5.5B, way more to come just for the REM. As for investments for hotels, offices, … in Goose Village, Griffintown, … $1B is announced in Dix30, more will be announced along the REM line.

          CDPQ could also be interested to fund a stadium, it’s another way to add more trafic to the train line and ultimately, to their ROI. CDPQ is investing $3B out of $5.5B in this phase only. So add few more hundreds of millions of dollars to have a stadium, that could be part of the bigger picture. Keep in mind CDPQ assets worth $248 billion CAD (31 December 2015). A stadium is pocket change for them if Bell Media don’t want to pay $500M with their $5B budget not spent for the NHL TV rights.

          Finally, I’ll give you another hint: Bronfman is the owner of Claridge. Claridge is a major investor in condos/offices in Griffintown. Having a stadium in Goose Village will increase the value of their real estate investments.

          • That’s all fine.

            Again, if the owner of the stadium and the owner of the team aren’t the same entity, there is no purpose in “investing” in a stadium. Teams want expensive stadiums because (in the right market) they create a lot of revenue and the teams want the revenue for themselves. Which is why either the public pays for and “owns” the stadium (without the revenues) or the stadium builder gives away the revenues, which makes it more of a gift than investment.

            I think if I’m an institutional investor charged with maximizing pension fund revenues, an MLB stadium is the last place I’d look for parking my customers’ money.

            Highly doubtful that stadiums significantly increase property values. Of course, if your baseline is to take highly sought after property in a hot market, property values are going to go up. Which means “ROI” comes from selling more product, not giving it away to MLB.

            I have no more idea how this will end up than anyone else, but I will say that the devil is in the details when people have to actually spend their own money. The whole “make money from building a stadium” plan hasn’t worked out in very many places.

          • Which is why I brought up the expansion fee, and said if it’s set too high, you risk the team owners not being able to turn a profit without stadium subsidies. Which is another way of saying: If MLB thinks it can get $1 billion for an expansion team because it’s counting on a free stadium with all the revenues going to the team owners to provide them with ROI, then Montreal is in trouble.

          • The most likely scenario in Montreal is what Rogers did in Toronto. A telecom group (Bell Media) that owns several teams/stadiums. NBA team is the likely next step after MLB considering the Bell Center (Molson & al.) is supporting the NBA group in Montreal.

            And mayor Coderre is bold. Private sector need to invest into a baseball stadium. But governments need to support the project. Because ultimately, they will get benefits from it (tangibles and intangibles benefits).

            Time will tell.

      • I just spent a week in Montreal last summer! Went to a Women’s World Cup game (at the Big O), ate at my favorite vegetarian Thai restaurant, saw some Jazz Fest. It’s one of my favorite cities, and could certainly support an MLB team, but it would be a mid-sized market at best — which isn’t an insult, it’s just not more lucrative than, say, Phoenix.

        As for a stadium being a loss leader for attracting transit riders, that was a huge deal in about 1880, when streetcar owners would buy baseball teams and build stadiums at the end of their streetcar lines to collect all the nickels. I haven’t heard it suggested as a business model much since then.

        • Neil, I suggest that you read this study on the economic impact of having a baseball team (and a stadium) in Montreal. Here is the summary.

          http://www.ccmmdev.com/baseball/analyse_retombees_baseball_131212.pdf

          FINANCIAL AND ECONOMIC IMPACT
          of the potential return of the Montreal Expos
          Study conducted on behalf of the company Homerun Montreal Project and the Chamber of Commerce of Metropolitan Montreal

          The Conference Board of Canada – November 2013

          The economic impacts

          The construction of a new stadium would help sustain 1,900 jobs a year of construction and a total of $ 470 million of GDP.

          Montreal inherit two-thirds of economic benefits. Over 80% of the benefits would be felt in Quebec.

          The operation of a stage, as well as the equipment and the team’s support services would result in the creation of 825 direct jobs and will support around 1 600 jobs in total, taking into account the indirect jobs and induced. It would inject $ 96 million into the Quebec economy.

