Thursday, October 25, 2012

Selling Out & Buying In – Time Warner Cable




I know I promised a blog on Becky’s wedding (I’m actually half way through
it) but I have to interrupt the broadcast for this important announcement. To my
Laker Brethrens (and a few sisters): I realize that when the Lakers made the
announcement that they had struck a deal with Time Warner Cable for exclusive
rights everyone got pretty upset (me included) because it meant we wouldn’t be
able to watch the Lakers without cable.

I, like my fellow Laker Nation, couldn’t believe the Dr. Buss “sold out.” I
mean, what did he need the extra money for anyway? He’s Dr. Buss!!! Here’s the
deal though, with the new Collective Bargaining Agreement and the harder luxury
tax penalties for going over the salary cap in the NBA, Dr. Buss needed another
source of income to both make a profit AND stay relevant. For those of you who
don’t know about the new luxury tax penalties, the Lakers are projected to pay $30
million in taxes alone this year and a whopping $85 million if they keep the same
payroll next year. In addition, in order to help the small-market teams, the NBA will
implement a new revenue sharing plan in which the teams who make a profit will
have to share that profit with teams losing money to help balance the books
(socialism). That will also cut into the Lakers profit.

So here’s where Time Warner Cable comes in. The current deal with TWC is
for 20 years at an estimated $3 Billion. That’s right BILLION!!! A closer look at the
contract reveals that there are annual raises that bring the deal closer to $3.6
Billion. That’s right BILLION!!! Furthermore, the Lakers have an option to extend
the deal to 25 years, which would bring the total to $5 Billion. That’s right
BILLION!!!

If you were Dr. Buss would you say “no” to a potential $5 BILLION? The
Lakers know you need to spend money in order to acquire top talent. Last year, the
Lakers looked at the luxury tax situation last summer and went into cost-cutting
mode, basically giving away Lamar Odom. However, with the TWC contract kicking
in, they looked at the luxury tax situation again, decided to gave it a middle finger,
and traded for two-time MVP Steve Nash and three-time Defensive Player of the
Year Dwight Howard. If the TWC contract gave to the Lakers the guts to say, “Taxes
be damned” and enter into “win-now” mode, then I’m all for Dr. Buss “selling out”
the fan base.

Despite the enthusiasm for this year’s team the question remains, “How in
the world are we going to actually watch the team?” I’ve been milking my in-laws
for their cable for years, so I hated the thought of paying for it myself. But even the in laws aren’t a reliable option at this point. They don’t have TWC. TWC is in the middle of negotiating with other cable companies in order to carry the Lakers.

However, with the Nash/Howard trade, TWC has all the leverage and is probably
playing hardball. Opening night is 10 days away and a deal hasn’t been made yet. It
will probably go down to the wire. In the meantime, though, my father in law’s DISH
won’t do us any good. Plus, my wife said something about how late nights at her
parents’ house two or three times a week might not be good for Joelle. As a father, I
fail to see how anything related to watching the Lakers could be bad for my
daughter, but I won’t argue with my wife on this one.

Now as many of you know, I am currently working on my financial planning
certificate. This work has required quite a bit of time online to complete
coursework and classes. We’ve had AT&T Internet service for a while now. It’s
always been awful, but it seems to have become progressively worse. Since it was
cheap, we didn’t complain too much. That’s over, though. I now need more reliable
internet in order to do my school work. My wife looked around and you know
which company was the only one who serviced our area? . . . you guessed it – Time
Warner Cable! So being the conscientious student that I am, and wanting to care for
my daughter’s scheduling needs, I told my wife our only option was to switch our
internet to Time Warner Cable . . . and while we’re at it we might as well get the
cable TV as well. (I guess my in-laws will be milking us for cable now.) So come on
over and join us for a game or two… I want to feel like money is being well spent,
and there’s nothing like sharing good fellowship, good food, and good basketball.

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