MLB National TV contracts double in value

[mikecubs]

New MLB TV contracts finalized: $1.5B annually

We have a final tally on the new TV contracts signed between Major League Baseball and broadcast partners ESPN, Fox Sports and TBS: an average of $1.5 billion annually, or $12.4 billion over eight years.

The deal between ESPN and MLB was made public earlier -- $700 million annually, totaling $5.6 billion over eight years-- and we now have a public announcement of the new contracts with Fox Sports and TBS. Fox will up its commitment to MLB with more playoff games and an average annual payment of $525 million per year, while Turner Sports will scale back its baseball coverage but will still pay $325 million per year.

Combined, the three deals will deliver more than a 100 percent increase in annual rights fees to Major League Baseball over the current deals. As part of the new agreements – which take effect beginning in 2014 – the World Series and All-Star Game will remain on Fox, while the League Championship Series and Division Series will be shared across Fox, TBS and MLB Network. Both deals also include digital “TV Everywhere” rights to stream televised games and other MLB-related programming online and through mobile devices.

Under the terms of the new agreements, Fox Sports will retain the rights to the World Series, the All-Star Game and one League Championship Series while adding coverage of two Division Series starting in 2014. Fox Sports will also double its number of regular season national windows on Saturdays from 26 to 52, with 12 of those windows exclusive to Fox and as many as 40 non-exclusive windows on another nationally distributed Fox channel -- which could be FX or the much-rumored Fox Sports channel designed as a competitor to ESPN. TBS will retain the rights to air one League Championship Series, two Division Series and one of the Wild Card Games. TBS will also air afternoon games with new co-exist rights on the final 13 Sundays of the regular season. Fox and Turner will alternate each year which league’s DS and LCS games they telecast, with MLB Network airing two Division Series games each year from the same league as Fox.

"I have often said in recent years that we are living in the golden age of baseball and that the game has never been more popular," said Commissioner Bud Selig said: “But to see the unprecedented and historic commitment these networks have made to televising Major League Baseball for years to come is truly amazing. On behalf of Major League Baseball, I am thrilled that we will continue our relationships with both FOX and Turner. Both networks are passionate about baseball and are committed to covering, promoting and growing the sport, and I want to thank them for their continued support.”

“It is with tremendous pleasure that we’re able to extend and advance our relationship with Major League Baseball for another eight years,” said Randy Freer and Eric Shanks, co-presidents, Fox Sports Media Group. “MLB, both nationally and regionally, has been part of our DNA here at FOX for a long time, and we’re looking forward to working with MLB on many new initiatives that will grow and promote the sport in coming years.”

“Major League Baseball on TBS has very much been a staple of our programming foundation for more than 35 years and the network has been the home to so many memorable baseball moments over that time,” said David Levy, President of Sales, Distribution and Sports, Turner Broadcasting System. “When you look at the overall scope of television and digital rights that we acquired, this new agreement adds considerable value to our portfolio of sports offerings.”

Additional highlights of the new agreements include:

Games included in the Fox Saturday national exclusive windows, which were previously blacked out to MLB Extra Innings and MLB.TV viewers, will be available beginning in 2014.
In addition to two Division Series games, MLB Network has also acquired the rights to telecast both the MLB All-Star Game Selection Show and the SiriusXM All-Star Futures Game.
Turner will have interactive television rights, which includes the rights to create companion and ancillary products related to the TBS broadcast of regular and postseason games.
Fox Sports will air a weekly 30-minute show created by Major League Baseball Productions.
One interesting thing to pop up during discussions of the deal with the press: Fox hasn't signed Joe Buck and Tim McCarver to contract extensions. Their deals end at the conclusion of the 2013 season.

ballparkdigest.com/201210025652/major-league-baseball/news/new-mlb-tv-contracts-finalized-124b-annually

[mikecubs]

Here is a real good breakdown on how much each team will get.

The 2014 MLB TV Windfall
Marine Layer09.24.12, 16:2023 CommentsToday’s report from Sports Business Journal’s John Ourand indicates that MLB’s national television deals are just about locked in. We’ve discussed this a couple times now. I’ve done some rough math on it, and the financial picture looks even healthier than I previously projected. Sure, the TV deals will more than double in value, from $660 million to $1.55 billion. But it’s when that figure is coupled with all other sources of national revenue that the picture starts to really brighten.