          The increase in tourist flow in Quebec would result in additional consumer spending of about $ 50.8 million to $ 58.1 million per year.

          This wave of tourists will support between 630 and 720 jobs per year.

          The financial impact

          The construction of a stadium should generate revenues of approximately $ 55.6 million for the Government of Quebec and $ 51.3 million for the federal government.

          The operation of the stadium, as well as support services and equipment ensuring the maintenance of the baseball team, would generate revenues of $ 19.6 million per year for the Quebec government and $ 18.3 million per year for the federal government.

          The revenue generated by the tourist inflow related to the coming of a baseball team could reach between $ 6.3 million and $ 7.2 million per year for the Quebec government and between $ 6.4 million and 7.3 M $ for the federal government.

          • I’m going to Montreal on vacation, and I’m going there because it is a really nice city with great food and great things to do. You seem to be doing pretty well with that model, even without baseball, so maybe Montreal should emphasize spending its money on being a well-run, elegant, interesting place to visit and not merely the location of a baseball team.

        • I could read it better if you sent the English translation. (Pretty much all I’ve retained from high school French is the word “fauteuil,” which doesn’t come up that much.) That said, throw a rock and hit the nearest economist and they’ll tell you that anyone who thinks that a baseball stadium, will generate $40 million a year in new revenue for the provincial and federal governments much be smoking some funny maple leaves.

          • Unfortunately, the original document is in French only.

            Like I did, you can user Google Translate to translate section by section. I just posted the summary.

            https://translate.google.com

  5. No need for expansion. Just move the Rays to Montreal and you have best case scenario. Expos and Jays in the same division would be a great rivalry. Too bad the A’s were blocked from building a new stadium in San Jose. That would have solved their stadium issue and kept them close to their fan base.

  6. I don’t think Montreal is that much better a market than Tampa Bay. And if he wanted to build a stadium with his own money, Sternberg could do that right now in Tampa.

    • Neil – Montreal has more people, more people with disposable income (read, less geriatrics), more corporations, more tourists, two language streams for TV revenue – not to mention a better baseball history. So, overall, Montreal is already a much better market than Tampa.

    • Montreal is ~4m people in the metro area, Tampa Bay is ~3m. But of course, the former number is metric people.

      • That’s still a 1 Mn+ MORE people. And if you remove the old geezers from the Tampa Bay region, they’d be left with 10 folks…

      • I was always happy to cross the border at Buffalo on the way to Toronto. That meant we could travel in km/hr instead of the slower and longer MPH. Metric is much faster.

        You would be amazed at how many people will buy into that. I have admit I never worked out the metric person convertion before this.

        Back to the subject at hand, it is also possible that Manfred was speaking off the top of his head and really wasn’t trying to make a statement. Figuring out Oakland and St. Pete are number one through ten on his list. I’ll bet next will be replacing those “aging” stadiums from the early to mid 1990s, which are quickly coming up on a ancient 30 years. Somewhere below that is Montreal and Mexico City – right above Havana.

        BTW, whatever you did to make appending with a phone easier is working. Thank you!

        Andy

  7. Montreal can land a much bigger TV deal than Tampa. Bell, which lost the NHL to Rogers and TVA for the next dozen years, would probably be willing to pay a lot of money for Expos baseball. Of course none of this matters if Tampa is willing to build the Rays a new stadium. As we’ve seen with previous Florida teams (Marlins and Panthers), they have no problems spending tax payer money on sports.

    • Not sure about the first point, James.

      Tampa’s long term deal (which I think is about $18m/yr) is about to run out. Most think the next one will be for at least 2-3 times that amount (which would still make it a small deal comparatively, around $50m USD/C$60m ).

      Do you really think the Canadian RSNs will pay more for the Expos than Rogers pays the Jays (also about C$50m)?

      • Not sure where you get the idea that the next agreement will be worth 2-3x the amount of the current one. Tampa is NOT that great of a market nor have they been a great team the last few years….

