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The New TV deals are going to be a windfall of all 30 teams

Aug 28, 2012, 10:30 AM EST

Money Bag

Let’s put that new ESPN rights deal in context.

While each team keeps its own local broadcast money, national TV money is split equally among all 30 teams. I’m assuming MLB gets the vig, so it’s not all divided up, but we’re just dealing with rough numbers here.

Beginning in 2014, ESPN’s annual payment for MLB rights will jump from around $306 million to $700 million a year. Meaning that the annual payment to each team will jump from just over $10 million to around $23 million.  That’s $13 million more in each team’s pocket per year starting in 2014, though the ESPN deal alone.

Now, figure that there will be at least similar and perhaps greater proportional annual bumps for the deals currently held by Fox and TBS. Which are bigger money overall given that they include the playoffs. And that’s assuming that baseball and their would-be network partners don’t get creative and add in a new broadcast product of some kind.  Figure then, what, $25 million more a year on top of the ESPN bump?  $40 million?  With numbers going they way they’re going right now, it’s entirely possible. The upshot of all of this means that, without doing a single thing, each major league team is looking at an increased cash payment of, at minimum, $40 million. Probably much more. Just for the national TV rights increase.

Put differently: the Dodgers seemingly insane assumption of the Carl Crawford, Josh Beckett and Adrian Gonzalez contracts will basically be paid for out of TV money eventually. The vast majority of the entire 2012 payroll for teams like the Padres, A’s, Rays, Astros and Royals will be covered.

It’s a new world out there. Or will be soon.

  1. b453841l - Aug 28, 2012 at 10:34 AM

    Yes, but will we still have the bogus blackouts we all know and love?

    • natslady - Aug 28, 2012 at 10:54 AM

      So on the mark! Who lives their life tethered to a cable in their apartment? You pay $120 for MLB.tv and can’t watch your OWN team–even when they are out of town???? You have to get cable and a Vulkano (= slingbox) to watch the games on a device.

    • bigleagues - Aug 28, 2012 at 12:04 PM

      Three letters: V.P.N.

    • serbingood - Aug 28, 2012 at 12:16 PM

      Amen bro! I live in Las Vegas and follow the Yankees. Have Dish TV, MLB.tv and whenever the Yanks play in California and are not carried on a CA station, I get blacked out. Even when on a CA station I get the video blacked out on MLB.TV on my phone. Same thing when a CA team plays in NY. Whenever they play Boston on a Saturday and Fox carries the game, I get blacked out. A friend follows the Cards. They get blacked out here whenever in CA or Phoenix, AZ. We are NOT an Arizona market in any way shape or manner.

      I don’t really care what ESPN or Fox ir whomever pays for the rights. What I care about is the bogus blackout rules. MLB rob$ the networks and screws the fans. The great American Sport indeed.

      MLB, can you just stop the blackouts on MLB.TV? We are paying for the ‘privilege’ to see the game. I am certain that there is a 12 step program you can enroll in to get help. Have a talk with your drug testing department.

      • bigleagues - Aug 28, 2012 at 3:21 PM

        Stop the blackouts on MLB.tv?

        Three little letters: v.p.n.

  2. ThisIsBaseball - Aug 28, 2012 at 10:36 AM

    This is another bubble waiting to burst, right? And what happens when it does? The death of baseball as we know it?

    • dowhatifeellike - Aug 28, 2012 at 10:47 AM

      I’ll be giddy when it does. Players will not be able to chase a big contract like they do now.

      • nategearhart - Aug 28, 2012 at 10:54 AM

        Your kidding, right? You’ll be giddy when viewership of baseball games tanks so hard that the network deals turn into massive albatrosses, giving teams less money to offer to the guys who actually play the goddamn game?
        Ok, I’ll bite: what exactly is wrong with the amount of money players make right now?

      • bsbiz - Aug 28, 2012 at 11:53 AM

        That’s a good thing?

