BUSINESS EXCLUSIVE
Principals in the YankeeNets holding company are in talks to unwind their partnership, The Post has learned.
Tensions within the group have gotten so bad that the parties want out – and are now trying to devise a way to break up, according to sources familiar with the matter.
They’ll likely exchange shares in the YES Network, the regional sports network founded by YankeeNets.
The partnership holds 60 percent of the network. The remaining 40 percent is held by investment bank Goldman Sachs and other investors.
A YankeeNets spokeswoman declined comment.
YankeeNets was formed in 1999, when Yankees owner George Steinbrenner and a Ray Chambers-led group that owns the New Jersey Nets agreed to merge their teams. Later, the group bought a stake in the New Jersey Devils hockey franchise.
The value of YankeeNets is estimated at close to $1.5 billion.
The main impetus of the merger was to build a regional sports network to capitalize on the surging costs of sports broadcast rights. The deal left each side able to run most of the day-to-day operations of their teams.
But some opposed to the deal from the start believe the two sides could have cooperated on building a sports network without merging the teams.
The partners also had grand visions of joint marketing projects, which never got off the ground.
“It’s a mess,” a source close to the partnership said. “They’ve got to do something.”
All three franchises are expected to post operating losses this year, sources say. In addition, the Devils have a lot of debt coming due – including about $40 million owed to former owner John McMullen.
There are many sources of tension within the group.
For one: As part of the merger agreement, the teams are supposed to get YankeeNets board approval for player acquisitions, sources say. Steinbrenner, however, has largely ignored that requirement, sources say.
For example, when the Yankees recently acquired Ruben Sierra, it came as a surprise to the members of the YankeeNets board, according to sources.
The YankeeNets were also “blindsided” by the new collective bargaining agreement in Major League Baseball, which required the Yankees to share more of its revenue with small-market teams.
Tensions have also flared over the YES Network, whose contract with Cablevision puts the channel on a premium tier.
A lengthy dispute kept Yankees games off the screens of Cablevision customers last year, and when a deal was finally reached it was at less lucrative terms than the YES Network had originally hoped for.
Time Warner Cable has now moved to put YES on a premium tier, a move that YES has vowed to fight. And Comcast, the nation’s largest cable operator, has indicated that it too plans to move the YES Network to a premium tier, a source said.
If YES and Cablevision cannot reach a long-term deal, the two sides will wind up in binding arbitration. The results of that arbitration will affect the network’s long-term deals with other cable operators that carry the channel.
Meanwhile, the near-collapse of efforts to obtain a new stadium in Newark – which would have been home to both the Devils and Nets – appears to be the final straw that will break up the group, sources say.
The group is already shopping around the Stanley Cup-winning Devils, whom the YankeeNets control through an affiliate called Puck Holdings, sources have told The Post.