Sale of YES NETWORK stalled--Reuters

This article says the Yankee team owns about 40% of YES but other reports put it in the low to mid 30's range.

• (Reuters): "The YES Network is around 40 percent owned by the Yankees baseball team, with the remainder owned by Goldman Sachs Group Inc, private equity firm Providence Equity Partners and Raymond Chambers, former co-owner of the New Jersey Nets basketball team."

(The question is which group(s) are looking to sell? I wouldn't expect the Yankees to admit it even if it they were one). sm

• (Reuters): "It is unclear if the entire network will be sold or just the parts owned by private equity, the sources said.

Goldman Sachs is running the sale process."

• (Ah, Goldman Sachs, Arod, etc.) sm

(Reuters): "The bidding has dragged on longer than thought, hurt in part by a severe drop in private equity deals due to the credit crunch. Player contract talks have also slowed the process, one source said. A final offer date has not been set, the source added, but may come in the next few weeks.

• Key to the sale is keeping all star Alex Rodriguez, among the best players in baseball, who is in the final stages of negotiating a new deal with the team."
• (We're back to linking Arod's value to television, which is what Boras wanted to do in the first place. I'm starting to wonder if Boras' being "bypassed" isn't exactly true). sm

"That explains in part why Goldman managing director Gerry Cardinale stepped in last week to negotiate a deal for Rodriguez when his agent, Scott Boras, appeared unwilling to rekindle talks that earlier fell apart.

• The bottom line of the company would probably not take much of a hit if A-Rod left because YES is not dependent on individual subscribers. YES is part of basic cable packages, meaning the cable companies pay for the subscriptions, which are locked in for a long period of time.

But losing A-Rod and other stars could hurt parts of the network.

• "Marquee stars and winning do impact the ratings of regional sports networks. Advertising would be affected," said John Mansell, a media analyst at John Mansell Associates. Mansell said about 90 percent of YES' viewership is for live Yankees games.

Prior to the credit crunch, private equity buyers would likely have been eager to snap up the asset, given its cash flow, its brand and connection to one of the most successful sports franchises ever.

• But the current price tag is a problem for private equity firms because the credit crunch has choked off lending from investment banks and dramatically cut leveraged buyout deal volume.

One source said that YES has been shopped around more to private equity buyers than corporate -- or so called "strategic" -- buyers, in part because buyout firms were aggressively scooping up assets before the credit crunch hit.

• "I would have thought that a Time Warner or a Comcast or a News Corp would mesh well with their existing services," Mansell said. "But you're in a current economic environment where there aren't a lot of deals getting done. The market would hammer the companies for empire building."

All three companies declined to comment."

• From Reuters article by Michael Flaherty and Megan Davies, " NY Yankees Network Sales Stalls as A-rod Deal Looms," published on Reuters.com, 11/20/07

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