      • dowhatifeellike - Aug 28, 2012 at 3:00 PM

        Nate: there’s nothing wrong with the amount of money. The problem is the scale of it. Name me another industry where the average worker makes over 1000% more at the end of their (short) career than at the start.

        There’s no company loyalty in MLB. Everyone is a bat or an arm for hire. If it weren’t for the rules currently in place, nobody would play for the Padres or the Rockies or the Royals for more than 2 years.

        The roster churning in the MLB is incredible. Brian Roberts is the only Oriole who has been with the club more than 5 years. If there were less money to dole out, buying free agents would be more difficult; nobody is going to change cities for a 10% raise.

      • bigharold - Aug 28, 2012 at 3:43 PM

        “There’s no company loyalty in MLB”

        There isn’t much loyalty with the fans either. Regardless of how much the fan base likes a particular player he either produces’ or, .. given enough instances of failing, .. he’d eventually get booed of the field.

        Your point regarding the scale of salary increase refers to work places other than MLB so they are a false analogy. If you were arguing against the appropriateness of MLB juxtaposition to the relative value they add to society you’d have a stronger philosophical argument but you’d still be overlooking one important aspect of the MLB salary structure. Salaries are set by the owners, .. not the players nor their agents. Pick any outrageous contract signed by a player and that contract would have the team’s signature on it as well. Nobody is forcing them to spend at the rate they do. And, the owners do so because they assume that they’ll make more from it. Of course that’s not always the case.

        One can debate the logic, reason and long term ramifications of paying the newest, least experienced player on the worst team in MLB over $400K a year when teachers, .. the individuals that teach our kids how to read and write and generally need advanced degrees, .. are making one tenth of that figure. But, frankly debating it is all that will come of it. And, .. I’d rather the players, .. or at least some of them anyway, .. get rich playing baseball rather than some already very wealthy individual get tens of millions more for doing nothing more. In the end a lot of that money is going straight into the pocket of owners that have no need for it and even less inclination to reinvest it back into their team.

    • dondada10 - Aug 28, 2012 at 10:48 AM

      The complete opposite. It’s full speed ahead for the game we love.

    • 18thstreet - Aug 28, 2012 at 10:49 AM

      Well, if ESPN decides not to bid on baseball in eight years, you’ll probably see a lot less baseball on SportsCenter and Baseball Tonight would be cancelled. ESPN has no ethical qualms in dividing the sports that it broadcasts from the events its considers newsworthy. (Look at how Monday Night Football, no matter what, is the most important event in sports every week.)

      But I think (under the bubble bursting scenario) you’ll still see MLB Network broadcasting games at the same pace, you’ll still see a Saturday Game of the Week (whether on Fox or TBS). And your local broadcasts aren’t going anywhere.

      I see no reason to worry about a bubble bursting, as a fan and a viewer. And how rich the players and the owners get from these contracts is of no interest to me, except for the fact that I’d like to tax those so-called job creators at the same rates that Eisenhower did.

      • Lukehart80 - Aug 28, 2012 at 12:06 PM

        SportsCenter and Baseball Tonight are of such low quality at this point that I’d be just fine if they disappeared.

      • dowhatifeellike - Aug 28, 2012 at 3:03 PM

        SportsCenter hardly covers MLB as it is. They’re more about interest stories than reporting scores and results. Orioles results are mentioned maybe 1 out of every 3 days, never for more than 20 seconds.

  3. Lukehart80 - Aug 28, 2012 at 10:43 AM

    So the Indians can trade for Justin Upton now and sign Zack Greinke, right?

  4. stex52 - Aug 28, 2012 at 11:01 AM

    I’ll give you another insane regional example. The Astros’ Comcast deal with the Houston Rockets starts this fall. They will get an 80 MM$ annual payout plus equity ownership in the company. Add the 23 MM$ national deal. Assume you get 15,000 people per game (really poor, but they won’t be better next year) and they pay $50 each for tickets and concessions (low). That’s another 60 MM$ plus. I have no idea what they get on merchandise sales, but it isn’t nothing.

