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Tuesday, November 24, 2015

The biggest Reds news of 2016: their TV deal is about to expire

Photo Credit: Lynn Friedman
It's a challenging time for the Cincinnati Reds.  Coming off back-to-back losing seasons, there doesn't seem to be much reason for immediate optimism.  Even the front office is no longer bothering to predict great things.  In a recent interview, Reds President Walt Jocketty called 2016 a "transition year."  The front office is usually the last to admit they're not bound for contention, so we shouldn't expect much from the team next year.  All signs point to a fire sale this winter, and the question is more "how much" than "whether" in terms of the Reds converting their higher-priced veteran talent into cheaper and controllable prospects.  I'm hopeful that the next year will bring some exciting trades, at least.  I do worry that the Reds waited too long to sell off some of their top guys.  Chapman has only 1 year of control left and thus won't command the return the Padres just got for Craig Kimbrel.  Frazier probably peaked last summer.  Et cetera.  But there's still value to be had (and dealt).

There is one acquisition sitting on the horizon, however, that seems guaranteed to bring a nice boost to the Reds' bottom line: their television contract expires after next season.  Baseball's TV bonanza started, more or less, when the Dodgers received their other-worldly TV contract a few years back.  Ever since, we've seen team after team secure outstanding contracts that substantially boost revenues.  While there has been some cause for concern that this bubble might someday burst, there hasn't been any indication of that so far as I've seen.

Currently, the Reds' TV contract with FSN Ohio is reportedly for about $30 million per year.  That figure stands to increase with the new deal, but not to the tune of anything approaching the $8+ billion contract (total) the Dodgers received.  In fact, it might be laughably smaller: Cincinnati is the smallest TV market in all of baseball, according to Nielson's 2014-2015 Local Television Market Universe estimates:

Designated Market
Area (DMA)
TV Homes
% of US
1. New York
2. Los Angeles
3. Chicago
21. St. Louis
22. Pittsburgh
35. Milwaukee
36. Cincinnati

This improves, of course, if one adds Indianapolis (#27 with 1,082,690 homes) and Louisville (#49 with 656,900 homes) into the Reds' territory.  I'm not positive whether those packages would be part of the same deal or not.  Probably?

In any case, it remains to be seen how much extra money this new deal might provide the team.  An estimate a year and a half ago had the deal at $75 million.  I don't have any way to judge how accurate that is, but if true it would provide the Reds an extra $45 million to play with per season.  One has to expect that not all of that will make it to the team payroll, but it should still pay for most of Joey Votto's and Homer Bailey's contracts, which collectively range from $41 million in 2017 to $48 million in 2019. Effectively wiping those deals off the books, while still permitting the Reds to (hopefully?) benefit from their contributions on the field, would be huge.  The Reds have seemed pretty much at maximum budget from the moment that Homer Bailey signed his extension.

My hope is that they at least see an increase of $20-$25 million in their TV deal, which would be enough to cover Joey Votto.  Getting that money back to play with the rest of the roster could net them 6-7 wins per year in free agent salaries, and even more value if invested in young, extendable talent.  Time will tell.

...of course, the problem is that it's unclear who those young, extendable talents might be.  Anthony DeSclafani?  Eugenio Suarez?  Jesse Winker?  Robert Stephenson?  Some soon-to-be-acquired talent?  It remains to be seen.  But the Reds clearly will need a major infusion of talent to get back to being competitive with the likes of the Cardinals, Cubs, and Pirates.

Hat tip to a commenter on this article at fangraphs, who pointed out the Nielson DMA ratings.

Wednesday, November 04, 2015

Reds promote Dick Williams to GM

The Reds followed pattern that has become commonplace in baseball front offices over the last several years by promoting former Assistant GM Dick Williams (not that Dick Williams) to the role of General Manager, with Jocketty staying on as the President.  This is the new model that we're seeing around baseball, with similar arrangements in place with Mark Shapiro in Toronto, Andrew Friedman in Los Angeles, and, of course, Theo Epstein in Chicago.  In many cases, the President retains many of the authorities that once were under the purview of the General Manager.  For example, final decisions on the Blue Jays transactions will be controlled by Mark Shapiro, which was the main reason that Alex Anthopoulos cited for not returning to the Jays following their outstanding season.