Come 2014, every team could rake well over $80 million per year without selling a single ticket.
The table above reflects rising revenues from every source except for Sirius XM, whose deal was locked in years ago with the money paid in advance. MLB Advanced Media, the internet and broadcasting subsidiary of MLB, admitted last year that it was hitting nearly $500 million in revenue just for 2010. Combine each team’s share with other non-TV sources (adjusted for inflation), and each team comes away with $31.8 million per year. All told, that’s an estimated $83.5 million per year.

That doesn’t even include the dividend each team ownership group gets as an equity partner in MLB AM.

Every team is going to get this windfall, so it’s not as if the A’s or Rays are getting some great competitive advantage. It will allow both teams to be able to confidently offer FA-competitive long-term deals to their own free agents, though $100 million payrolls are still probably beyond reach. To get $100 or $110 million payrolls, both teams will need new stadia. The impressive thing about these bumps is that the A’s will get $10-15 million more via Central Revenue than they get from playing in the Coliseum. Add in local TV/radio and the usual $30 million or so in annual revenue sharing, and the A’s should net $180-185 million per year starting in 2014. Not rich compared to the other teams, but a far cry from destitute

newballpark.org/2012/09/24/the-2014-mlb-tv-windfall/

[Deleted]

Nov 18, 2012 0:20:00 GMT -6 mikecubs said:

"I have often said in recent years that we are living in the golden age of baseball and that the game has never been more popular," said Commissioner Bud Selig said: “But to see the unprecedented and historic commitment these networks have made to televising Major League Baseball for years to come is truly amazing.

I love baseball as much as the next guy, but I have to respectfully disagree with Mr. Selig, the game of baseball is not in some golden age.......

Melky Cabrera, Barry Bonds, Alex Rodriguez, Mark MacGwire, Sammy Sosa, Rafeal Palmero and on and on and on.......

That is not golden era baseball players!

Mantle, Jackson, Fisk, Aaron, Rice, Dawson, Bell, Ozzie, Yaz, Williams, Carter,

Now that is golden era baseball players and golden era baseball !

[Deleted]

Nov 18, 2012 0:40:16 GMT -6 DEATHBYPOPCORN1990 said:

Nov 18, 2012 0:20:00 GMT -6 mikecubs said:

"I have often said in recent years that we are living in the golden age of baseball and that the game has never been more popular," said Commissioner Bud Selig said: “But to see the unprecedented and historic commitment these networks have made to televising Major League Baseball for years to come is truly amazing.

I love baseball as much as the next guy, but I have to respectfully disagree with Mr. Selig, the game of baseball is not in some golden age.......

Melky Cabrera, Barry Bonds, Alex Rodriguez, Mark MacGwire, Sammy Sosa, Rafeal Palmero and on and on and on.......

That is not golden era baseball players!

Mantle, Jackson, Fisk, Aaron, Rice, Dawson, Bell, Ozzie, Yaz, Williams, Carter,

Now that is golden era baseball players and golden era baseball !

Really? You are too nice. I disrespectfully disagree with Selig.

[mikecubs]

Local MLB TV deals are also exploading

Baseball's Biggest Cable Deals

During the 2010 MLB season there was a heated competition taking place off the field involving the Texas Rangers and the Houston Astros. Fox Sports, who currently holds the local television rights to each team, was vying to lock down these anchors of their two Texan regional sports networks, Fox Sports Southwest and Fox Sports Houston, into long-term deals.

Complicating the matter was the fact that the Astros and the National Basketball Association’s Houston Rockets, who had been television partners since 2003 and had unsuccessfully battled Fox in court to start their own regional sports network, were jointly shopping their rights around as was permitted in an out-clause in their 15-year, $600 million rights deal with Fox Sports Houston. It was no secret the clear front runner was Comcast SportsNet who was not only Houston’s biggest cable operator, but was also willing to give the teams something they wanted, something Fox was unwilling to give – equity in the RSN.

Hell-bent on keeping its foothold in Texas and preventing Comcast or any other competitor from forming another RSN in the Dallas-Fort Worth Metro area (NBA’s Dallas Mavericks’ owner Marc Cuban was reportedly interested in acquiring the Rangers during its bankruptcy in order to launch his own network), Fox Sports made a bold move. In September 2010 it gave the Rangers a 20-year contract valued at $3 billion that begins in 2015. Not only does it include an average annual $80 million rights fee – triple the amount under the expiring contract – and an upfront payment in excess of $100 million, but it gives the team a 10% equity stake in Fox Sports Southwest. It was considered the league’s largest television deal.

That was until a month later when the Houston Astros and Rockets deal with Comcast was officially announced. The Astros scored a 45% stake in the new Comcast SportsNet Houston (the Rockets will own 31%) to be launched this upcoming Fall (in time for the 2012-13 NBA season kickoff), and will collect an average annual $80 million rights fee over twenty years in a deal valued at $3.2 billion – seven times the value of their expiring deal with Fox Sports.

