Monthly Archives: December 2006

The NFL Network’s one week special

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nfl-network.JPGYou have to hand it to the owners of the National Football League — they recognize a public relations blunder when they see one coming.
As noted in earlier posts here and here, the NFL owners’ attempt to drive a hard bargain with cable companies that service most of the nation’s television viewers has backfired badly in regard to the owners’ NFL Network venture. The viewing marketplace couldn’t care less about the NFL Network’s product and the NFL owners have come off looking like petty moneygrubbers by not making a deal that allows most football fans to watch the NFL Network’s games. In the meantime, the NFL owners’ refusal to cut a deal with the cable companies meant that two post-season bowl games to be televised by the NFL Network — Houston’s Texas Bowl between Rutgers and Kansas State and the Insight Bowl pitting Texas Tech against Minnesota — would not be seen by most viewers in the nation.
Well, the huge collective yawn of viewers, combined with the growing crescendo from long-suffering Rutgers fans who were not going to be able to watch their team play in the Texas Bowl, has prompted the NFL owners to offer an olive branch — one week of free access to the NFL Network in the New York area during the week of the two bowl games.
Now, the only problem with the offer is that Time Warner — one of the largest cable companies in the country and the one that services most of Houston — has not decided whether to accept the NFL owners’ offer. Regadless, most football fans in Houston won’t see the game because the NFL owners’ offer is limited to the New York area.
Are you getting the same impression that I have that the NFL owners have overplayed their hand a bit on this one? ;^)

Krispy Kreme’s new strategy

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krispy6.jpgThe mercurial rise and fall of Krispy Kreme used to be a common topic on this blog, so I took notice of an interesting observation about the company that the NY Times’ business columnist Floyd Norris recently made on his blog:

Krispy Kreme came out with some more sort-of numbers today, and the market liked it. Its stock rose 17 cents, to $9.98.
The doughnut company said sales were down, and that it continued to lose money in the quarter ended in October. But it said it couldnít get out a 10-Q report to the Securities and Exchange Commission, or calculate just how much it lost, because it was too busy working on older reports.
The company has not put out any reports for the current fiscal year, and is still missing one from the quarter than ended two years ago.
But the stock has done well. It is up 74 percent this year. Short-sellers still hate the company, with the last monthly report showing a short position of 19.3 million, more than 30 percent of the shares outstanding, but others think the glory days will return. Some of those shorts evidently cannot find shares to borrow, but hold on to their positions anyway. The company has been on the list of stocks with a large number of failures to deliver for 110 days.
When the New York Stock Exchange continues to list a company, and investors continue to embrace it despite long-delinquent filings, it is hard to see what incentive the company has to get the full numbers out. It promised the S.E.C. today that it ìintends to file the Exchange Act Reports at the earliest practicable date,î but did not speculate on when that might be.

In other words, the company is doing so poorly that it has almost crossed the line to doing well. ;^)

Not another dime

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jail15.jpgCharles Kuffner, one of Houston’s best political bloggers, notes a small sign of progress (also here) in the seemingly relentless and misguided campaign of local governments to build expensive and unnecessary fiefdoms in the guise of large jails:

State Sen. John Whitmire, D-Houston, said there is no need for [Harris County] to spend at least $267 million building two jails when it could cut the inmate population at the county jail by allowing non-dangerous offenders out on bail before trial.
“I am very suspect whether there is a need for jail space,” said Whitmire, who chairs the Senate Criminal Justice Committee. “Harris County wouldn’t have an overcrowding problem at all if it had an effective pretrial release program.”
Whitmire said the Legislature, in the upcoming session, may look at ways to help reduce jail overcrowding, such as shorter sentences for some crimes.
Commissioners Court likely will ask voters next November to approve bonds for new jails that would add 4,600 beds.
County Judge Robert Eckels and other members of Commissioners Court said the jails are needed to reduce overcrowding now and in the coming decades.

As noted earlier here, the condition of the Harris County Jail has long been a civic embarrassment, but the solution is not simply to build more jails. As noted earlier here, Scott Henson has written this thorough and insightful analysis of the true problem with the Harris County Jails, which is overcrowding from sloppy and lazy processing of prisoners who do not need to be incarcerated pending their trial.
There are some powerful political forces — county commissioners, contractors, police unions, etc. — that benefit from and support this unending spiral of jail construction, while the constituencies supporting prisoners are not as powerful or well-funded. However, it is clear that the solution is not simply to build bigger and more expensive jails. Rather, building additional facilities should not even be a consideration unless or until Harris County adopts a sensible pre-trial release policy that frees up literally thousands of existing jail cells that are being wasted on folks who should not be in jail. Moreover, the county should also be required to fix the chronically deplorable condition of its existing jails before seeking to build more. This is a community issue — and in other communities as well — that should transcend party politics. But I doubt that it will.