The rationale typically cited by outside observers when these kinds of moves are made is that they provide a way for teams to retain talented assistant general managers within an organization when they are at risk of securing a general manager job elsewhere.  By giving them the title of GM, you make staying within your organization more appealing, even if it's not the traditional GM job as chief decision-maker.  Teams often have more than one assistant GM, and so this is a way of formally recognizing the President's chief lieutenant with an improved position title.

In the Reds case, it seems to be a bit more honest, though: while Jocketty will retain decision-making this year, and Williams is being granted the GM title for now, the expectation is that Jocketty will step down after 2016 into an advisory role.  At that time, Williams will take over a traditional GM role, wielding full power to control transactions and shape the ballclub.  Whether the Reds will hire another President to replace Jocketty and oversee Williams is an open question, though they seem to be indicating that this is not the plan.

There are some things to like here.  Per C.Trent's article, Williams has a background in investment banking and private equity.  Those are fields dominated by those who are effective in using data-driven approaches to make decisions.  I just recently started reading Jonah Keri's The Extra 2%, which profiles how the trio of Stuart Sternberg, Matthew Silverman, and Andrew Friedman made the transition from similar Wall Street backgrounds to running the Tampa Bay Rays.  It's hard not be excited by the prospect of the Reds being run by someone who has similar principles to Friedman's, with a strong emphasis on analytics as a way to meld statistical and scouting information.  True to form, that was one of Williams' first talking points today:
"We have some of the best scouts in the game so I would never say we are not heavily dependent on scouting. At the same time, we're doing everything in our power to grow our analytics initiatives," Williams said. "We're right up there with the other teams. We don't talk a lot about it because it really doesn't get you anywhere to let information out there publicly. We will be continuing to invest more and more in our analytics. That's just the nature of the business right now. I'm very much a proponent of combining the analytics and the scouting to get to the right answer."
That's saying all the right things to my ears.  And he's right that the Reds do have an analytics department.  Sam Grossman has said a few interesting things in public over the years, and I noted that the Reds had hired intern Lewie Pollis for a time.  How much they actually make use of those analytics is a question, but I will say that I haven't seen many recent, substantial moves (aside from the extensions of Votto, Phillips, and Bailey) that clearly ran contrary to a data-driven approach.  The Latos and Simon trades last winter looked good at the time and still look good, with Anthony DeSclafani and Eugenio Suarez looking like useful pieces for years to come.  The trades this summer seemed to do what they were supposed to do: net a number of quality players, albeit almost all pitchers, to enhance the farm system.  They probably didn't trade enough of their players last summer, but the moves they've made have looked good.  I'm not sure I buy that the Reds are "right up there with the other teams" in terms of implementation and development of analytics though I guess it depends on what teams.  Pirates?  Cubs?  No way.  But I'd buy that the Reds could be close to a median ballclub on this.

There are some other things that aren't as enticing to me.  Williams is the grandson of former Reds owner William Williams (hat tip to Red Reporter), and there are two other Williams-es near the top of the executive office roster: Chairman Joseph Williams and Vice Chairman and Treasurer Thomas L. Williams.  Now, one can be positive about this and see this as the Williams' being a great Reds' family who are at the core of the business.  But, on the other hand, you could view this as just straight-up nepotism.

Can we really argue that Dick Williams is one of the 30 best candidates for this position, given the advantages he had to gaining and maintaining his position?  I don't know.  I won't blame the guy for his family, but I'm not comfortable giving him credit for it either.  There is an opportunity cost here, in that the Reds aren't giving themselves a chance to hire from outside the organization and bring in a top-tier candidate.  Maybe Alex Anthopoulos (to pick a name of an available, successful GM) isn't a better option, but the Reds didn't even give themselves the chance to find out.

No matter what I think of it, though, Dick Williams is now, or soon will be, our guy.  We get a long goodbye with Walt Jocketty (I hate long goodbyes), and we get to know Williams gradually.  I'll always cheer for the Reds, so I'm cheering for this to work.  Good luck, Walk & Dick.