An aphorism for modern baseball times, from the noted poet Scott Boras:
"These days, a franchise's No. 4 hitter is no longer in uniform. The No. 4 hitter is the guy who negotiates the contract for the TV rights."
Boras, agent by title and provocateur by nature, is not selling anyone or anything when he utters these words. Baseball's more than seven-fold growth over the last 21 years – from a $1.2 billion business to an $8.5 billion behemoth – first came on the backs of taxpayers with municipality-backed sweetheart stadium deals and today balloons thanks to consumers' monthly television bills.
Given the choice of a cleanup hitter and cleaning up via beaucoup local TV bucks, there is no question every franchise in baseball would take the latter – mainly because it can afford them the former. A bad TV deal isn't apocalyptic for a franchise's prospects. It's just cloudy with a chance of perpetual drudgery.
Some of it is luck, in the cases of the teams whose contracts have expired since the Texas Rangers' landmark 2010 deal heralded the boom in local-TV revenue. Some of it foresight for the teams that recognized the DVR and social media turned sports programming – perhaps the last form of entertainment that demands to be consumed live and with others – into advertising heaven.
And some are wondering if the billions of dollars being tossed around are dangerous for the game's long-term health. The most interesting debate in baseball these days isn't Bryce Harper vs. Mike Trout. It's bubble or no bubble with TV dollars.
The thought goes like this: When a network pays huge money for a sports team's TV rights, it hikes its carriage fee for cable providers. The best regional sports networks (RSNs) cost upward of $3 a month for cable and satellite providers to provide to each household. With monthly TV bills already exorbitant and more options to provide entertainment, from Netflix to Hulu and beyond, consumers could rebel against the single-payment system and choose what they view a la carte. One executive who has negotiated TV deals worries that the sport will find itself embroiled in litigation and needing an entirely new method of distribution to cater to the on-demand generation.
"It's not just local. It's national," the executive said. "The amount of rights being paid are getting passed to consumers. I'm worried there is going to be a bubble. It seems like there's a lot of money going out. We don't want to be dependent on the bulk of our revenue coming through local rights-fee deals."
Boras is more bullish. Look at Hollywood. Netflix paid $100 million for 26 hours of "House of Cards." RSNs get more content from a baseball team in a week, including the pre- and postgame shows.
"It's so much less expensive than creating programming with actors and actresses," he said. "It's so much cheaper to just buy the rights. All you have to do is show up, film it, telecast it and produce the show. The amount of work that goes into the production versus the shows that are fictitious – the value of that is going to continually rise, and the demand for that is going to be greater."
For the time being, he is correct. Because as long as the current model works – and we're too early into the post-rights-fee explosion to judge whether it can succeed across smaller platforms as it has for the New York Yankees or Boston Red Sox – it will be copied, plagiarized and Ctrl-C'd across the landscape. Already the …
1. Philadelphia Phillies are whetting their appetite over what could be when their deal with Comcast expires at the end of 2015. It's easy to see why.
Comcast is a Philadelphia-based company. It does not want to lose the rights of the team that from 2009-11 ranked among the three highest local baseball broadcasts. Problem is, Fox Sports, which has scooped up local rights to about half of baseball, wants to further its grip on the sport in anticipation of Fox Sports 1, the all-day sports channel expected to launch in August.
"And they want Philadelphia," one source with knowledge of Fox's plans said. "They got the Yankees [by buying a share of the YES Network], which helps. They're not going to have the Red Sox. They're not going to have the Mets. They want another East Coast team."
The last time there was a bidding war over TV rights, the …
2. Los Angeles Dodgers ended up with a $7 billion deal. Or at least that was the reported figure. The actual money, via an annual rights fee as well as ownership of the RSN with Time Warner, will reveal itself later.
Still, nothing better exemplifies how much TV money means than the Dodgers. They are in the same city as always, the same stadium, the same uniforms – the same everything, really, as to when Frank McCourt owned them and drove them into the ground. So how, then, can they afford double the payroll?
For the same reason Mark Walter bought the team for $2.1 billion: TV money runs baseball. Walter didn't buy the Dodgers. He bought their TV rights and stadium. Even though the TV money revolution started more than a decade ago, the Dodgers' deal reinforced its effect on the game today – and how the chasm between haves and have-nots is worse than ever. This full accounting of TV deals by Wendy Thurm at FanGraphs illustrates as much.
