In 1993, the FOX network bid on and won the rights to broadcast NFL games as part of the league’s NFC package of Sunday games. The league bid $1.58B for four years of broadcast rights. Stripping out Sunday and Monday night packages, this made roughly 464 games available to the network. Prorating the bid amount over these games creates overhead of $3.4 million per game before dollar one is spent on production.
In 1996, the pre-tax profit for News Corp (the parent company of Fox) was $1.36B versus 1997 pre-tax profit of $1.47B (The final two years of the original deal). The 2010 figure came in at $3.7B. Fox is currently broadcasting league games under a six year, $4.27B agreement that began in 2006. Certainly, it’s easy to see that those dummies at News Corp could have turned a $4.41B profit in 2010 without investing in the NFL package, right? Right?
The reason why Rupert Murdoch eclipsed CBS’ 1993 bid by more than $100M, was because the NFL broadcast rights serve as a way to generate Sunday ad revenue (which essentially offsets production), promote other programming broadcast throughout the week, broadcast the tri-annual cash cow known as the Super Bowl, and to cross promote other endeavors. In the retail world, it’s called a loss leader. So if you hate Anne Coulter, blame the NFL for not accepting CBS’ bid in 1993.
The Town of Chestertown is currently mulling over its own version of NFL broadcast rights. To many, the marina and riverfront project looks like $2M of red ink before dollar one is spent to tie a boat to a dock. It has also been said that the public sector should not dabble in what the private sector could not already make profitable. It has also been said that the public payroll should not increase for the purpose of managing a marina.
What has not been said enough is that the Town is not trying to operate a marina. The Town is trying to facilitate the creation of an industry, leveraging its major asset. It’s not like the Town is trying to use stimulus money to construct a year round outdoor ice rink in the hopes of holding the 2022 Winter Olympics. It’s not a one time cash outlay to groups of people in the name of “putting people to work.” It’s about a path to sustainability.
What makes this plan sustainable is the Town’s competitive advantage. This is a vital concept. When we can name the Town’s economic drivers in a very specific way that is similar to naming all of the places to grab a hot sandwich, it indicates that there is not at the present time, a sense of unity or direction in our long-term economic strategy. If we don’t utilize our competitive advantages, we have no return on assets. At some point, it ceases to be an asset.
It may be so 1990s, but I think a SWOT (Strength/Weakness/Opportunities/Threats) analysis is a good exercise to get a lay of the land. Strengths: A riverfront with public access that is used for Town events. A downtown with history that is adjacent to the port. Don’t forget those diverse food options and some interesting boutiques. Weakness: Finite funds under the current budget construct. Opportunities: Grants to defray costs. Lease revenue from enterprises occupying a subdivided marina. An incentive to quickly occupy the proposed Stepne Manor neighborhood (the tax roll argument). Continued use of the area for downtown festivals is also a plus. Threats: We do nothing and lose public access that is taken for granted. We build it, but Shoeless Joe never shows. Buy or not, we have no influence over what happens across the Chester River.
The key is to overcome weakness, and use strengths to seize opportunities and ward off threats. If Queen Anne’s County decides that Kingstown is going to be allowed to boom, then Chestertown will eventually become “the other side of the river” if there is no reason to venture to it. Aside from the standard marina and perhaps an expanded Fish Whistle, picture a more ornate dock for the Sultana, a high profile areas for Living Classrooms, hansom cabs to Fountain park, and a couple of docks committed to pedal boat launches (not officially proposed, but the idea is to see the currently unseen). Leadership must reiterate that this goes beyond the scope of a standard marina. The opportunity is there to be Cambridge, but without the vacant downtown storefronts.
The reason why the Town can invoke a long-term loss leader strategy is because it doesn’t have a profit motive. That said, it is accountable as stewards of our tax dollars, to act with prudence to avoid sunk costs (pun intended). News Corp used the strategy knowing that they too were bound by constraints. Their shareholders have the expectation that investments will eventually pay off over the course of an agreement. Generally Accepted Accounting Principles (GAAP) dictate that revenues and expenses have some type of correlation during a fiscal period (and here you thought private enterprise was some unregulated wild-west environment).
On the other hand, the town has decades to recoup rents and income taxes that are derived from waterfront activity. Property values will hold steady or increase to bolster property tax revenues. The Stepne project now makes much more sense, and bolsters the tax basis. The Town’s aggregate wealth (public and private) would increase with a properly implemented plan. Some call it the multiplier effect. In any event, I’m not sure that Adam Smith and Milton Friedman are doing as many somersaults in their respective graves as some might think.
Warrior Bob Kramer says
Monsieur Troup’er:
You were right… I like the piece. Nicely covers all aspects of the issue.
Bill says
Launch a paddle boat there and it will be the occupants who will be the “unseen.” Suggest you look in Millington, or perhaps Comegys Bight, depending on the time of day.
Bill
rcg says
” If we don’t utilize our competitive advantages, we have no return on assets. At some point, it ceases to be an asset. ”
easiest ES case study is RedEye’s – they couldn’t pay people to come when they first opened – now they couldn’t pay people to stay away…
even Harris Crab House moved from the old oyster house to a fancy new building when traffic increased (and Harris’ held there own during that time)…
i am NOT suggesting that CTown and FishWhistle turn into RedEye’s – don’t worry – i am suggesting that if CTown can grow well and show initiative, it will become more of a destination – not just during large events and for college family visits…
yes – i am a native – yes – i worked at Harris’ Crab House the first two summers RedEye’s was open – no – i do not, nor have i ever owned my own business – no – i was not an econ major…
Gren Whitman says
C’town should keep in mind that Big CIty Across The Bay — and the various successes of Baltimore’s Inner Harbor development.
Of course, I’m not suggesting a rah-rah-Rouse-“Harborplace”-style development here, but the fact is that the Baltimore’s Inner Harbor is a NATIONAL tourist attraction — you might say, even an international attraction.
Just the simple acts of (1) KEEPING THE WATERFRONT ACCESSIBLE and (2) KEEPING THE WATERFRONT PUBLIC re-animated Baltimore City when it was gasping and sorely needed revival.
MBTroup says
^Now if a retrocon (My label for my one person movement) and a progressive can agree on this…
Warrior Bob Kramer says
Monsieur Troup’er… Add a ProCon in the agreement category. We’ll all be singing Kumbaya before long.
Steve Payne says
+1 more. Why don’t you guys,and girls, come to Open Mic night on the 27th at The Prince and perform Kumbaya live. Keith and Clark and many more regulars will be there. I’ll video it!