Canadian Business
R.A. Dickey

The Empire Strikes Back

Rogers Media is betting $200 million on the Blue Jays in a bid to bring baseball glory back to Toronto. Why it’s the smartest investment they’ve made in years.

R. A. Dickey’s knuckleball travels like an airplane in heavy turbulence—erratic, unpredictable and capable of striking fear in grown men. It dances through the air, wobbles side to side, rises and falls on its own impulse and baffles batters accustomed to connecting with 95-mile-an-hour fastballs. It seems like magic, but it’s really just physics. While the average fastball might rotate 15 times between the pitcher’s hand and the catcher’s glove, the knuckleball is virtually devoid of spin, typically completing less than one full rotation during its 60-foot path to the plate. While in flight, the leading seam of the near-stationary ball interferes with the aerodynamics, slowing the flow of air over the ball. Once the air currents find their way past the seam, they speed up, causing the ball to drift. Hitting a well-thrown knuckleball is like swatting at a moth with a chopstick.

Dickey became one of the biggest stories in sports last year for his mastery of a pitch long maligned by baseball’s rank and file as a gimmick. The 38-year-old pitcher chalked up 230 strikeouts in 233 innings for the New York Mets, winning a Cy Young Award and reclaiming his fading career in the process. Now, he’s one of the new faces of the Blue Jays franchise, the final piece of a $200-million off-season roster overhaul that stunned Major League Baseball. Flush with cash extended by Rogers Communications (which owns the team and Canadian Business), the Blue Jays front office reconstituted the franchise from a perennially irrelevant, if entertaining team into an instant division favourite and a championship hopeful.

On paper, the Blue Jays are now as good as any team in the league, having purchased five new current or recent all-stars. In addition to Dickey, there’s Josh Johnson, a dazzling pitching talent; Mark Buehrle, a steady veteran left-hander who threw a perfect game three years ago; Jose Reyes, possibly the best shortstop in the game and a potent leadoff hitter; and Melky Cabrera, who led the National League batting race last year before a doping suspension ended his season. “It’s the first team I’ve been associated with in 36 years that has it all,” says team president Paul Beeston. That says a lot coming from the executive who helped build the Blue Jays championship teams in 1992 and 1993. But the math backs up the hyperbole. Baseball stats wonks running forecasting models calculate that if every player meets his statistical potential, the Blue Jays stand to win between 90 and 95 games this season, all but assuring a playoff berth.

While wins are the blunt tool by which fans will measure success for the team this year, the parent company has more nuanced objectives. These moves are as much about delivering sports content as they are about the sport itself. Long a distant second in Canadian sports media, Rogers' Sportsnet cable channel has been narrowing the gap with TSN. And baseball, Rogers has decided, is a linchpin in the quest to make Sportsnet the country’s top sports media brand. By hiking the Blue Jays’ 2013 payroll to about $125 million from $80 million last year, Rogers is investing not just in a ball team, but on a brand that can help sustain its media empire.

But justifying a major investment in a baseball team is tricky. The ungovernables of sports can spoil any cost-benefit analysis. Chance plays too big a role. Any game can change with the swing of a bat, and any team with an out to spare can win. Investing in a championship team is a bit like connecting with a meandering Dickey knuckleball. All a company can do is time its pitch and hope for a bit of luck.


What does $200 million buy you?

One of the more valuable statistics available to baseball managers today is Wins-Above-Replacement (WAR). It boils a player’s worth down to a single line: How many more wins he would deliver versus a league-average replacement.

R.A. Dickey war card Josh Johnson war card Jose Reyes war card Mark Buehrle war card Melky Cabrera war card

Joe Carter touching home plate
“Touch 'em all, Joe!”

Tom Cheek

When Joe Carter sent a ninth-inning 2–2 pitch over SkyDome’s left-field fence to win the 1993 World Series, he marked the last moment the team would appear in a playoff game. It was a definitive conclusion to the team’s championship era, when the Toronto Blue Jays were the New York Yankees of their time. They had the highest payroll in baseball, league-leading attendance and two consecutive World Series banners to hang from the rafters in what was then a modern marvel of a stadium in downtown Toronto.