See Baseball’s Biggest Cable Deals

In “everything is always bigger in Texas” talk, these were called gravy-train-with-biscuit-wheels kind of deals. More significantly, they were signs of a tipping point in sports media rights.

Up until then Fox Sports sat comfortable atop the RSN industry. It held the local tv rights to half of the teams in MLB, but never had given equity ownership in an RSN to one of them. Comcast, who to that point had the rights to only five teams’ telecasts, was judicious in that regard. The Chicago Cubs, Chicago White Sox and San Francisco Giants were all given stakes in their Comcast RSN, and the Philadelphia Phillies once owned a stake in theirs but renegotiated their deal to instead take control of the advertising sold on CSN Philadelphia.

But a poorly kept secret was getting out. “Live sports are holding together the $150 billion cable industry,” said Chris Bevilacqua, who runs the media consulting firm that goes by his name and negotiated on behalf of the Texas Rangers in their blockbuster deal.

Indeed sports media rights are an increasingly hot commodity, thanks to rabid fans and the rarity of those who set up their DVR to record a game. The result? In the advertising industry that was hard hit but the economic downturn, ad spending on sporting events on television rebounded quickly – and faster on cable networks. Nielsen reports that ad spending on sports jumped 33% in the past three years to $11 billion annually. In the last year alone, spending on sports on cable grew 37.3%, compared to just 5.9% on sports ad spending in general.

Subscription fees – which account for 80-90% of an RSN’s revenue – too were skyrocketing. According to SNL Kagan affiliate-fee revenue for all regional sports networks rose 44% in the past five years, from $3.2 billion in 2007 to $4.6 billion in 2011. The Rangers television home, Fox Sports Southwest, earned $303 million in revenue, second highest among RSNs behind the Yankees YES Network, mostly from charging an average $2.88 fee for its 8.1 million subscribers.

“It is only natural MLB teams with their 162-game schedule covering six months (i.e. the crux of an RSN’s programming) want in on that action,” added Bevilacqua.

Of course not all can be the Yankees with the crown jewel of team-owned RSNs, the YES Network. It has the most subscribers of any with 12.2 million, and on operating revenue of $475 million, it generated a whopping $224 million in operating income last year. The Bronx Bombers own a 34% stake in the network and was paid $90 million in rights fee last season, the most in MLB. The Yankees are now worth $1.85 billion, the most in baseball, tied with the National Football League’s Dallas Cowboys, and second in the world to Manchester United, the English soccer team worth $1.9 billion.

Other teams are faring well enough in their foray into the media business though. The value of the Astros media deal increased 113% thanks to additional equity component, and the team’s value increased 16% to $549 million. The Rangers’ media deal increased 88% with their added equity component and the value of the team rose 20% to $674 million. (See how the sale price of MLB teams have been boosted by cable networks.)

Last December the Los Angeles Angels of Anaheim followed suit and scored a 17-year, $2.5 billion deal that pays an average $95 million rights fee with a 25% equity stake in Fox Sports West – the second deal of its kind for Fox. Like the Rangers before them who spent $100 million of their new stash of cash (thanks to that upfront bonus) to get the next Nolan Ryan in Japanese pitcher Yu Darvish, the Angels immediately used their windfall to land slugger Albert Pujols to a 10-year, $240 million deal, (See Baseball’s Highest Paid Players). Their team’s value increased 18% and is now worth $656 million.

Now the for-sale Los Angeles Dodgers are on deck, poised to land a deal in excess of $3.5 billion for 20 years, a 30% equity stake, and average rights fee of $100 million. So valued are their television rights and equity stake that next owner of the team is expected to shell out between $1.3 billion and $1.5 billion for the winning bid. For perspective, we pegged the bankrupt team to be worth only $800 million last year.

So what does this all mean for every other team? Bevilacqua says that anyone who owns live sports rights benefits from this as rights fees will always go up.

In the near term, there are many MLB teams undervalued and due for a payday. The Seattle Mariners, Arizona Diamondbacks and Philadelphia Phillies should be the next group to cash in, all with deals that expire or have re-opener clauses by 2015. At the very least, after the example set by the Southern Californian and Texan teams, rights fees are set to double at a minimum. While equity stakes are all not a foregone conclusion, rest assured they will be on the table – and in the Phillies’ case, they shouldn’t be fooled twice by their value (especially considering CSN Philadelphia has one of the highest average subscriptions fees per month at $3.18, more than the Yankees).

