CSN Houston and Jim Crane's Long, Strange Trip to Nowhere
No sports fan in Houston really cares why the Rockets and Astros still aren't on TV. They don't care about the money behind the deals, the accusations of fraud, the back-room negotiations, per-subscriber rates, the posturing and the lawsuits. The only thing that they want is for their teams to be on television, and not just on a single provider. With only 40 percent of the city subscribed to Comcast, the only cable provider carrying CSN Houston fans want someone to blame.
The truth is that all the parties involved in this mess share some of the blame, but, if you want to break it into percentages, no one has had more undue influence over CSN's lack of coverage than Astros owner Jim Crane. It could be argued that he and he alone is responsible for preventing deals that would put the Rockets and Astros on the air. He believes the network should be worth more than it is based on what other cities are doing with their regional sports networks. But, fans could care less whether or not owners who are worth millions (some, billions) and their franchises are more profitable. In fact, they are less likely to support a team that they can't see. Out of sight, out of mind and all that.
Nevertheless, Crane has blocked deals that would have put his team and the Rockets on providers other than Comcast. As a result, he's embroiled in bankruptcy proceedings and lawsuits, and it has all gone down in dramatic fashion.
As fans, we may be pissed, but I do think it is important to understand why things are the way they are and just exactly how we got here. A little history...
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Crane bought the Astros with a group of investors.
Unlike Rockets owner Leslie Alexander or Texans boss man Bob McNair, Crane isn't hyper rich. He needed the help to buy the team in the form of investors and bank loans. Why is this important when discussing CSN? It's important because despite being the boss, he must be responsive to other people. The buck ultimately stops with him, but it's more complicated than the Rockets or the Texans.
This is also relevant because Crane's recent claim that he was duped by former Astro owner Drayton McLane when he purchased the team with regards to the CSN deal, which suggests enough due diligence wasn't done prior to that transaction. If there was truly fraud on the part of McLane and CSN, the fact that it was missed by whatever exploratory committee Crane put together before buying the team must put him in a difficult position with investors. More importantly, it makes him look bad and that cannot sit well with Crane, a man noted for his tenacious competitiveness. That same competitive drive has the potential to make him a great owner, but it keep him from negotiating a deal that is even slightly less profitable. He has less room for error than Alexander and he doesn't want to be caught looking like he was ill prepared to own an MLB franchise.
He refused to negotiate on per-subscriber fees (reportedly $3.40 per subscriber), blocking any deals from being made with carriers like Dish Network, U-Verse and DirecTV.
This is an undisputed fact. Four people must be unanimous in their decision to negotiate on these agreements, Crane, Alexander and two representatives of CSN. In the initial bankruptcy filing, Comcast intimated that it was Crane who created the impasse and kept them from negotiating any deals. The Astros owner is convinced his team and the Rockets deserve more and told Hair Balls as much in early November. There areother parts of the country -- notably Dallas -- where TV deals are worth substantially more than the $80 million Crane and the Astros are getting annually (or not getting for the time being). There are also deals being discussed in places like Philadelphia that could be more lucrative than the CSN deal in Houston.
In that same story, he said, ""If you look at what just came out on the Phillies [who are negotiating a new TV deal] and the numbers that they're talking about, you go to yourself, then how come this is not worth as much? This is a big city, this is a sophisticated city with high-paid people and a good employment rate. Everything's clicking here. It's a great town. Why is ours worth so much less than theirs? When you do the math, even though they may have more subscribers in a tighter area, the math doesn't work."
That kind of future casting might work if the carriers agreed to actually make those deals, but Philadelphia still has no deal in place, though one could be announced this month. And some of the carriers have openly stated they feel regional sports networks are swallowing up so much money that they are unwilling to make market value for new ones fearing it will drive up prices for their subscribers.
Logic would dictate SOME deal is better than NO deal, but Crane isn't budging and neither are carriers like U-Verse, DirecTV and Dish Network. Crane suggested that the bankruptcy filing was a move to cut him out.
In this case, he's probably right, but should that come as a surprise? The other franchise in the equation, the Rockets, seem perfectly comfortable moving forward with negotiations including lowered per-subscriber rates. Of course the representatives from Comcast are willing given that it will likely lower their costs as well, but the fact Les Alexander is open to it says something about the financial flexibility of these deals.
In a way Crane is like the lone juror who refuses to budge. Maybe he is the sole voice of reason that keeps an innocent man from the needle or maybe he sets a killer free. It's hard to know who is right at the moment, but it is clear that, whatever the case may be, he is going to insert himself into the process until he gets his way, and if anyone tries to block him, he'll sue.
It's an interesting maneuver for a guy who has made some intelligent and gutsy moves with his franchise. No one can argue the hirings of Jeff Lunhow and Reid Ryan were smart. He's been willing to tear down the entire team to rebuild, something that many in baseball believe is not only the right move, but a ballsy one. It seems counter to his recent quick legal trigger finger.
The judge told Crane to put up or shut up and find a better deal.
In a move that was clearly a direct response to Crane's claims that he could work out a deal quickly on his own, the judge in the bankruptcy case told Crane to find a deal if he was so sure he could and report back. Within a month, it became readily apparent that wasn't going to happen. But, interestingly enough, he didn't bother to mention in the morning hearing last month that the same afternoon he'd be filing suit against CSN and McLane, convinced they were responsible for his failure to strike a deal with anyone.
This is where things really start to run off the rails. First, he blocked any deal that would reduce the per-subscriber rate to a place carriers might be willing to pay. Then he claimed he could get a better deal. Finally, when it was clear that wasn't possible, he sued claiming McLane and CSN knew all along the rates were too high, but set them there to artificially inflate the value of the franchise before Crane purchased it.
It feels as if Crane was in over his head from the beginning and rather than acknowledge it, get a good deal and move on, he is stubbornly forcing everyone to endure this nonsense. The details are rarely this simple and it is likely he is doing all he can to get the best business deal he thinks is available.
Maybe the deal he wants is a deal he can't have. At this point, no of us really know. All we know is that we can't watch our teams unless we have Comcast.
Hopefully, Alexander will make good on his offer to buy CSN and put the damn network on a wider range of providers already. Maybe then everyone can have what they want. Crane can go to Fox Sports Southwest and get out of a deal he thinks he was tricked into taking, and the fans will get to see ALL their teams on TV once and for all.
Until then, we're still on this bizarre roller coaster ride with no end in sight. When it's over, maybe we'll laugh or maybe, like the a kid who rode the Texas Cyclone after eating a chili cheese dog, we'll just puke and get on with our lives.