A strike killed the 1994 season and, one by one, the team’s marquee stars cast off their blue jerseys and left town. Gone were John Olerud, Roberto Alomar, Devon White, Paul Molitor and more. Paul Beeston left to take over as president of the MLB. Even the mastermind of the Blue Jays juggernaut, Hall of Fame general manager Pat Gillick, moved on. The Yankees dynasty came to reign over one of the toughest divisions in all of professional sports. Even in good years, the Jays were far from a playoff spot. Fans lost interest, and a long winter descended on Blue Jays Way.

When Rogers rehired Beeston in 2008, the franchise was a mess, saddled with an underperforming roster and bloated contracts. This was the worst of both worlds—a team that was both expensive and not all that great. Beeston’s mandate was to restore baseball greatness to a city long estranged from postseason sports. “The idea was to build the depth we could pull forward for a 10-year period,” Beeston says. “It was to be a part of the large-market caucus of baseball—the Red Sox, the Yankees, the Cubs, the Dodgers.” For the Jays to exploit its sizable market in Toronto, and nationally as the country’s only pro ball team, Beeston would first have to undo much of what had been done in his absence. For that, he needed a general manager who could stick to a plan.

Alex Anthopoulos was handed the job in 2009. He was 32, largely unknown, and suddenly in charge of turning around a listless professional sports franchise. But in Anthopoulos’s rise through the ranks of the Blue Jays scouting system, Beeston saw a potential GM that could spot talent and rebuild a roster. With the team at a crossroads, the pair had to choose a course—win now or win later. To make an immediate playoff run, the front office would have to bolster the roster through player trades and signing free agents. But the league’s premiere stars had little interest in playing in Toronto, given the state of the franchise. And the Jays’ farm system lacked young talent to use as trade currency. “There was only one option,” Beeston says, “Let’s rebuild this thing, take our lumps, have some fun with the team, but let’s not fool ourselves into thinking we’re something that we’re not.” Fans weren’t fooled, either. In 2010, after Anthopoulos had unloaded many of the team’s most popular (and expensive) players, fewer than 1.5 million people attended a ball game. It was the worst draw since 1982, accounting for less than 40% of stadium capacity. “We had to consciously make deals that we knew in the short term weren’t going to help us,” Anthopoulos says. “I didn’t necessarily believe in the core of that team.”

But while ticket sales dropped, Beeston claims the team more than made up for it in savings on payroll, which was slashed to about $70 million. The money saved was poured into scouting and player development to build up one of the better farm systems in baseball, stacking the Jays’ minor league teams with future stars. For three years, Blue Jays fans waited for Beeston and Anthopoulos to make their big move.


World Series 1993, Game 6, Jays vs Phillies, SkyDome, Oct. 23, 1993

Jays scoreboard, October 23, 1993

To hear Tom Cheek’s broadcast of the bottom of the 9th inning, listen here. For Joe Carter’s home run, fast forward to the 11th minute.


Advertisement


“Let’s not fool ourselves into thinking we’re something that we’re not”.

Paul Beeston

Jays fans in empty stands
“We have broken our trust with the fans...It’s in the mindset of fans that this is a city of losers.”

Paul Beeston

There are four types of fans, says Keith Pelley, president of Rogers Media, the division that includes both Sportsnet and the Blue Jays. There’s the diehard, whose allegiance is unwavering, the bandwagon jumper, who will follow a streaking team, the corporate patron, who sees a ball game as an opportunity to schmooze, and lastly, the “fashionable fan,” who wears the hats and jerseys and attends the games because the team is trendy. Pelley believes this last group may be the most important to the brand’s momentum. “We could see last year, it was very quickly becoming a fashionable brand.”

For the 2012 season, the team did away with the black-and-grey uniforms and “Angry Jay” logo and returned to its classic early-1990s look. “It was huge,” says Stephen Brooks, senior vice-president of business operations, explaining that sales of merchandise almost doubled last year. Despite the shortcomings of the team on the field, a movement built behind the Jays. For the first time in years, the team’s demographic began skewing younger, into the key 18-to-34 range. A youthful contingent discovered the brand and connected with players like Brett Lawrie, J. P. Arencibia and Jose Bautista on Twitter. By mid-season last year, Jays-related tweets on game days had spiked by more than 40% over opening day, according to SportsBusiness Journal. The team embraced it all, hiring a Twitter consultant and building a social-media presence.

The new cohort began to register in a big way in both TV viewership of Sportsnet broadcasts and through the turnstiles of the Rogers Centre. Home-game attendance rose by almost 20% over the first half of the year. “They were engaged, and they were interested,” Beeston says. “We were getting the following we were looking for. We didn’t want to lose that momentum.”