And while now is the time for conventional wisdom to kick in and dictate that such deals are only for big market teams and perennial favorites with great ratings, enter the San Diego Padres. Their current contract pending league approval with the newly launched Fox Sports San Diego is worth $1.4 billion, will pay them an average $50 million in rights fees beginning this year (four times their previous deal), and include a 20% equity stake in the network, making it three in a row for Fox to offer ownership in an RSN. How did a team playing in the fifth smallest market with neither commercial success (their television ratings last season dropped 41% from 2010) nor on the field success (in the last five years) manage that? Timing and a little bit of luck. Their deal with Cox Communications was over and they were open to entertaining all offers. Then the fact that the San Diego market has a high penetration of cable subscribers made them very attractive, especially for a new market for Fox. Lesson learned for small market teams.

There is additional upside to these new hybrid rights fee / equity stake deals. While the rights fee portion of them are subject to the league’s 34% revenue sharing tax, the equity stake in the RSN is not. Of course it bears mentioning that the downside is the equity in the RSN is that it may not end up being as lucrative as suggested by the value of the new deals. Additionally, at the rate rights are increasing, the fees teams are agreeing to now could be undervalued ten years from now. It’s a safe bet the RSNs are hedging they will be.

But at the end of the day you would be hard-pressed to hear either party call the television bounty a bubble. “At the end of the day, the businesses are growing”, said Bevilacqua. A win-win for both.

www.forbes.com/sites/christinasettimi/2012/03/21/baseballs-biggest-cable-deals/2/

[mikecubs]

Nov 18, 2012 0:40:16 GMT -6 DEATHBYPOPCORN1990 said:

Nov 18, 2012 0:20:00 GMT -6 mikecubs said:

"I have often said in recent years that we are living in the golden age of baseball and that the game has never been more popular," said Commissioner Bud Selig said: “But to see the unprecedented and historic commitment these networks have made to televising Major League Baseball for years to come is truly amazing.

I love baseball as much as the next guy, but I have to respectfully disagree with Mr. Selig, the game of baseball is not in some golden age.......

Melky Cabrera, Barry Bonds, Alex Rodriguez, Mark MacGwire, Sammy Sosa, Rafeal Palmero and on and on and on.......

That is not golden era baseball players!

Mantle, Jackson, Fisk, Aaron, Rice, Dawson, Bell, Ozzie, Yaz, Williams, Carter,

Now that is golden era baseball players and golden era baseball !

That's the black spot on the current era. Probably the whole league or most of it was/still is on something.

Popularity wise, $ wise the game is in a golden age. It's very unlikely you will ever be able to stop the cheating unfortunately. Look at the Olympics, no sport will ever be "pure" again.

[mikecubs]

Here is an interesting article on the St. Louis Cardinals financials/local TV deal. It isn't ratings that drive the big TV deals but the size of market/number of cable suscribers. Thus big cities/markets have the advantage. The Cardinals are usually near the top in MLB for local TV ratings yet because St. Louis is a small MLB city they won't get a big TV deal. However the St. Louis Cardinals are the one team in MLB that plays in a small market that produces big market revenues because baseball in St. Louis=hockey in Canada. St. Louis kills it at the gate usually averaging over 40,000 a game per season.

Cards bank on ticket sales, not TV revenue

A collective gasp greeted the news that the Los Angeles Dodgers were negotiating a television rights deal worth a reported $6 billion because it meant the game’s biggest spender was about to pack a lot more power into its purse.
A genuine gold rush is afoot in baseball as teams, mostly from the largest markets, strike it mega-rich with rights fees that are radically changing the game’s economics and rosters.
Ask the Cardinals.

A year ago, the Los Angeles Angels crushed the Cardinals’ best offer to Albert Pujols by guaranteeing the three-time MVP $240 million, generosity made possible by a $2.5 billion rights deal secured by the team. The Dodgers have already spent freely banking on their upcoming haul. This revolution will indeed be televised.

“A lot of big TV deals are getting done, and it shows you the value of the rights to live sports programming,” Cardinals chairman Bill DeWitt Jr. said this week as baseball’s annual winter meetings began. “We’re in new territory with some of these deals. Payrolls follow revenue. As revenue goes up, payroll goes up. To that extent, when TV has big increases it will have an influence.”

Market size will be the driving force behind these rising fees, leaving midmarket teams like the Cardinals and clubs in smaller markets behind in the rights race, victims of geography and cable boxes. Whether that puts them at a competitive disadvantage is yet to be determined.

