Rockets, Astros recognize partnership in network helps in expanding brand

Giving new meaning to the chant "Beat L.A.," Toyota Center management's goal is to create nightly Hollywood productions on the new video screens, perhaps starring Chandler Parsons with a cast of thousands. The premiere is set for the home opener Nov. 3. less Giving new meaning to the chant "Beat L.A.," Toyota Center management's goal is to create nightly Hollywood productions on the new video screens, perhaps starring Chandler Parsons with a cast of thousands. The ... more Photo: Houston Rockets Photo: Houston Rockets Image 1 of / 1 Caption Close Rockets, Astros recognize partnership in network helps in expanding brand 1 / 1 Back to Gallery

Championship banners look great, and successful teams play to packed stadiums and arenas, but the true path to prosperity in 21st-century professional sports is to own a piece of your own TV network.

With Monday's launch of Comcast SportsNet Houston, the Rockets and Astros join 20-plus teams that have ownership or equity in the regional sports networks that televise their games.

The Rockets, which own 30.923 percent of the new channel, move to the new network this season; the Astros, who own 46.384 percent, move in 2013.

Both teams love to tout ways in which viewers will benefit from the new network. But the bottom line is the bottom line: The Astros received about $40 million a year from their expiring deal with Fox Sports Houston; they will receive an average of $80 million, according to Forbes, across their 20-year deal with the NBC Sports Group, which owns 22 percent of CSN Houston.

"It's a 24-hour, 365-day promotional engine for your franchise," said Astros president George Postolos, who envisioned a Rockets-Astros partnership when he was Rockets CEO in the late 1990s.

"For your fans, it's the one place they can go to at any time to stay on top of what is happening with your franchise and the other sports they care about. And it's also an economic engine that gives you resources to invest in the franchise."

The NBC Sports Group, of course, benefits as well. Houston will be the seventh top-10 market (joining New York, Chicago, Philadelphia, Boston, Washington, D.C., and San Francisco-Oakland-San Jose) with a CSN enterprise.

It also will be the sixth Comcast RSN in which teams have ownership or equity, a sharp variation from the Fox model in which only two teams (the Angels and Rangers) have network equity.

Working model

More Information Teaming up By partnering with Comcast and the NBC Sports Group, the Astros and Rangers join a growing list of major league franchises that own (through the team directly or through team owners) or have an equity stake in a regional sports network: Network Team partner/owner/equity holder Altitude (Denver) Avalanche, Nuggets CSN Bay Area Giants CSN Chicago Black Hawks, Bulls, Cubs, White Sox CSN Houston Astros, Rockets CSN New England Celtics Fox Sports Southwest Rangers Fox Sports West Angels MASN Nationals, Orioles MSG Knicks, Rangers NESN Bruins, Red Sox SNY Mets SportsTime Ohio Indians YES Yankees

"We like the model," said Jon Litner, group president of the NBC Sports Group. "It has been successful in Chicago, Boston, New York and San Francisco. It takes us out of the landlord-tenant relationship where you're on borrowed time, and you become true partners."

They share in the profits, but the Rockets and Astros face different circumstances as they depart their longtime partners at Fox.

Astros games will continue to be available, pending distribution deals, across Texas, Louisiana, Oklahoma, Arkansas and New Mexico. But they will face competition from Fox, which will air a full schedule of Rangers games in Houston.

The Rockets are bound by NBA territorial restrictions, which prohibit a team from going into an area within 75 miles of another franchise. That means San Antonio, Austin and Dallas-Fort Worth will continue to be off-limits.

But Comcast NBC will attempt to take the Rockets into Corpus Christi, the Rio Grande Valley and other areas that were part of Fox's territory dedicated to Spurs games.

"We will be looking for ways to expand our brand in areas where we feel it is appropriate and where we feel we have a strong fan base," Rockets president Tad Brown said. "We are going to aggressively move within the constraints of the guidelines that we operate under in the NBA."

In that vein, Brown acknowledged it was no accident the Rockets put their NBA Development League team in the Valley.

"There was some thought behind that," he said. "It was done primarily for basketball reasons, but we wanted to make sure there were fans there who will want (Rockets) content when we launch."

Some teams launching RSNs have attempted to boost interest through free-agent signings. The Rockets' acquisition of guard Jeremy Lin would seem to fit that pattern, but Brown said TV strategy "didn't factor in at all" to Lin's signing.

Deliberate process

Postolos said the Astros are more intent on building their farm system and strengthening their revenue base than making a quick splurge on a free agent.

"We want to be among the top five or six Major League Baseball teams in revenue," he said. "It might take us a number of years to get to that level. That's OK. We are setting ourselves on a course that will put us in that position.

"Obviously, the first step is to get the network launched and fully distributed, and we need to get the best young talent in baseball. When we get to that position, we can grow our revenue and our gate and our sponsorship revenue to match our television revenue to where we can compete with just about anybody in Major League Baseball."

As the Astros and Rockets enter business with Comcast NBC, watching with considerable interest is Michael Cramer, director of the Texas Program in Sports and Media at the University of Texas and former president of the Texas Rangers and Dallas Stars when they were owned by Tom Hicks.

Cramer said he met with Postolos and other team executives in the late 1990s in what proved to be unsuccessful talks about an RSN to air all the pro sports teams in Texas.

Increasing value

But he said the time is right for the Rockets and Astros, particularly in concert with NBC, as the value of sports TV rights climbs.

"It's not a stretch to say that TV properties, if they are run properly, are worth more than the teams," he said. "I regret that we couldn't get it done for all of Texas, but this is a tremendous move for the Houston teams.

Unexpected gains

"We all knew it was worth it to have a broadcasting business, but I don't think anybody could forecast the explosion in value of these networks. It's one of those things that turned out better than you thought it could be."

It took more than a decade, but the dreams of the 1990s are about to become reality.

"It's everything we expected it to be and everything we were told it was going to be," Brown said. "We have a blank canvas, and we want our partner to go out there and paint it with a great story."

For the rebuilding Astros, Postolos said the TV network is a significant asset.

"For the Rockets and Astros and Comcast, this is one of the most important initiatives in play," he said. "This is going to be the case, certainly, over the next 24 months. It is of critical importance."

david.barron@chron.com