Continental’s big news

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Continental Airlines logo5.jpgThe big news story today in Houston is the announcement about Continental Airlines engaging in merger negotiations with Chicago-based United Airlines. Here are the stories from the Wall Street Journal ($), the NY Times, the Financial Times and the Houston Chronicle.
The bottom line on the proposed merger is that it’s a longshot for a variety of reasons, not the least of which is that such mergers are traditionally complex and expensive. However, the fact that merger talks between the second-largest (United) and the fifth-largest airlines are taking place at all is a reflection that the airline industry is primed for a round of consolidations as the industry rebounds from the severe downturn that was inflamed by the effects of September 11, 2001 attacks on New York and Washington. United ended up in a long reorganization case under chapter 11 that it emerged from in early this year, but both Continental and United have absorbed higher fuel costs and added capacity, and are among the carriers that are expected to Improve financially in 2007. Mergers could help both airlines reduce overhead by eliminating overlapping routes.
One of the issues that mitigates against a merger between the two airlines is “golden share” that Northwest Airlines Corp. holds in Continental, which is a special voting series of Continental preferred stock Northwest holds in connection with a marketing alliance with Continental that does not expire until 2025. Thus, if a proposed merger requires shareholder approval of Continental, then Northwest could use those shares to block the merger. But Continental and United could simply structure around the golden share, such as having Continental buying another airline so long as such a transaction didn’t require Continental shareholders’ approval.
Also, United is clearly playing the field right now. The airline has recently approached Delta Airlines, which is currently wallowing in a chapter 11 case, regarding a merger through a chapter 11 plan of reorganization as an alternative to a hostile takeover bid that US Airways is currently pursuing.
Continental shares declined yesterday 5.6% to $42.88, but they continue to trade near the top of their past year range. The stock of UAL, United’s parent, also is trading near its 52-week high after closing down 2.9% at $43.23. This is the type of deal that will either gain momentum quickly or fizzle out, so stay tuned.

Evaluating the Jennings deal

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Jason Jennings 121306.jpgThe Stros made their second big off-season acquisition on Tuesday as they acquired Denver Rockies ace and former Baylor star Jason Jennings and journeyman pitcher Miguel Asencio in trade for CF Willy Taveras, promising starter Jason Hirsh and mercurial starter Taylor Buchholz. A friend who was driving at the time called to alert me to the deal and to inform that the sports talk shows were bashing the trade. Although the Stros first deal was questionable, this one is not.
Giving up young pitchers such as Hirsh and Buchholz always risks depletion of pitching depth, but that is the Stros’ strength right now, so they could afford to give up something in that area. Jennings is a 28 year-old, emerging star and an undervalued talent in Denver (he will make “only” $5.5 million next season) where his pitching stats suffered until the club started storing baseballs in a Coors Field humidor over the past couple of seasons. His career runs saved against average (“RSAA,” explained here) is only 23 in five seasons, but he is coming off his best season in which he had a 25 RSAA and a 3.78 ERA. If the Stros can lock him up after the 2007 season, then Jennings and Roy O can anchor the starting pitching rotation for years to come. And if the Stros re-sign Roger Clemens for at least a portion of the upcoming season, then the Stros have a potentially league-leading rotation, particularly when you add in the recently-acquired Woody Williams.
Meanwhile, what the Stros gave up was mostly hat and little cattle at this point. Taveras’ limitations are well-chronicled, so he will be replaced by a player — either Chris Burke, Jason Lane or Hunter Pence — who will generate more runs for the Stros than Taveras. The 25 year-old Buchholz has great stuff, but he mostly stunk when given an opportunity in the starting rotation last season (-17 RSAA; 5.89 ERA) and has never been able to pitch a full season of professional ball because of injury breakdown. The 24 year-old Hirsh is a potential star as he dominated the Texas League last season, but the fact of the matter is that Jennings was a better pitcher than Hirsh at his age and it is unlikely that Hirsh will develop into as good a pitcher as Jennings is right now. So, my sense is that the Stros were smart to overpay a bit with potential for an established frontline starter.
Think of Acensio, the throw-in on the deal, as sort of a right-handed Carlos Hernandez-type. He was a promising pitcher with the Royals as a 21 year-old back in 2001, but he broke down in 2004 and underwent Tommy John surgery on his right elbow. He hasn’t pitched much in the majors since then, but still has mid-90’s stuff and a wicked change up. He’s one of the guys who we might never hear about it again, but he’s young enough to take a flyer on to see whether he can develop into a middle reliever in a couple of years.
The bottom line — the Stros gave up a potential solid starting pitcher in Hirsh for a proven starting pitcher in Jennings who is not much older. Ascencio and Buchholz are essentially a wash, and the Stros improved by subtraction in getting rid of Taveras, who cost the Stros 30 runs his two seasons with the club over what an average National League player (think Chris Burke) would have produced for the club. That’s a good trade for the Stros in my book.
Williams’ career stats are below and a pdf of the same is here. The abbreviations for the pitching stats are here.