The Cardinals are in the middle of a long-term deal with Fox Sports Midwest that is competitive for their market size. The contract goes through 2017 and the Cardinals have an option for 2018, according to sources familiar with its language. The Cardinals currently receive a rights fee of between $25 million and $28 million, two sources confirmed. The contract has escalators built in that will move the Cardinals toward $30 million. Both sides declined to confirm or discuss the details of the deal citing confidentiality.

Asked if the soaring fees other teams are receiving could impact that Cardinals’ ability to remain competitive, DeWitt said the club’s model should weather the new order.

“For us to stay a top-tier team we need to be in line to have really strong attendance, which we have been able to do,” DeWitt said. “That hasn’t changed. We’re never going to be a top TV-revenue team, that’s for sure. In our view, the goal is every year to get three million people and have a shot at the playoffs, a legitimate shot. If you have a legitimate shot at the playoffs, we’ll draw three million people.”

The Cardinals drew three million people for the ninth consecutive season in 2012. The Cardinals have long maintained how their payroll is linked to ticket sales because of the size of the market. This coming season, season-ticket prices will experience an average increase of 4 percent, an official confirmed Monday.

The Cardinals expect to maintain a payroll of about $115 million for the coming season. The departures of free agents Kyle Lohse and Lance Berkman snip about $24 million from the payroll. Adam Wainwright is due a raise from $9 million to $12 million. Catcher Yadier Molina will double his salary to $14 million, and five players are eligible for arbitration and poised for increases. That still leaves some room for free-agent additions this winter as the Cardinals look to fill needs, not headlines.

Teams like the Angels, Texas, and the Dodgers are in a bidding frenzy for Zack Greinke, the righthander who is the top starting pitcher available. All three have benefited from (or are about to benefit from) increased rights fees. The Los Angeles Times reported that the Dodgers are negotiating a 25-year, $6 billion deal that could generate an average annual revenue of $240 million, or more than any team’s payroll. The Angels’ deal is worth $2.5 billion over 17 years, according to reports. Texas has a $3 billion rights deal. The Yankees own part of their own network and will reportedly see an escalating payout from $85 million in 2013 to as much as $300 million by 2042. Houston is set to double its revenue from broadcast rights.

All represent major markets. The Cardinals rank 23rd of the 30 teams in market size. Every year since 2000 the Cardinals have ranked in the top three in local ratings, a Fox Sports Midwest official confirmed. They once elbowed aside the Boston Red Sox aside the top spot. Ratings can help raise rights, but not to these galactic heights. What’s driving these payouts is the number of cable subscribers in each market and the fees they’re paying for sports programming, whether they watch or not.

Sports programming is desirable because it is live appointment viewing and is DVR-proof in ways entertainment programming isn’t in the on-demand age.

This trend is also reflected nationally, too. ESPN secured television rights from Major League Baseball earlier this season with a eight-year, $5.6-billion deal. That begins in 2014 and the revenue from it will be distributed to all 30 teams, boosting revenue throughout the game.

When it comes to local rights, the Cardinals are better compared to like-sized markets. Cincinnati’s current broadcast deal expires after 2016, and the Reds receive $10 million in fees per season, according to The Cincinnati Enquirer. The Cleveland Plain Dealer reported Sunday that the Indians are poised to see an increase from $30 million to $40 million in fees when Fox Sports Ohio purchases SportsTime Ohio. DeWitt said the rising rights fees and their influence in the marketplace underscore the team-building approach already adopted by the Cardinals.

It’s one that moves them increasingly away from the free-agent auctions.

“I think it points to our need to develop our own players and not rely on free agency for players, but more to use it as a way to complement our team and fill out our team,” DeWitt said. “The goal for us is to draft, develop, and play our own players and then retain them. Historically we’ve been fortunate to keep many of the core players with us as they hit free agency.”

The Cardinals and Fox Sports Midwest last opened their deal before 2011 when Fox Sports Midwest exercised its right to purchase games that had been shown on KSDK. The deal has been extended and negotiated before its experience in the past. The possibility of starting their cable network hasn’t gained traction for the Cardinals.

“The Cardinals are great partners, and we look forward to being their TV home for years to come,” said Fox Sports Midwest senior vice president and general manager Jack Donovan wrote in an email.

Despite their market size the Cardinals have been able to maintain a payroll in or near the game’s top 10, and their revenue has also been around 10th in the majors.

The two biggest streams to keep them there are rights fees and ticket sales.

Some teams are banking on one. The Cardinals are built on the latter.