    Astros’ payroll next year figures to be 100 games in 2013.

    Any doubt why Crane was willing to borrow a bunch of money and jump through hoops to get his ownership approved?

    • stex52 - Aug 28, 2012 at 11:04 AM

      My message was garbled. Payroll for next year is 100 games in 2013.

      • stex52 - Aug 28, 2012 at 11:06 AM

        Garbled again! Come on you guys!. Payroll plus draft 37 MM$. The rest is operating expenses, pure profit, and equity growth. Alll for a team that will lose 100 games.

  5. proudlycanadian - Aug 28, 2012 at 11:01 AM

    How do US TV deals affect the Jays? The Jays will not benefit from local TV deals as they are owned by a Cable network that owns the Canadian baseball rights.

  6. kranepool - Aug 28, 2012 at 11:20 AM

    Fred Wilpon is running around Flushing with no pants on screaming YIPPEE-AYE-YEAH MUTHAFU#@ERS!!!!!

  7. ajcardsfan - Aug 28, 2012 at 11:24 AM

    Maybe they’ll use that money to lower the price of beer? I know I can keep dreaming, but a boy can hope!

  8. Francisco (FC) - Aug 28, 2012 at 11:26 AM

    All this will do is increase inflation of baseball salaries. When every team sees massive increases in cashflow do you think that will result in teams acquiring more quality free agents? or in teams bidding higher and higher for the same product? It’s not like there’s going to be infusion of baseball talent added to the pool along with the money. When more money chases the same amount of product (in this case baseball players) costs rise. Scott Boras is rubbing his hands in anticipation of new megadeals that will make the Albert Pujols and Prince Fielder deals seem economical and the Ryan Howard extension look like a pittance by comparison.

    • bsbiz - Aug 28, 2012 at 11:57 AM

      I don’t know if it will do what you’re thinking. With that much money, how easy would it be (in theory) for the Rays to pay Hellickson and Moore and buy out a bunch of free agent years? How much easier will it be for (in theory) the A’s to buy out free agent years of their young players?

      If anything, this new money will likely cause the free agent market for guys in their mid 20’s to dry up a bit because it will be easier for their original teams to sign them (Boras clients, as usual, likely excepted).

      • sportsdrenched - Aug 28, 2012 at 12:22 PM

        I’m with FC. If each team gets $40 Million before they sell a ticket, it will make no difference in the competitive balance because each team starts at $40 Million, and then they add in their RSN deals.

        Big markets will still have big RSN deals, and smaller markets will still have small RSN deals. And Big markets will still have more money to chase free agents.

      • leeeroooyjeeenkiiins - Aug 28, 2012 at 12:25 PM

        It depends. If the Rays jump on extending guys early, this could benefit them. But they’ll have to act quickly because it won’t take long for the entire market to inflate. Some team will get desperate and overpay for a free agent because they suddenly have extra cash and, rather than using it wisely, they jump the gun because they want to make a big signing to appease their fans. That signing then sets the market and teams everywhere start scrambling and making similar bad deals, and before you know it the average salary for every position just went up and it’s as if the extra cash never happened at all.

        I do agree with you in the sense that there’s a window of opportunity here for small market clubs though. Use the extra cash to extend your young stars before the market changes and they start demanding more cash because everyone else is getting more cash too.

      • Francisco (FC) - Aug 28, 2012 at 1:03 PM

        What Leroy said. That window is actually right now. The Dodgers have to decide if they really want Kershaw long term. An extension worked out right now before the market changes will be cheaper in the long run.

        The small market teams you mention locking up younger players will have to do so at inflated prices, I don’t think it will make a difference once the market is set in 2014. Moores and Hellickson’s of MLB will be demanding not current extension salaries, but maybe twice or three times that. So they better start paying now before the money starts rolling in.