The upshot: bigger market, bigger money. And, as always, the …
3. New York Yankees are to blame. Not really, of course. The Yankees were simply the first to recognize where baseball business was moving. And for everyone who thought George Steinbrenner was little more than a turtleneck and temper, the YES Network and its $400 million-plus in annual subscriber fees alone say otherwise.
"George Steinbrenner gets most of the credit," Yankees president Randy Levine said. "His vision was second to none in many areas. He basically saw the convergence of sports and entertainment many, many years ago. He understood the power of the Yankee brand and realized that was the way to go."
After watching YES grow over the last 12 years into a $3 billion-plus entity, the Yankees divested a portion of their ownership to Fox – and, in the process, greatly increased their rights fees. The deal was lauded across the industry, a strike against the leaner times that could hit the club.
Coming into Sunday's game, year-over-year attendance was down 9 percent, more than 3,700 per game. Whether this is an early-season blip or indicative of fans' displeasure with the team will, in all likelihood, depend on whether the team is more the 15-9 surprise of April or the team with the lowest preseason expectations of any Yankees squad since the mid-'90s.
A not-quite-up-to-expectations start hasn't kept …
4. Washington Nationals fans from the ballpark. Their 6,197-per-game increase is third in baseball behind the Dodgers (8,437) and Toronto Blue Jays (7,877). The television audience, even as the Nationals won 98 games last year, left plenty to be desired.
The good news: The Nats saw the largest percentage increase in baseball for television viewership last season with a rating 74 percent higher than the previous season. The bad news: In 2011, they drew just 29,000 viewers per game, baseball's smallest audience.
Granted, TV ratings matter less to the Nationals than any other team in baseball. The Nats own a whopping 13 percent of their RSN, and their rights fees are set by the controlling partner of the other 87 percent: the Baltimore Orioles. Orioles owner Peter Angelos, given the TV rights as part of the agreement to allow the Nationals to move from Montreal into the Orioles' territory, is asserting himself in an eminently Angelosian way.
So during the offseason, commissioner Bud Selig asked Steve Greenberg, baseball's TV rainmaker, to explore a possible sale of the Nats' rights. Greenberg's involvement all but ensures Fox or Comcast will end up with them and Angelos will be warmly compensated for his consideration. Greenberg is the ultimate cleanup hitter, the sort whom the …
5. Atlanta Braves wish they had utilized during the sale that stuck them with the worst TV contract in baseball. It is not the lowest – that may belong to Tampa Bay, Milwaukee, St. Louis, Kansas City or Pittsburgh, the game's small-market brethren – but it is the least commensurate with market size and reach.
The Wall Street Journal reported the Braves get just 57 cents every month per subscriber to SportSouth, its RSN, compared to $3.35 for the Red Sox's NESN, $3.03 for Comcast SportsNet Philadelphia and $2.80 for YES. Instead of monopolizing the South, like Atlanta should, the Braves carry sub-$100 million payrolls and rely on superb scouting and player development to claw their way out of the worst contract in sports. Like, worse than the deal for A-Rod, worse than Mike Hampton, worse than Darren Dreifort.
Because it doesn't expire until 2031.
So, yes, it is OK to simultaneously pity and marvel at the Braves. They're one of the best teams in baseball, mostly home-grown, and come 2016 even the …
6. Tampa Bay Rays are going to be making more per year through TV than them. The Rays should be a good litmus test for the bubble. Their TV ratings are quite good when they win – almost a 6 rating, the fifth highest in baseball, during the 2010 season. At the same time, their market is smaller than St. Louis', and Florida has proven itself to be more a (fill-in the blank with pretty much anything) state than it is a baseball state.
How much the Rays receive won't change their reality – a reality that holds true across the game. It's a simple principle: TV money isn't going to go up for, say, the Rays without going up just as much, if not more, for the bigger markets. So whatever advantage more money would give the Rays gets washed aside when the leviathans shunt aside the fleas with a flick of their fingers.
Especially when the fleas have David Price. It was nice that the Rays signed Evan Longoria to a $100 million extension. They've got room for one well-paid star if they want to field a competitive team. They've got room for two if they want to skimp on the rest of the team. And the former is a better plan than the latter, so that means sometime within the next year, Price is gone, baseball's economics again playing its dirty trick on one of the game's best-run teams. Of all the teams out there, the …
7. Chicago Cubs make a lot of sense. Already one of the game's financial giants – they made a major league-high $32.1 million last season, according to Forbes' annual valuations – they're about to get the double boost of a stadium renovation and new TV contract.