“We have been in the upper-third of payroll most of the time since we bought the club, and that’s where we’d like to remain,” DeWitt said. “We hope to generate the revenue to do that. We feel like we have a competitive mix going into this season, just as we did last season, and we know the fans respond to a competitive team.”

www.stltoday.com/sports/baseball/professional/as-rights-fees-soar-cardinals-bank-on-ticket-sales-minor/article_0463c102-a98b-5987-98a5-a81b69d71483.html

[Tim]

That is also why ticket prices are so cheep for baseball. With a contract like that for the NHL, you could sell seats for $10.00 a person and make money.

[jetsorbust]

I would say ticket prices are so cheap because you have to sell 50-70 thousand a game to sell out, and theres 80 home games a year. But a few billion per team in TV revenue certainly wouldn't hurt!


All I think when I read this though is F*CK YOU DON FEHR!

[mikecubs]

^^^ 81 home games a year. The biggest stadium capacity is 56,000(LA Dodgers) average capacity is 43,287. You're right tickets are cheap because it's 81 games. When you calculate the amount of total tickets available per season versus other sports it's staggering.

MLB has 105,187,005 total tickets available per season counting the whole league as long as there are no rainouts etc and capacity remains completely as it is for each team.

NBA arenas have an average capacity of 19,129 and 23,528,793 tickets available per season

NHL has an average capacity of 18,229 and 22,421,793 tickets available per season (counting 15,000 for the Islanders at Barclays Center, I already consider the Nassau Coliseum dead)

NFL has an average capacity of 70,542 and 18,058,672 tickets available per season. (not counting the 1 Buffalo game in Toronto, I factored in 8 actual home games in Buffalo)

If you add the other 3 sports up they only total 64 million tickets.

The NFL had a 95.68% capacity this past season

The NHL had a 97.18% capacity this past season and a 95.54% capacity the season before

The NBA had a 90.81% capacity this past season

MLB had a 71.41% capacity in 2012. With the cold spring and many teams in massive rebuilds in good markets(Houston, Seattle, Cubs etc..) that will be even lower this season. Baseball is the one sport that isn't built for 100% capacity or near 100% capacity.

[mikecubs]

Seattle Mariners Sign Estimated $2 Billion Network Deal With DirecTV

The SeattleMariners and the MLB team’s television rights holder, DIRECTV Sports Networks (DTVSN), today announced a new regional sports network partnership in the Pacific Northwest. The Mariners hold a majority stake in the new venture

Over a year ago I wrote about how the Mariners were in line to get a much richer television deal. The team’s current deal is paying $450 million over 10-years. The new deal will likely be valued at $2 billion over 17 years, according to a source familiar with the team’s financial dealings. On top of that, the Mariners will get to shield some of the RSN’s income from baseball’s revenue sharing system.

As part of this new agreement, the network will televise Mariners baseball through the conclusion of the 2030 Major League Baseball season. In addition to the Mariners, the network will provide other professional, collegiate and high school sports programming year-round.

New York investment bank Allen & Company, led by Steve Greenberg, who is a board member of MLB’s New York Mets, advised the Mariners on this transaction, guiding the club through the development and creation of this new venture. Apparently forgetting about the Mets, in a press release about the Mariners new RSN Greenberg said, “MLB clubs that own a substantial stake in their own RSN’s tend to be among the strongest and most stable franchises in the league.”

The Mariners join a host of teams, including the Los Angeles Dodgers, Houston Astros, Los Angeles Angels of Anaheim and Texas Rangers, that have signed rich television deals over the past couple of years. The Dodgers and Astros are partnered with Time Warner Cable, while the Angels and Rangers are with Fox Sports.

www.forbes.com/sites/mikeozanian/2013/04/16/seattle-mariners-sign-estimated-2-billion-network-deal-with-directv/

[mikecubs]

Another massive local tv deal gets inked.

Philadelphia Phillies Land Lucrative TV Rights Deal Reportedly Worth $2.5-$3 Billion

First it was the Texas Rangers. Then it was the LA Angels. In-between, the Padres, Astros, Mariners, and soon-to-be Dodgers got in on the act. What they have landed are massive media rights deals that dwarf what they were receiving in revenue prior.

Enter the next in line, the Philadelphia Phillies.

Thursday it was announced that the Phillies and Comcast CMCSA -0.72% SportsNet had reached a 25-year agreement. Financial terms were not released, but word is beginning to leak out, and with it, the magnitude of the deal is coming into focus.

The agreement is worth approx. $2.5 billion in rights fees or $100 million annually. It will kick in after the 2015 season. To place the new rights deal in perspective, the prior agreement was garnering approx. $35 million annually for the Phillies, so growth will jump a staggering 186 percent.