But they did lose it. Three starting pitchers went down to injury during one disastrous week in June. Wrist surgery ended star slugger Jose Bautista’s season and his chances of winning a third consecutive home-run title. By August, the team was fielding just two players from its opening-day starting lineup. The team finished with just 73 wins, enough for fourth place in its division. “It was the season from hell,” Beeston says.

The franchise risked alienating its nascent following and squandering the chance to draw stadium crowds reminiscent of the glory days. But the surge in fan interest demonstrated the potential to fill a lot of empty seats in future seasons, says Wayne McDonnell Jr., a professor in sports business at New York University. “It’s probably not going to be 1993 all over again,” when the team drew more than four million visitors and averaged 50,000 people per game, he says. But three million in attendance is not unrealistic, which would still represent a 50% increase over 2012. For that to happen, the team needs to restore a culture of winning to Toronto. “We have broken our trust with the fans,” Beeston says. “It’s in the mindset of fans that this is a city of losers.”


The Blue Jays, their fans and social media

In recent years, Rogers has set in motion a social media strategy for the Toronto Blue Jays. But one thing’s for sure: They have no control over what fans post. In early 2013, Dave Andersen, a.k.a. @cashewmirman, posted to YouTube a Blue Jays tribute in the style of a 1980s video game. It was filled with inside jokes about the new team and Rogers’ personalities—and it spread like wildfire. Canadian Business asked Andersen if he would consider creating a second retro video game, this time starring Blue Jays GM Alex Anthopoulos. He did:


Advertisement

Bautista injury
“It was the season from hell”

Paul Beeston

Sitting on the dugout bench, just out of the February Florida sun, John Gibbons cackles when a reporter suggests the media presence is more star-studded than the Jays’ lineup. It’s true, the Toronto manager has fielded a squad notable more for who is absent—both the team’s returning elite and its new cadre of all-stars. “That’s how you run spring training,” he says with a shrug. “You’re building toward something.”

The first game of the preseason Grapefruit League against the 2012 pennant-winning Detroit Tigers could not be less meaningful as far as its outcome. But it’s a momentous occasion for media, particularly Sportsnet, which will give Canadians their first glimpse of a franchise transformed. “This is such an exciting day for so many in Canada,” Sportsnet host Jamie Campbell announces from the concourse behind the first-base bleachers, kicking off the broadcast. “We are set for action,” says Buck Martinez, the permanently tanned play-by-play man of the Jays televised games. As visitors to the Tigers’ Lakeland, Fla., stadium, the Jays bat first: three up, three down. Thus begins a new era in Blue Jays baseball.


Sportsnet overtaking TSN is a lofty goal. Canada remains a hockey country, and in that realm, TSN still dominates.

Since the Blue Jays ended its relationship with TSN in 2010, Sportsnet has identified baseball as crucial to challenging the supremacy of the front-running broadcaster. While Rogers owns at least a piece of every major Toronto sports franchise, the company holds exclusive broadcast rights for Blue Jays baseball. That helps explain the timing of Rogers’ investment in the team, McDonnell says. “Without question, it’s a content play.”

Rogers poached Keith Pelley, CTV’s executive vice-president of strategic planning and former president of TSN, to head up the media division a few months after the team’s split with TSN, upsetting the peaceful balance in Canadian sports broadcasting. Pelley brought in Scott Moore, then–executive director of CBC Sports, to oversee broadcasting, and the pair set out to make a run at TSN. But with every major sports asset already under contract, Sportsnet would have to attract new viewers to its existing media properties, primarily through the only monopoly it holds—the Toronto Blue Jays. “When there’s a big baseball story, people come to us,” Pelley says. When the Jays completed the blockbuster trade for R. A. Dickey, Sportsnet Connected played up the story heavily, with 12 minutes of baseball coverage on its evening edition, compared to two minutes on TSN SportsCentre, Pelley says. The Rogers broadcast attracted an average audience of 122,000 viewers, which beat TSN by 86%. “I think we have the potential this year to blow the doors off. You play well into September, you’ll be north of one million viewers a night.” In Rogers’ view, anything in excess of 600,000 viewers averaged over the season would be considered a ratings success. Even the team’s preseason opener against the Tigers got 450,000 viewers, setting a Jays spring-training record.