        • The Rays are currently way below average on their deal which expires in October of this year, and even getting back up to the mean based on ratings is 2-3x revenue increase.[1] This has pretty much been par for the course in the RSN deals that baseball teams that made a long term deal before the rights for TV deals went way up.

          [1]http://www.raysindex.com/2014/10/rays-next-tv-deal-could-be-worth-80-100-million-per-year.html

    • I think you can make arguments for both Montreal and Tampa, but they’re roughly in the same (sorry) ballpark when it comes to market size, TV rights, etc. They should probably both have MLB teams — but Sternberg is unlikely to jump from one to the other unless he’s offered a more lucrative stadium deal, and we still don’t know yet what Tampa will offer him. Expansion is a far more likely route.

  8. Much more upside in the long run with Tampa Bay market. It will continue to grow. Florida is a destination location. Montreal has pretty much peaked and the weather sucks. The taxes are already bad enough in that hellhole they call Montreal. That’s why so many Canadians leave and come to Florida. Unfortunately, they bring their bad teeth bad breath and bad habits. Man Fred is just trotting out what MLB wanys him to say. Montreal just doesn’t care enough weight

  9. Mexico City seems logistical impossible. It’s a two hour flight from it’s nearest opponent. And it’s almost 2000 feet higher than Denver.

        • Yeah, Mexico City. I’d be fairly concerned about kidnappings of team employees (particularly ones on the lower end of the pay scale) and the position it’d put MLB into following such an abduction.

          Incidentally I can’t see such a team being successful in the field, given the disadvantage they’d likely have in acquiring and retaining free agents, particularly those with wives and children.

  10. Montreal’s advantages as a sports town are so overwhelming that their hockey team hasn’t made the Stanley Cup Finals since 1993. The last time they were in the playoffs (which absolutely no Canadian teams made this year), they lost to … Tampa. Likewise, Toronto has had one MLB playoff appearance since 1993 (last year).

    I agree that Montreal is a fine town with the right kind of business demographics, but investors might want to take a look at what has gone on in Canadian pro sports in the last 25 years before plunging in.

    • Investors DID take a look at what has gon on Canadian pro sports in the last 25 years. And Bronfman & al. said publicly they are ready to plunging in.

      Any other questions?

      • It worked out so well the last time. Full steam ahead.

        I’d be more of a believer if they had Cromartie AND Le Grand Orange on the board of directors.

        • Last time, Quebec inc. failed. They were not ready to manage a sports team. They were hoping it will work out without taking care of it and without being baseball fans.

          The existing investor group is baseball oriented with way deeper pocket than the previous Quebec inc. consortium.

          BTW, Cromartie is the head of Montreal Baseball Project, working with Bronfman & al. Pedro Martinez, Éric Gagné, Tim Raines, Steve Rodgers, Andre Dawson, … all want to invest and be part of the Expos too. The foundation in 2016 is way better than what it was back in 1994-2004 without sharing revenues and lucrative TV deals.

          Stay Tuned!

          • Pat: That’s all well and good, but only one of the names you mention has the kind of money needed to own an MLB team (and it’s not the ex players… no matter how much money they made).

            I’d love to see the Expos return, but the reality is that the economics are still challenging in small to mid size markets (which Montreal would be in MLB). The shared revenues will help, obviously, but it is still the “local” revenues a club earns that makes it able (or not) to compete on salaries with major clubs…. unless you have a billionaire who doesn’t care if he loses money. And those are exceedingly rare even in major sports.

          • John, unfortunately, you don’t have all the facts and the information that we have here in Montreal.

            The Montreal investors group is composed of (that’s the names that were publicly released, there are also some New York investors in the loop, for Mexico?):

            – Stephen Bronfman (his father Charles Bronfman was the original Expos owner, worth $2.3B USD)
            – Bell Canada (market value of $51B CAD), owner of Bell, RDs, TSN, …
            – Larry Rossy (worth $1.06B CAD), owner of Dollarama
            – Mitch Garber (worth $200M USD), Chairman of Cirque du Soleil, CEO of Ceasars Entertainment Group
            – Stéphan Crétier (owner of Garda World)

            Again, money is not an issue. Not even close to be an issue.