That, alone, would make the broadcast deal align somewhat with others that have been met, namely the Rangers and Angels who inked 20-year, $3 billion agreements. But, the Phillies are also acquiring a 25 percent minority ownership stake in venture, thus adding an equity component to the mix. When you throw in that there are escalators factored into the CSN SID +2.36% Philly deal, total value should come in at, or slightly above $3 billion in total value.

The infusion of revenue should continue to allow the Phillies to sign extensions or long-term free agent deals in the future.

And the Phillies won’t be the last. The aforementioned Dodgers are on track to have Major League Baseball approve their record $7-$8 billion rights deal, and the Chicago Cubs and Arizona Diamondbacks are working on new media rights agreements.

www.forbes.com/sites/maurybrown/2014/01/03/philadelphia-phillies-land-lucrative-tv-rights-deal-reportedly-worth-2-5-3-billion/

[mikecubs]

What Clayton Kershaw’s Historic Deal Means for the Pitcher, the Dodgers, and Small-Market Teams

Clayton Kershaw and the Dodgers have reportedly agreed to a seven-year, $215 million contract extension, making the best pitcher in baseball today the highest-paid pitcher in baseball history.

Though the deal won’t officially be announced until Friday, the contract reportedly includes an opt-out clause after five years. Kershaw, like CC Sabathia before him, will likely exercise that clause if he’s healthy and productive in 2018. He’ll be just 30 years old at that point, a month younger than Justin Verlander was when he signed a seven-year, $180 million extension with the Tigers last offseason. Given how TV money has exploded both locally and nationally, Kershaw could blow that Verlander deal out of the water if he’s still pitching like this five years from now.

Kershaw’s track record gives no reason to doubt that will be the case. Per ESPN Stats & Info, of all pitchers to throw 1,000 innings through their age-25 season, Kershaw’s 2.60 career ERA ranks second, trailing only the great Tom Seaver. Kershaw has improved every year, too

Of course, no long-term contract is ever a sure thing, especially for a pitcher. But as FanGraphs’ Dave Cameron wrote Wednesday, we’ve never before seen a pitcher this good, this young, and this durable sign a deal this long. Cameron, who wrote his piece shortly before the Kershaw news broke, looked for pitchers who could even remotely match Kershaw’s dominance through age 25. Only six made the list: Seaver, Pedro Martinez, Roger Clemens, Bret Saberhagen, Bert Blyleven, and Kevin Appier. Seaver and Blyleven are in the Hall of Fame; Martinez will get in next year (causing a Simmons-Keri Cooperstown kegger for the ages in the process); Clemens is arguably the best pitcher of all time, but will have to wait on the Hall because of PED association; and Saberhagen and Appier ran into injuries later in their careers, but still posted a number of big seasons after their 26th birthdays.

Doubters will point to the risk of high innings counts: Kershaw tossed a career-high 236 frames last year, plus 23 more in the playoffs … and he and the Dodgers certainly hope to make it back to the postseason multiple times during the length of this new deal. Trying to predict pitching injuries using instruments as blunt as raw innings counts or pitch counts is a futile exercise, however. The good news here is that Kershaw has become more efficient with his pitches over the years, part of an overall remarkable progression that has included picking up (and quickly mastering) new pitches — and even learning to hit a bit.

There’s no debating Kershaw’s value. Without delving too deeply into dollars-per–Wins Above Replacement calculations, consider this: The going rate for free agents right now is about $6 million per win, and Kershaw has averaged 5.4 wins in his five full seasons, and 6.2 over his past three. Assuming Kershaw stood to make about $18-$20 million in arbitration this year, that means the Dodgers are committing $195-$197 million for the remaining six seasons of the deal, a little less than $33 million a year. CBS Sports’ Jon Heyman reported Wednesday that Kershaw’s annual salary breakdown will be as follows: $22 million in 2014, $30 million in 2015, $32 million in 2016, $33 million in 2017 and 2018, and, if he stays, $32 million in 2019 and $33 million in 2020.

Yes, that’s a lot of money, no matter how you parse it. The thing is, there’s no way to evaluate a Dodgers contract and, say, a Pirates contract the same way. The Dodgers have already shown they’ll pay more money for less talent. From the start, principal owner Mark Walter and his partners have operated as though they have unlimited money, spending more than $2 billion to acquire the team, making major renovations to Dodger Stadium, and paying megabucks for talent. The Dodgers now have five players who’ll make $20 million or more in 2014, and their payroll will almost certainly climb above $250 million this season. For the Dodgers, baseball’s $189 million luxury tax limit is a tiny gnat on the windshield of an 18-wheeler that’s holding all of Guggenheim Partners’ cash and doing 110 on the 110.

