Sunday, March 17, 2013

Astros owner reveals his true inner being

Jim Crane, the owner of the Houston Astros, isn't a dummy. He's been a rather successful (ethical would be a very different question) businessman. That's what makes his latest misstep such a head scratcher.

No businessman worth his salt would buy into a business in which he stood no chance of making money. Whether that be cash flow or capital accumulation depends on the tastes of the businessman. Major League Baseball is awash in cash. According to Hardball Talk columnist Craig Calcaterra, the new deals with ESPN, Fox and TBS should net each club some $40 million a year beginning in 2014. That's money on top of local television rights and ballpark revenue.

The long and short of it is you have to really want to lose money not to make money in the long run owning a baseball team.

And Jim Crane wouldn't have bought the Astros if he didn't think he could make money like his predecessor Drayton McLane. Even if the club has a negative cash flow in the short run, the value of the club itself will appreciate over the long run.

For the upcoming season the Astros will have a payroll in the $25 million range. We're talking Kmart, folks. Crane and the Astros "braintrust" don't expect the team to even be competitive for another two years.

Now keep in mind that over the last year the Astros (along with the Rockets) launched a cable sports channel that is accessible to fewer than 100,000 folks in the Houston area (out of a population of just under 2 million). The Astros got greedy and are asking way too much in carriage fees for cable and satellite providers to carry the network. As a result, most folks will be unable to watch the Astros on the tube this year (with the exception of the season opener against the Rangers).

Crane and his crew also decided to up the ante with "dynamic pricing." As a result overall ticket prices have risen as the product on the field has gotten worse. Supposedly dynamic pricing is supposed to take into account the attractiveness of certain teams and ticket prices are supposed to fluctuate accordingly. Therefore, tickets for games against the Yankees, Red Sox and Rangers are more expensive - but, surprisingly enough, tickets for games against the Royals, Rays and other jetsam never fall below the regular price. Hmm. Funny how that works, Jim.

But now Crane has topped himself.

When asked by the Wall Street Journal about a comment by Los Angeles Dodger president Stan Kasten that he wouldn't be comfortable with the direction the Astros are headed, Crane lashed out at fans who were expecting the team to do more to make itself competitive.
“It doesn’t bother me that people want us to spend more money,” Crane told the Journal. “But it’s not their money. This is a private company, even though it’s got a public flair to it. If they want to write a check for 10 million bucks, they can give me a call.”
Yes, the Astros are a private company (despite the moniker "Houston" Astros), but they have also been on the receiving end of plenty of public money over the years, and to take the attitude that Crane has taken is beyond arrogant. It does, however, paint an accurate picture of who the man is and what he's about.

To Crane the Astros are a commodity. I am certain he will break down the revenue streams into minute detail and look for every way to raise more revenue and cut more expenses. He's not in it because he loves baseball, he's in it because he views a major league team as a cash cow he can milk for all its worth.

And, contrary to his continued statements that the Astros are losing money, he told the WSJ that he'll be making money this season.

Oh, it's going to be a long season.

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