The corporate players

Paul Beeston baseball card Alex Anthopoulos baseball card Nadir Mohamed baseball card Keith Pelley baseball card Phil Lind baseball card

With higher ratings, the broadcaster can charge more for advertising. Already the rates on Blue Jays broadcasts have gone up this year. “The Jays is an easier sell than it’s been in years,” Pelley says. That momentum should translate into higher market share for Sportsnet this year, Moore expects. Until recently, Sportsnet had only surpassed TSN’s viewership in one single month in 12 years. Last year, the Rogers broadcaster claimed two months. “I expect that number will increase this year,” Moore says. But overtaking TSN is a lofty goal. Canada remains a hockey country, and in that realm, TSN still dominates.

The fight for the hearts and minds of Canadian sports fans is one front in a larger war. As media companies here and in the United States have made sports content a top priority, the value of broadcast rights has exploded. In no sport is that more apparent than baseball.

Live sports is the last bastion of traditional cable television—the “battering ram” of pay TV, as media tycoon Rupert Murdoch once put it—and one of the few television events left that’s best consumed immediately. Once the outcome of a game is known, its value plummets. “Very few people record a baseball game to watch later. It’s like a perishable good,” says Brad Humphreys, a University of Alberta professor with expertise in sports economics.

Baseball in particular, with 162 games a year, offers such a high volume of the kind of content advertisers seek, broadcasters are willing to pay astronomical sums for the rights. The value of a baseball team used to be driven by stadiums and ticket sales. Now, broadcast is guiding the economics of the league. And teams are using that money to increase payroll and shower money on high-priced free agents.

Case in point: the Texas Rangers agreed to a regional broadcast deal with Fox in 2010 that pays the team $1.6 billion over 20 years. While the team was in bankruptcy less than three years ago, the windfall allowed the Rangers to boost payroll up to $120 million last year. A huge broadcast deal for the Los Angeles Angels of Anaheim followed in 2011—that one worth $3 billion. Even before that contract went public, the Angels made Albert Pujols the second-highest-paid player in the league. Then, earlier this year, Time Warner Cable committed $7 billion for media rights to the Los Angeles Dodgers, even though the entire team had just been purchased for only $2 billion. And those deals are just for regional broadcast rights. For the national rights to baseball broadcasts, including the World Series, the league itself negotiated a contract worth $12.4 billion to be spread evenly among all MLB teams. Beginning next year, that puts an estimated $25 million a year in the Blue Jays budget, which goes a long way to paying the future salaries of those pricy new players. “It’s all flowing down off of the massive increase in value in the media-rights properties,” says Chris Bevilacqua, a New York–based sports media consultant.

It shouldn’t surprise anyone that Rogers has ulterior financial motives in its ownership of the team. “Media companies are there to exploit content,” says Lee Berke, the president of LHB Sports, Entertainment & Media. “The right company with the right platforms can generate a substantial amount of revenue.” With the opportunity to leverage Jays content across all Sportsnet platforms, Rogers has a financial interest in the team’s success. Such is not always the case. The performance of the ever-stagnant Toronto Maple Leafs has had little effect on the franchise’s following and value. Elsewhere in Major League Baseball, TV ratings don’t matter as much as they used to. The Angels, for instance, signed their lucrative broadcast deal despite having the second-lowest ratings in the league. But for the Blue Jays franchise and its fans, it comes down to this: Rogers wants this team to win.


Advertisement

Anthopoulos and Beeston
“The instinct might be to run a team like a corporation. But you can’t.”

Wayne McDonnell Jr.

When the 2012 season crumbled and the Jays reverted to the kind of mediocrity fans have come to expect since the 1990s, there was cause for alarm at Rogers. Viewership of Blue Jays broadcasts dropped by 35% in August to an average of 422,000 viewers. The company suggested it could salvage the season. Pelley says Rogers was willing to put up the money required for Anthopoulos to patch up the squad before last July’s trade deadline. Anthopoulos declined. “He said, ‘This isn’t the year,’” Pelley says.

Blue Jays Payroll/Wins Infographic

Rogers puts a lot of confidence in Anthopoulos and Beeston to spend company money wisely. Having proven themselves to be restrained spenders, the front-office pair was largely afforded the freedom to enter the market for new players when they felt it was appropriate. The money Rogers promised to fans would come, but at the discretion of Blue Jays executives. It couldn’t have worked any other way.