            Regarding the potential TV deal in Canada (for the Expos).

            1. TV ratings during the Blue Jays 2015 series were (on RDS, french only network, so Quebec province only) 754 000 viewers at the peak! This is for a team playing in Toronto! You can easily extrapolate and assume TV ratings for the Expos in french only will be 500 000 and up to 1M to 1.5M in series.

            2. TV ratings during the Blue Jays 2015 series were (on Sportsnet, english only network, so out-of Quebec provinces only) 11M viewers at the peak! Some of those 11M viewers are Expos fans and will come back to watch the Expos. Let’s say 5% or 600K (to be pessimistic).

            3. Total viewers per Expos games will be ~1M per game in Canada and up to 2M-3M (pessimistic estimate) during the series.

            4. Bell (RDS1-2, RDS INFO, TSN1-2-3-4-5) lost for 12 years the NHL TV rights. $5.2B contract (or $434M per year). Let’s say that Bell is paying 10% of that contract for 162 games (premium content). So $44M per year (pessimistic estimate)

            Then translate all those numbers into a TV deal based on the real US TV deals and guess what? That’s a lot of money for a consortium where Bell is getting profits out of a TV deal like Rogers is doing with the Blue Jays and Sportsnet.

            Bottom line, there are no other markets in the US or in Canada that can have such numbers and I can’t see how the Montreal investors group will loose money on such project.

            Even if they loose money, they are all aware that the first assumption is: YOU MUST BE READY TO LOOSE MONEY. OTHERWISE, DO SOMETHING ELSE.

            This is why all investors did their homework (some of them since 2010) and they are serious.

            So with all respect for all the objections I read so far, most of you are missing the whole picture.

            The stadium will be one component of a major investment project (REM phase 1 is $5.5B, phase 2+ to be announced), other major investments will be announced in Griffintown, Goose Village, near Jacques-Cartier Bridge ($500M was announced last week), $1B announced in Dix30 next to the REM station over there, …

            When the mayor of Montreal have the luxury to meet Mexico City Mayor to see how they can work together to have a joint MLB Expansion proposal, it says a lot of what is going on behind the scene and how confident the investors are to let the Mayor work with another city.

          • Nothing you said changes any of the actual facts, rather than the suppositions you present.

            Billionaires did not get to be billionaires by being willing to lose money on investments.

            You are committing the common error of assuming that billionaires “have enough” money and don’t mind losing money on operations just so “the people” can have a baseball team. If that were the case professional sports subsidies would not exist. Yet they do, and are in fact the exception and not the rule.
            How many billionaires a potential ownership group has is utterly irrelevant. They may have the capacity to lose money on operations, this is not the same as being willing to lose money.

            The Expos II will not generate more money in TV rights fees than the Blue Jays do (even if we only count the GTA itself, it is larger than the entire Quebec or francophone Canadian market).

            There is simply no way that Canadian RSN rights will come close to the major US market rights. This is easily demonstrated by a comparison of any market you care to pick in this country.

            The tv numbers you present are unremarkable. The two heavily promoted Blue Jays exhibition games you mentioned generated fewer viewers than some regular season CFL broadcasts on TSN last year. That does nothing to bolster the argument that Expos II will generate even what the Blue Jays do, let alone more.

            Again, I hope the Expos do return… but even with a fully publicly funded stadium the math is marginal with respect to the club breaking even or generating a profit. They would need to average more than 25,000 per home game (something the original Expos only managed a couple of times when they were contending), generate as much money on TV rights as the Jays do, and keep their payroll below $100m USD. And that is to break even.

            You have offered no facts to rebut these, just anecdotes about how wonderful it will all be and how rich the supposed investors are.

  11. Montreal makes sense as an expansion market, certainly in the top 3 of sensible potential markets for MLB. Mexico City is total nonsense though.

