10/5/12

Wang vs Dolan On Cable Contract/Territorial Rights Buyout

New York Islander Fan Central | 10/05/2012 08:24:00 AM
Anyone who believes James Dolan, who took a tantrum over hockey coverage costs in 2005, fighting with another former Msg President Mike McCarthy here , who pulled the Isles pregame one year for a month, and fought them over $50,000 for the Metro Ice Challenge is simply going to pay Charles Wang well over a hundred million dollars for a cable contract that runs until 2030/territorial rights simply has not been paying attention.

Terms of the Cable Contract? 
NY Times: Going back to 1998 we know how the Dolan's reacted when they signed a new agreement until 2030 that gave the Isles eighteen percent of all Msg/Fox television revenue.  

The Garden invoked a phony competition clause and pulled Islander games.

In 1999 Charles Dolan discussed the competition clause he obviously never invoked on his own laughingstock teams but we did get the only documented terms of the updated cable deal.

Cablevision recoiled at the possibility of paying the Islanders 18 1/2 percent of total FSNY-MSG revenues. In the talks, the team got an extension through the 2030-31 season, which features yearly payments rising from $14.8 million next season and $17.5 million in 2000-1 to $36 million in the final year, and the possibility of lousy performances causing a breach disappeared from the final contract.
In November 2004, the Devils no longer with Yankee-Nets resigned with Msg until 2023-24.
Financial terms were not disclosed, but officials on both sides said the deal will give the Devils substantially more than the roughly $8 million rights fee the team was to receive this season.   In the past fans have complained when Devils games were broadcast on the Metro Channel, which is only available on Cablevision-owned systems. But Lamoriello said MSG and FSNY,  owned by Cablevision, assured him that will no longer happen.

"In this agreement we were able to look at all areas to help the franchise," Lamoriello said. "We wanted to ensure accessibility for all of our games to all our fans and we have a commitment to work that out." "What we were able to work out was the best decision for the franchise going forward," Lamoriello said. "Timing is everything in life."
Note-That is one reason why the New York Islanders received one game on Msg last season, and zero most other years while the Devils appear frequently on Msg.

To be fair as a Time Warner subscriber Metroguide was used during the Islander-Leafs 2002 playoffs, it was limited, but never a Cablevision-only channel. 

Guess that agreement did not cover playoff post-game road coverage for Lamoriello in 2012. 

How Much Is That Until 2030? 
Frankly, a full total of the cable contract has never been provided, nor have the Dolan's discussed the numbers which they will not do in a publication they now own. We can low estimate if the number remained at it's 2000-2001 level from 2012-13 at 17.5 million until 2029-30 that would come to 297 million, plus another 36 million for 2030-31.

333 million from this point forward if there has no been no increase since 2000-01, for years I listed the total around 300m so what I read in professional media could have been poorly done.

What Voids The Contract? 
That's easy, the franchise relocating out of their territorial rights area which includes Brooklyn, Queens, Suffolk, and a portion of Ct.

Territorial Rights? 
Four million when the Islanders joined the NHL in 1972, it's likely worth a great deal more today, and especially to the Dolan's if those rights were vacated.   

NY Times: In 1987 Devils owner John McMullen discussed how much he had to pay the Islanders, Flyers and Rangers in territorial rights fees so we have more background beyond 1972.

So What Does Charles Wang Do? 
Charles Wang purchased the Marriott Hotel in 2005, he bought out Scott Rechler's share in 2010, and the total cost was reportedly ninety million dollars at the time of purchase. He owns the abatement (walk of champions area) between the hotel and the Coliseum permanently.

He has no reason to ever move this team as long as he retains ownership, his actions in 2011 agreeing to a thirty year lease extension with a rent/revenue split, far worse than the deals ownership was offered in Edmonton/Phoenix (where owners get paid to manage facilities) made that very clear.

As to what he does now that's easy, he's not advertising any move/sale out of his territorial rights area because it means Dolan has no obligation to pay him anything. If he does decide to sell locally he's going to want from a potential owner his share of that future cable contract money as part of the purchase price.

Perhaps he also wants a potential owner to purchase the Marriott as part of the package to keep the club on that site?

This does not even touch Wang's ownership, management in Bridgeport until 2021 or the lease with Bridgeport to manage Webster Bank Arena which he renovated, with more city renovations planned in 2012 page 23.


What Will Dolan Do?
First off in 2001 it was reported the Knicks own territorial rights on Long Island here. 
The Dolan's needed Nets ownership approval in 1996 which is how the Nets got territorial rights in Brooklyn here.

Dolan's going to see what Wang's best offer is if he eventually decides to sell, give him a big cable/territorial rights buyout to take the team out of his television market if an out of town offer equals a local offer.

Dolan's not going to offer him anything if there are no competing offer of equal value. 

Ultimately:
Sorry folks, if  CharlesWang's final decision is to sell the New York Islanders, he has every reason to make back every penny he invested in this franchise since the day he purchased it (not even counting his share of the 20m Lighthouse Project) and protect himself/family above anything else.

Having written this, I absolutely believe there are too many financial reasons for Charles Wang  to retain the team at the Coliseum site permanently, and plenty of time based upon what's happened in Pittsburgh or Edmonton, who's lease expires a full year before the Isles. 

On May 16th 2011, this blog posted an entry titled New York Islanders Will Never Leave New York. 

On March 14th 2012, this blog posted an entry titled Total Support For Charles Wang.

I'm standing by those entries. 

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