The Blue Jays are one of only two teams in the league still owned outright by a media company, a relationship that used to be more common. Rather than pay for broadcast rights on the open market, corporations could just buy the whole team and with it, the content the sport generates. But baseball teams make for messy businesses with a litany of uncontrollable factors that don’t fit well in publicly traded companies. “The downside is that you also have to do more than programming, you have to actually manage a team,” Berke says. “There are a variety of issues that are non-media related. If you’re up for that, great. If you’re not, those responsibilities can be difficult.”

Blues Jays Attendance Infographic

The 2000s saw the great undoing of media ownership in MLB—the Walt Disney Co. sold the Angels in 2003, News Corp. got rid of the Dodgers in 2004, Time Warner sold the Braves in 2007 and the Tribune Co. sold the Chicago Cubs in 2009. “Media companies have certain skill sets,” Berke says. Those skills typically do not include building successful ball clubs. As CEO of Rogers, Nadir Mohamed signs off on any major Jays investment but lacks any specific training in baseball management. “Nadir always asks good and pointed questions for someone who doesn’t know a whole lot about baseball,” Beeston says.

The marriage of baseball and media might be an awkward one, but it can work if the team has sufficient independence, McDonnell says. “The instinct might to be to run a team like a corporation. But you can’t.” A sports franchise is unlike a typical business. Winning and losing on the field doesn’t always translate directly to profit and loss on corporate statements. Money doesn’t necessarily buy winners. And media executives need to be able to stomach the wild swings inherent in sports. Having long agreed the team needed to boost payroll to compete, Rogers deferred to Beeston and Anthopoulos to judge the baseball merits of a potential deal. “Because we couldn’t,” says Phil Lind, the Rogers vice-chairman who was instrumental in the company’s acquisition of the team in 2000. “We have in Beeston and Alex, the best one-two combination of baseball executives in North America.”

All Beeston and Anthopoulos needed was a desperate seller. It was no secret the Miami Marlins were poised to sell off players after a debacle of a season. But at the general managers’ meetings in California last November, Anthopoulos saw the team was prepared to gut their roster with few reservations. What began as a discussion about starting pitcher Josh Johnson quickly expanded to include fellow starter Mark Buehrle and shortstop Jose Reyes. Here was a chance to fix much of what was wrong with the Blue Jays with a handshake. But Anthopoulos would need to surrender some of the greatest prospects he’d worked so hard to amass over the previous three years. He called Beeston. “I said, ‘I don’t believe you. They aren’t going to do it. This must be a bait and switch,’” Beeston says. After getting approval from Rogers, the 12-player deal was consummated—the biggest trade in Blue Jays history. With immediate contention the new priority, Anthopoulos signed free agent slugger Melky Cabrera and traded for knuckleball wizard R. A. Dickey. The rebuilding phase was abruptly over.

Outside the clubhouse in the Blue Jays aging spring training stadium in Dunedin, Fla., fan Jim Richards angles among a crush of autograph hounds pushing toward R. A. Dickey. The longtime Jays supporter speaks of the perpetual disappointment the team became after the back-to-back championships. “It was so frustrating. Midway through the season things start to fall apart, it seems. Year after year.” Despite that history, he has no interest in limiting his expectations. “Hell no,” Richards says. “We’re going all the way.”

It would be easy to define a successful season for the Blue Jays as a dominant summer campaign with great hordes filling the Rogers Centre and watching Sportsnet broadcasts, leading up to the first Canadian World Series win in a generation. Failure, on the other hand, is tougher to peg. A mere playoff berth would go a long way in overcoming much of the skepticism 20 years of losing produces. Even missing the playoffs entirely would not necessarily be catastrophic. The team has more than one shot at baseball’s highest distinction, considering the core of the roster is locked down for the next three years. Contrary to much of the sports media’s opinion, this is not a playoffs-or-bust season, but rather the first in what Beeston says should be a decade of contention. From Rogers perspective, even if the team falls short of championship expectations, the season will be deemed a success if it holds the interest of fans throughout, Lind says. “When people go to the park or turn on the TV, if there’s a good chance we’ll win that game, that night, that’s the important thing, that we always seem to be in it.” Win or lose, just so long as people are watching.


Alex Anthopoulos and John Gibbons discuss the Miami Marlins trade, and more, with the media, Nov. 20, 2012.


Advertisement