    And what’s this about people having affection for the Big O? That place is a total pile of crap.

  12. If the Nordiques are not a slam dunk expansion franchise then why would Montreal be? Quebec City has the building and hockey is bigger in “Le Belle Province then baseball. I bet neither getting it has something to do with the value of the Loonie (Canadian Dollar)

    • USD/CAD currency is not an issue for a MLB team in Montreal. Why?

      A MLB team will get in 2016 ~75M to 85M USD in sharing revenues (National TV deal). Let’s say that a Montreal team have a salary budget of $100M USD (which will be most of the expenses in USD for such team). That means the impact of USD on this team will be $15M to $25M. With an exchange rate of 30% (which is a pessimistic assumption over time), it’s $4.5M to $7.5M CAD.

      So Montreal investors are ready to purchase a MLB franchise for $1B USD and they can’t deal with a USD impact of $4.5M to $7.5M CAD per year?

      If it’s the case, let’s close the book, end of story.

      • No, if the payroll is $100m USD it’s C$120-125m. That’s a $20m hit. Multiplying that difference by 30% again to account for currency exchange (as you have done) is incorrect.

        Keep in mind also that the USD exchange also affects revenues as Canadian clubs sell their tickets (and a significant percentage of their Merch) in C$. So, assuming Expos II would earn C$30-32m in gate revenue, that’s another $8-10m lost on the revenue side. As noted below, the $45-50m (C$) in regional rights fees the club might earn is also far less than the majority of US clubs earn (the top 5 avg at least $150-180m USD per year)

        Your “$4-7m” revenue hole is actually a $30m hole, not including the shortfall on regional sports network rights.

        • John, read my post again. You don’t understand that the sharing revenues (MLB National TV deals) in USD offset a big part of the USD payroll/expenses.

          So the payroll is $100M USD – $75M to $85M USD coming from MLB (all teams receive one part of the big pie). So a Canadian team is receiving USD revenues and will pay in USD the expenses. The exchange rate does not apply for those revenues/expanses covered.

          Almost all other expenses (and revenues) are in CAD (with some exceptions).

          So the exchange rate impact is minimal and is applicable only to the difference between the USD revenues and the USD expenses. All other expenses & revenues are in CAD. Even if the TV deal. merchandise, ads, … are in CAD, expenses are in CAD (administration, supplies, …).

          So again, exchange rate impact is not a significant variable. It’s pocket change.

          • Exchange rate is absolutely a significant issue for a business that pays out USD and takes in C$. Suggesting otherwise is simply irresponsible.

            The shared revenues you are talking about will NOT cover payroll, unless the new Expos intend to battle for the bottom 5 spots in total payroll in MLB.

            In order to operate any business with annual expenses of USD $150-180m (which would mean the club’s total expenses would have to be lower than the Jays player payroll costs alone…), Expos II will need to bring in a minimum of $260m Canadian (don’t forget payroll taxes, GST/HST, travel and other items that sports lobbyists love to consider “pocket change”).

            As noted elsewhere, even if we accept that $100m Cdn is going to come from MLB, $30-35m from gate/concessions and another $50m from TV rights… you still have a significant operating shortfall to fill.

            Are the billionaires you mentioned each willing to write a $10-15m check every year to cover that shortfall? When one of them pulls out, will the others up their annual subsidy checks to $20m each?

            Your claims about “facts” mostly appear to boil down to “rich people will pay for this for us”.

            I don’t recall that ever happening in the professional sports world. One of the reasons the Bronfmans got OUT of MLB is that they got tired of writing checks to cover losses.

          • John, here is the first public Team Operation Overview (Preliminary Budget). A new one was produced by the investors but you can figure what the investors used originally in 2013-2014.