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“Ethics” at Seton Hall

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handcuffs121206.jpgI swear, you can’t make this stuff up.
This previous post reported on Richard A. Epstein‘s WSJ ($) op-ed that addressed a common topic of this blog — that is, the improper use of deferred prosecution agreements by prosecutors to blackmail companies into agreeing to absurd fines and “corrective” measures to avoid being prosecuted out of business.
In the op-ed, Professor Epstein used as an example the recent conduct of the US Attorney for New Jersey. The US Attorney forced Bristol-Meyers to endow a chair of “ethics” at the US Attorney’s alma mater, Seton Hall Law School, as a condition to granting a deferred prosecution agreement settlement to the company over criminal charges. Apparently, in the US Attorney’s world view, the ends of endowing an ethics chair justifies the means of utilizing dubious ethics in arranging the endowment.
Normally, you would think that the publicity surrounding such an arrangement would at least raise some ethical concerns at Seton Hall. Instead, the Seton Hall Dean used this WSJ letter-to-the-editor ($) to respond to Epstein’s disclosure of the questionable arrangement and brag about Seton Hall’s ethics program. He doesn’t even address the school’s problematic ethics in accepting the endowment from a company that was coerced to pay it by a federal prosecutor!
H’mm. I wonder if the Seton Hall Dean would have had a problem if he knew that the alum’s source of funding for his “ethics” program had come from a kickback or ransom paid to the alum? On second thought, his letter answers that question.

The golfing benefits of valium

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tommy_bolt1.jpgIt’s not golf season, but this story is too good to pass up.
This John Coomber/Northern Territory article addresses the difficulties that professional athletes have in acknowledging depression and the beneficial role that antidepressants have played in the lives of professional golfers Brett Ogle, Stuart Appleby and Steven Bowditch. It’s a serious issue and one that has often been swept under the rug by the folks who promote professional sports and the athletes themselves.
However, the article ends with a funny anecdote. Five-time British Open champion Peter Thomson is quoted as saying that he never noticed depression to be a much of a factor during his playing days, though he suspected that some of his colleagues self-medicated through use of alcohol. Thomson goes on to recall that the famously volatile American golfer Tommy Bolt once tried taking sedatives to control his anger on the course:

“In 1956 (the year Thomson won his third successive British Open) Tommy started taking a drug like a kind of valium to calm him down,” he said.
“When I came back to America for the 1957 season I asked him if he was still taking the tablets and whether they were doing him any good.
“‘Yeah,’ he said. ‘I’m still three-putting but now I don’t give a shit.'”

Hat tip to Geoff Shackelford for the link.

The Houston bowl game that few will see

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Texas Bowl 2006.jpgThis NY Sunday Times article does a good job of reporting on Texans’ owner Bob McNair’s efforts to revive Houston’s bowl game, renamed “the Texas Bowl” after being known over the years as the Bluebonnet Bowl, the Astro-Bluebonnet Bowl, the GalleryFurniture.com Bowl and, most recently, the EV1.net Bowl.
Now, if only McNair could persuade the other NFL owners to let most of us watch the game. Sort of silly to have a bowl game that is supposed to promote the city when most people can’t watch it, don’t you think?

A big cost of maintaining Auburn’s minor league professional football program

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auburn univ.jpgThis NY Times article reports on the latest developments in the Auburn University academic scandal involving the school’s intercollegiate athletic program. The university’s report on its internal probe indicates that at least one scholarship athlete had his grade changed from an incomplete to an “A” in a course without the professor knowing about it in order to allow the athlete to fulfill eligibility requirements. And it’s not as if the course was even a real academic exercise — it was something called a “self-study” course. Earlier posts on the scandal and the tension between academic institutions financing and operating minor league professional sports franchises are here, here and here.
Is there really any question at this point that minor league professional football is more important than academic integrity at Auburn?

2006 Weekly local football review

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Young goes for the TD.jpgTitans 26 Texans 20
Unless you are a hardy soul, it would be a good idea to avoid sports talk radio this week in Houston.
It would have been bad enough given that jilted no. 1 draft choice Reggie Bush had another brilliant game in helping the Saints blast the Cowboys. However, Texas Longhorns hero Vince Young really turned the knife when he transformed a third and long situation in overtime into a 39 yard touchdown run to give the Titans their second win over the Texans this season. The Titans trailed 14-13 in the fourth quarter before Young led a 15-play, 88-yard drive that gave the Titans their first lead of the second half, 20-17. The Texans tied it up on a Kris Brown 36-yard field goal with a little under two minutes ago, and then Young’s TD run occurred on the first possession of the overtime period.
Rookie Young clearly outplayed embattled fifth-year Texans QB David Carr, who could generate only 133 net passing yards on a 17-23 day. Young was 19-28 for a net 200 yards with one interception, but tacked on an additional 86 yards rushing on just 7 carries. Given how close-to-the-vest Texans coach Gary Kubiak played this one on offense, it’s reasonably clear that Kubiak has little confidence in Carr and that the first draft choice in the Texans’ history is probably playing his final few games with the franchise.
The Texans (4-9) now go on the road to face the Patriots (9-4) and then return home to finish the season against the Colts (10-3) and the Browns (4-9). There may be one more win in those three games, but my pre-season prediction of six wins for the Texans now appears to be a pipe dream.