    • nategearhart - Aug 28, 2012 at 2:30 PM

      As I asked someone up above, what’s the problem with salaries going up to coincide with increased revenue? If your employer starting turning a much bigger profit, wouldn’t you want a cut?

  9. phillyphann83 - Aug 28, 2012 at 12:04 PM

    And there goes your cable bill right through the roof, because it wasn’t there already.

    • 18thstreet - Aug 28, 2012 at 2:53 PM

      I hate how I have a gun to my head, forcing me to buy cable television. The right to purchase cable at $5 less than I’m paying now is in the Constitution, I tells ya!

      • dowhatifeellike - Aug 28, 2012 at 3:07 PM

        Cable is the worst thing to ever happen to television. Advertising revenue is supposed to cover the costs, but here we are paying out the nose for something that used to be free.

      • 18thstreet - Aug 28, 2012 at 3:37 PM

        You can still get five channels for free, just like always. the next 400 will cost you.

  10. bigleagues - Aug 28, 2012 at 12:08 PM

    IF enough people bought MLBTV Premium and used a VPN – MLB would eventually get the point and I would hope, negotiate an end to these silly last century business model anti-consumer Blackouts.

    • beyondtheballfield - Sep 10, 2012 at 6:43 PM

      No MLB.TV does not need to do that. A bunch of people like watching TV through the TV networks (because they haven’t figured out how to hook a computer up to the large screen or whatever). The problem is not the blackouts in theory it is how they are practiced.
      I lived in South Bend Indiana where it makes sense to blackout Cubs and Sox games for the TV market deals. Yet also on MLB.tv I was blacked out from Reds, Indians, and Tigers games. What the heck? Can’t watch those teams on TV yet MLB.tv blocks them. They are not selling the rights to those areas so why are theey blacked out?

      • bigleagues - Sep 10, 2012 at 7:58 PM

        In a nutshell, MLB allows cable companies to choose which Regional Sports Networks they want to offer their subscribers, and likewise, which teams games will be blacked out on other broadcast platforms.

        Thus, here in Connecticut, most cable providers offer Red Sox/Yankees/Mets. So if I attempt to logon and watch a Red Sox/Yankees/Mets game on MLB.tv, all three are blacked out . . . but also blacked out are the feeds for whomever the Red Sox/Yankees/Mets are playing.

        As for your circumstance, that would seem to be a geographical black out as defined by MLB. Whats strange is why they wouldn’t include, say Milwaukee, over the Reds. I can sort of understand including the Indians as they are a straight shot down I-90, but the other two are sort of a stretch.

        Anyway, I can understand your frustration, but again, that’s why using an anonymizing VPN service will allow you to avoid that silliness.

        You can watch it on your PC. And the VPN services are not very complicated. One new on makes it as simple as possible. I think they are called CloudVPN.

        People who use VPN services and a major sports online package can watch each and every game on the broadcast schedule . . . including the ESPN and FOX games.

  11. paperlions - Aug 28, 2012 at 1:19 PM

    Well then….it’s a good thing the owners and player screwed guys in the MLB draft out of a couple hundred thousand bucks….and that they are planning to screw international amateur free agents as well. It would be horrible if that money got into the hands of those that generate it.

  12. Ted Spradlin - Aug 28, 2012 at 7:19 PM

    It was just after the 1989 season when Kirby Puckett “hit the jackpot,” signing a 3 yr $9 mil contract, on the heels of the CBS TV deal. And to think Vernon Wells earns 7X Kirby Puckett?
    A lot of players will be thanking Baby Jesus this free agent season.

  13. nickp91 - Aug 29, 2012 at 8:31 AM

    a new all-time record for an MLB broadcasting deal

  14. thebigcaptain2011 - Aug 29, 2012 at 2:35 PM

    ….and despite the extra money financial bottom-feeders (e.g. The A’s, Royals, Padres) will still field crappy teams and collect luxury tax money.

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