            Your $260M CAD number is way too high. The projection is $241M CAD in 11 years (2024)

            Page 39-40.

            http://www.ccmmdev.com/baseball/etude_faisabilite_baseball_en_131212.pdf

            Complete site will all studies is here.

            http://www.btmm.qc.ca/en/metropolis/retour-du-baseball/feasibility-studies/

            The Pirates in 2008 had $146M USD in revenues. See their 2007 and 2008 financial statements.

            https://html1-f.scribdassets.com/89ztqcgoow16khy9/images/2-b63356d693.jpg

            http://deadspin.com/5615096/mlb-confidential-the-financial-documents-baseball-doesnt-want-you-to-see-part-1

            So bottom line, your numbers are way too high and explain why your assumptions leads to a financial failure/tough project while the Montreal investors, with more accurate data said that it will be profitable and they are ready to move forward, money is not an issue (this is what we heard publicly from the Mayor, Bronfman, Garber and privately from other sources).

            Hope that those facts are solid enough to question your assumptions.

          • CORRECTION: Your $260M CAD number is way too high. The projection is $241M CAD in 11 years (year 1 is in 2019, so in 2030)

    • If the Nordiques are not a slam dunk expansion franchise then why would Montreal be?

      It has nothing to do about finances. Quebecor Media has very deep pockets and already signed up pay the $500 million expansion fee. Nordiques would be without a doubt a slam dunk NHL franchise. The reason they are not getting a team (yet), is because Quebec City would be another Eastern conference team in a league that already has too many teams in the East. Not to mention Carolina is still having a hard time finding a local buyer, so the NHL could be saving QC for a possible relocation.

  13. Baseball loves Montreal and Montreal loves baseball.

    But that doesn’t pay the bills (as we have seen before). I won’t go into the many issues that doomed the original Expos, but some of them still very much exist in this market.

    As for TV money, the Jays effectively earn about C$50m a year in rights fees. This number is more or less meaningless as they are owned by their broadcaster, but that is effectively what gets transferred from Rogers to the club in exchange for rights fees (this came from a well connected Rogers employee). The broadcaster also owns the stadium they play in, and your guess is as good as mine as to how the operating expenses and revenues figure in.

    TSN (Bell’s sports network) might be willing to pay that much a year (which, as Neil points out, only amounts to $40m in USD) to gain Expos English/French broadcast rights. Since there are only two major french language sports broadcasters who might be interested, and one of them is TSN’s sister network (RDS), it seems unlikely there would be a bidding war for Expos French language rights.

    It is possible that Bell would just buy the team themselves, of course. But they won’t get an attractive price like Rogers did for the Blue Jays/Skydome (which I believe was in the $130m/$25m range). The prospective owner will pay around C$1bn ($800m USD) for the franchise, another $4-500m for a basic stadium and then have to figure out how to make a C$125m payroll work in a 32-35,000 seat stadium that comes with a $15-20m annual bond or mortgage payment.

    So… let’s say there’s around C$50m in tv rights, another C$30m in gate revenue and maybe $50-70m in MLB distributed revenue.

    Ok… so player payroll is covered… now um…. I guess the owner has parked $1.5Bn in a non-interest bearing account so that the good folk of Montreal can have major league baseball. If 25,000 people show up for every game, the owner can break even. That only happened a couple of times in the Expos history, even when they were perennial NL East contenders in the late 1970s early 80s.

    Hmmmn.

  14. What a joke ! Manfred should have extortion skill down perfect working for MLB. Disposable income in loonies won’t even buy the average fan a MLB beer. Baseball has priced itself out of expansion into other countries. Only reason Toronto is still there is because they’ve become Canada’s team. As for Mexico city well the Zika virus will soon control that city too.

  15. Wouldn’t Monterrey make more sense than Mexico City? More affluent, not as far, normal elevation, and both cities would draw a television following from all of Mexico

    • I’d heard Monterrey more than Mexico City up until recently. Not sure what’s changed, unless it’s something with TV money.

      • But Mayor Coderre is about to have a meeting with the Mayor of Mexico city to talk about baseball, MLB and how Montreal can help to build their business plan. Montreal can leverage everything they did so far (analysis, business plan, contacts within MLB, …) and will probably propose to MLB 2 strong expansion proposal together.

        No other cities will be able to compete against such joint approach (this is what Mayor Coderre told the press).