Updating Wrigley Field is the bigger-impact move, as only a portion of the Cubs' TV deal expires following the 2014 season. It's the iconic part, of course – WGN, the last of the superstations broadcasting baseball – and the one baseball business is almost certainly going to leave behind.
WGN will televise 67 Cubs games this season. One analyst believes that package is worth at least $80 million a year to Fox or Comcast – and that could be on the low end. Another possibility: Comcast, which owns the rest of the Cubs' broadcast rights through 2019, rips up that contract and renegotiates a megadeal somewhere in the $200 million-a-year range in hopes that it will be the network that finally gets to broadcast the Cubs the season in which they win the World Series.
Or the Cubs could sign a short-term deal for its outstanding games, spend the next five years drawing up plans for its own RSN and do what the …
8. Seattle Mariners and so many others have: take TV into their own hands. Less than two weeks ago, the Mariners partnered with DirecTV to buy the RSN that will broadcast their games until 2030. Greenberg brokered the deal, the biggest benefit of which is to potentially keep money from MLB's revenue-sharing program.
As recently as a decade ago, the Mariners were among the biggest-earning teams in baseball due to years of packing Safeco Field with Ken Griffey Jr., Randy Johnson, Alex Rodriguez, Edgar Martinez and plenty more thriving there. Last season, according to Forbes, the Mariners' revenues ranked 15th. The lower their revenue dips, the more shared money they receive.
They could do what the Yankees did: pay a slightly below-market rights fee to the team, thus tamping down its net local revenue – the money that is shared – and growing the RSN into a cash cow that could eventually be sold. One of the reasons a …
9. Boston Red Sox sale could reach upward of $2 billion if John Henry ever does find the right partners is because the team owns 80 percent of NESN, the popular RSN that is synonymous with the Red Sox. If YES is derisively called Al Yankzeera, NESN might as well be Sox News – the furthest thing from fair and balanced.
But hey. It shows baseball games. Like the one Tuesday night with Jon Lester and Brandon Morrow, two power pitchers in the primes of their careers, both on teams having unlikely Aprils – the Red Sox atop the AL East and the Blue Jays at the bottom. And it's one of the 10 pitching matchups we're most excited to see this week. The other nine:
Monday: Mat Latos vs. Adam Wainwright – 6-foot-6 vs. 6-foot-7.
Monday: Matt Harvey vs. Jose Fernandez – The first of many dandies between these two.
Tuesday: Jose Quintana vs. Yu Darvish – Darvish could be pitching against somebody with no arms and he'd still make the list.
Tuesday: Alex Cobb vs. James Shields – Is it really "all good" between Shields and Evan Longoria?
Wednesday: Homer Bailey vs. Lance Lynn – Both off to phenomenal starts.
Wednesday: Jordan Zimmermann vs. Paul Maholm – To have Stephen Strasburg and Gio Gonzalez on a staff and not be the ace is sort of unfair.
Friday: Shelby Miller vs. Kyle Lohse – Lohse gets to face the guy who took his spot in the rotation.
Friday: Clayton Kershaw vs. Barry Zito – Friday is apparently Opposite Day.
Saturday: Tony Cingrani vs. Jeff Samardzija – There might be 30 strikeouts.
Considering the money they spend on their rotation, it's surprising not to see any …
10. Philadelphia Phillies on that must-watch list. Suppose a 12-14 ballclub without a whole lot of offense and with deceptively bad pitching – they've allowed 108 runs, the fourth most in the National League, and just five fewer than the worst team, Miami – doesn't inspire viewership.
Certainly the Phillies run the risk of Comcast ratings dropping further and sullying the potential blockbuster they seemed primed to get two years ago. Even if they had renegotiated that, it would've preceded the Dodgers' deal, and that was the true game-changer. If a team that can't even crack the top 5 in audience size like Los Angeles can fetch as much money as it did, then the Phillies – with an average 2011 audience of 276,000 and 2012 audience of 168,000, second and fourth best, respectively – should be just fine.
Because the Dodgers are going to be their comparable team. Not the Rangers nor the Astros, even if their markets are closer in size to Philadelphia's. There weren't bidding wars over the Rangers or Astros. The Phillies are going to get at least $4 billion, more likely $5 billion, and when the numbers get to that absurd level, it's impossible to say how high they'll reach or just how much bigger the bubble will get.
The only certainty is this: The Phillies, like the Yankees and Red Sox and Dodgers, will remain in that rarified strata of payroll where the haves look down on the have-nots and chuckle that they're playing the same game even though it's so obvious they aren't.
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