That spending is easily justified by the team’s new TV deal, which will reportedly generate up to $8.5 billion once it becomes official. (Here’s a good video primer breaking down the deal.) Once that TV revenue is secured, the next step will be selling out Dodger Stadium as often as possible, with ticket prices set as high as the market will bear. There was no way in hell the Dodgers were going to let the best pitcher in baseball go, not when his star power can help ensure enough wealth for Walter to hand out yachts to the homeless every other Tuesday.

The Dodgers might not be finished spending, either. According to Fox Sports’ Ken Rosenthal, they’re still hoping to land another starting pitcher to bolster a rotation that already includes one of the league’s best duos in Kershaw and Zack Greinke. Rosenthal mentioned 14-year major league veteran Bronson Arroyo as a possibility, but the Dodgers could easily aim higher, and multiple reports indicate that the Kershaw extension won’t necessarily preclude the team from going after Japanese phenom Masahiro Tanaka.

Really, the only losers here are baseball’s small-revenue teams. The Dodgers play in a market that dwarfs Cleveland and Pittsburgh and Kansas City in both size and financial opportunity. Over the years, MLB has made some attempts to remedy that imbalance, starting with the revenue-sharing advances that followed the 1994 strike. But baseball, like every other enterprise, is reactionary; the league waits for a problem to come along, and only then tries to whip it. The TV money flowing into the game is, in many ways, a boon to all, with the new national deal adding $26 million to every team’s top line in 2014. Unfortunately, the league failed to anticipate the massive gulf that would develop between the have and have-not teams once the wealthiest clubs signed their new local deals. The Padres make $60 million a year from their TV contract, while the Dodgers make $340 million. The notion that these two teams compete every year in the same division is kind of insane, and the existing, outdated revenue-sharing structure isn’t going to fix that.

Earlier this week, I wrote about the possibility of the Alex Rodriguez case creating some rocky negotiations when the current collective bargaining agreement expires on December 1, 2016. The bigger threat, however, might actually come from small-revenue teams revolting against their mega-market overlords.

Yes, the Dodgers pay the standard 34 percent in revenue sharing on their TV money, as mandated by the most recent CBA. And yes, low-revenue teams occasionally rise up and crash the postseason: The Pirates and Indians did so in 2013, and the Rays have somehow managed to make the playoffs four times in the past six years despite going head-to-head with two of the biggest regional sports network beneficiaries in the Yankees and Red Sox.

When CBA negotiations resurface, however, the little guys will remember this Kershaw deal and the other mammoth contracts handed out by rich clubs like the Dodgers. They could argue that the rules of the game have changed, and that revenue sharing needs to become far more generous to small-revenue teams. Scott Boras has claimed that teams are playing elaborate shell games with their TV money in order to hide it from revenue-sharing distribution; if that’s accurate, the next round of bargaining could get downright nasty.

grantland.com/the-triangle/los-angeles-dodgers-clayton-kershaw-extension/

[Bruinsfan]

If the MLB continues to mask revenue from the players...especially in the low income teams, they are going to get a really bad CBA fight


What is needed is a cap floor, and i can guarantee the players desperately want a floor but would fight a ceiling.

[mikecubs]

No kidding. What could hurt too is Selig leaving MLB. Pre-Selig MLB owners couldn't agree on anything. Lots of people around MLB fear the return to the bad old days of endless labor wars could be returning without him and his consensus building skills.

Historically MLB's union has actually resisted a cap floor especially under Don Fehr. Fehr's reasoning was teams should have the right to bottom out and totally rebuild if they want and shouldn't be forced to sign a so-so veteran or 2 so they reach the floor. The real reason was they feared that if there was a cap floor a total salary cap would eventually be asked for and put in place.

MLB does have a gentlemen's agreement not on the books with the players union that whatever amount of revenue sharing a team receives they should have a payroll as high as that amount bear minimum or they should at least have that much amount invested in the minor league system plus payroll.

I personally wouldn't mind a cap floor if that included $$$ spend on the draft and international signings/building academies in Latin America.

A better idea might be instead of a cap floor just kick out Jeff Loria from MLB instead. I think most of the other teams are trying except Miami. Something should be done with them. Houston has an abnormally low payroll too but that is strategic. They are rebuilding through the minor leagues and promise a top 10 payroll once the minor leaguers are ready. In a few years revenue sharing will be totally fazed out anyway for the top 15 markets so Houston won't be eligible to receive it anymore anyway.