  16. The “funding scenarios” for Montreal are nothing more than hope and prayers. Just because one may want an MLB team for their city, it doesn’t mean it will happen. Much more upside in Florida with the Tampa and Orlando markets. Taxes are a huge issue in Canada. Not many people willing tolerate those increases anymore. The last thing that’s needed is an overpriced, stadium that requires taxpayers to chip in.

  17. I wonder why we never hear of expansion possibilities in Puerto Rico. That seems much more doable than Mexico City. First of all, it’s in the U.S. And, despite the high unemployment on the island, there are plenty of millionaires who could be potential owners (some are there due to some very unwise tax policies that allow companies to use relocation to the island as a tax-avoidance scheme), and also plenty of wealthy people who could be season-ticket holders.

    • Puerto Rico has no money at the Commonwealth level. And as such it really isn’t a good target for getting someone else to pay for a stadium.

      • Right, I know that the Commonwealth is strapped — thanks to those dodgy tax policies which I mentioned.

        I suppose that I was just imagining owners who might want to build a park themselves. As I understand it, Puerto Rico is home to many super-rich people who could do such a thing if they wanted to, and who would be capable of owning a Major League franchise.

        • Here’s another reason. For every extra owner MLB adds, they lower the previous owners’ shares of media deals. Thus, MLB either 1) will demand a huge expansion fee (as Neil pointed out) or 2) will expect media rights and merchandise sales to increase to offset the revenue losses or 3) both/or more.

          So the question isn’t necessarily “is Montreal (or Puerto Rico, or Mexico City) a good place to play baseball.” The question is really “will the addition of these teams give MLB and its owners more than it takes away?”

  18. The message that will should be absorbed by people from Montreal is that you better not get your hopes up and be prepared to hurry up and wait for..Oh…..about 75 years.

  19. MLB just removed some games due to Zika virus. I guess the baseball classic needs to be eliminated. The old people on the island are broke and having their cheap pensions halved. The young people who remain are NBA fans. The NFL & MLB are never going to get anything close to NBA international success.

  20. The phrase “irrational exuberance” keeps coming to mind, the big-time sports
    industry knows how to profit from it no matter how clumsy their schemes are.
    https://en.wikipedia.org/wiki/Irrational_exuberance

  21. If Montreal ever does get a team back, they better have well-heeled owners because if they don’t spend on players, look to what happened last time with less than 3,000 in attendance at many games. Montreal is a fickle city sports wise, Canadiens don’t even sellout always, and the Canadiens and hockey rule the roost there. I can’t see a new baseball stadium being built either. People can say there are investors but that’s all a bit of joke from what I’ve heard.

    • I’d love to see the Expos back, Mike, but you are absolutely correct. It will take ownership willing to absorb losses of $40-80m annually on operations to run a new Expos franchise. That could come from a TV network willing to pay double for rights fees what they can generate in advertising or just eight or ten wealthy guys who each love Montreal and baseball so much they are willing to pay $10m each a year just to keep it afloat, but it has to be covered somehow.

      More than 50% of the revenues a Montreal MLB franchise generates will be in C$. They will be lucky to get half of the USD value for rights fees even an average US market generates as well. That adds up to a minimum $50m revenue hit vs a similar sized US market. Like the Jays, a TV partner might look at spending $100m on programming that generates $40m in revenue but provides 500 hours of annual content for the network as good value. It depends on how many new viewers they get for that $60m and what the replacement programming for that 500 hours would cost them (if it’s celebrity poker, not much…)

      As you say, though, they can’t be at the bottom of the payroll spending list either, or fans will abandon them.

      It’s not impossible… but it is hard. There won’t be any $200-300m USD annual RSN rights fees for a Canadian franchise to bank on.

      • John, take the time to read the Feasibility Study. Still not perfect, but it a hell of a good start to understand the high level breakdown and the assumptions.

        http://www.ccmmdev.com/baseball/etude_faisabilite_baseball_en_131212.pdf

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