7/10/2012 10:29:00 PM Sports Beyond the Lines Column: MLB plans on doubling TV revenue
Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is a Professor and Chair of the Sport Management Department at SUNY Cortland and is a contributing author to the Business of Sports Network. Jordan can be reached at firstname.lastname@example.org.
Jordan Kobritz Courier Columnist
Recent media rights deals for sports properties, professional and amateur, have begun to resemble monopoly money. That's good news for Major League Baseball.
MLB currently banks almost $712 million per season from three different sources, ESPN, Fox and Turner. Those deals, which were signed in 2006, will all terminate at the end of the 2013 season. Earlier this year, league executives began negotiations with representatives of the three networks in an effort to extend the expiring agreements. However, in each instance the exclusive negotiating window expired before the parties could reach an agreement.
That means MLB is currently a free agent with the opportunity to do two things: Negotiate with additional suitors (NBC Sports Network being the prime candidate) and play each of the media giants against each other. In addition to the three current rights holders, another possible suitor is CBS, which due to its strong ratings position has less of a need for MLB programming than its competitors do.
MLB's own network may also be a factor in the discussions. The MLB Network currently broadcasts a number of live games during the season along with two Division Series games, and may wish to expand its programming. While MLB teams may elect to forgo competing with their broadcast partners for playoff games, expanding in-season coverage may be a viable option without potentially diluting rights fees.
Regardless of which networks end up with broadcast rights to the national pastime, one thing is certain: MLB is in an ideal position to capitalize on the frenzy for sports programming. Despite mixed ratings, the league has a number of factors in its favor, including a new CBA which guarantees labor peace through the 2016 season, competitive balance that is unrivaled in any other professional sports league, and an abundance of young stars that should make the sport attractive to the younger generation of sports fans.
Often accused of being tradition bound, MLB has gone to great pains in recent years to market their product to the younger set. The league has added instant replay, televised the first round of the free agent draft, and this year, agreed to add two more wild card teams to the playoffs.
This is an advantageous time to be marketing media rights for professional sports leagues. With the exception of NASCAR, the major sports leagues are locked into long term rights deals. Any network that is shut out of the new baseball agreements will be without the opportunity to add a major sports property for several more years.
Other than MLB, the party that stands to gain the most in the upcoming negotiations is NBC. With a major commitment to expand programming on its recently renamed NBC Sports Network (NBCSN), the subsidiary of Comcast Corporation could be poised to escalate the bidding for MLB. Currently, NBCSN's prime programming is the NHL, still a niche sport, supplemented by a host of lessor sports such as cycling and elk hunting. While NBC holds the rights to the popular NFL on Sunday nights, as well as the Olympics, NBCSN could use the boost it would receive from a piece of the MLB package.
The network with the most to lose is ESPN. The World Wide Leader can ill afford to lose its baseball programming. In fact, ESPN may bid aggressively for a piece of MLB's post season which is currently held by FOX and Turner.
Along with television rights, MLB will almost certainly include a package of digital rights, perhaps not entirely by choice. The league has preferred to retain digital rights and market them through its own MLB Advanced Media arm, the envy of the industry. But most TV networks have insisted on digital rights being included in all new media deals, which may also be the case here.
Where the negotiations will lead is anyone's guess. The prediction here is MLB teams will at least double their current take from national TV contracts. Several things are certain. When the current round of negotiations are completed, several media outlets will be very pleased; at least one of the bidders will be left at the altar, with plenty of cash to bid on the next sports property to hit the open market; and MLB teams will be a lot richer.
Posted: Wednesday, July 11, 2012
Article comment by:
I had to laugh at this statement:
"competitive balance that is unrivaled in any other professional sports league"
You made 0 facts to back your statement up.
1) There is no salary cap, just a luxury tax. Teams like the Yankees(while wanting to cut back on total salary to lessen the blow of the luxury tax), can still spend much more than smaller market teams(Like our own Diamondbacks).
2) Can you remember the last time Pittsburgh, Kansas City, Seattle, etc. made the playoffs?
NHL has probably the best competitive balance, up there with the NFL.
NHL last season, had the Western Conference(If you paid any attention to the Coyotes saga this past season, you should remember this), with 4 teams that could have made the playoffs! Dallas, San Jose, Los Angeles, and Phoenix, all fighting for positions 3, 7, 8, and 9, pretty much until the last day of the regular season!
I really disagree with your statement that MLB has competitive balance that is unrivaled in professional sports. MLB has the 2nd weakest compared to NBA, which obviously has the worst.