Stormy Skies Ahead?: Amazon, Audacy, and the Future of Twins Broadcasting

[Whitey333]

Great article!  Well written and researched.  I haven't been able to watch the Twins ( nor Wild, and Timberwolves, and others) at home for over 3 seasons., due to the very limited availability of Bally Sports on the various media outlets.  The Twins promised three years ago they were go

[Major League Ready]

16 hours ago, nicksaviking said:

Sorry, I agree with most of your points but not this one. The billionaires care more about immediate returns knowing the quick return will be money in their pockets that can be generating interest right away.

Millionaires may have long term vision, but not Billionaires. If they did, they would have never accepted the broadcasting deals from a decade ago which is hurting the sport now but paid out immediately. And they wouldn’t constantly be trying to torpedo economic, climate and healthcare deals that hurt in the short term but would pay off in the long term.

No problem we just disagree on this one.  I almost always agree with you but not here.  The broadcasting deals a decade ago looked pretty darn good.  I would bet the owners and the league pursue strategies based on long-term revenue vs short-term cash flow.  It will be apparent with the Twins soon enough.    

Millionaires don't become billionaires with long-term vision.  Do you think Bill Gates made decisions based on immediate term?  These guys are the optime of long-term strategists.  My firm put together a strategic plan for all of the companies owned by one the NBA owners.  Their focus was very much on long-term sustainable growth.  In my experience, the vast majority of fortune 500 companies make decisions based on long-term revenue and profitability.  They discount future returns but the decisions are almost always based on long-term return and risk mitigation.  Granted, we are not talking about owners in this context but this sort of approach is widely the norm.

[Linus]

39 minutes ago, Bigfork Twins Guy said:

Could we be at an inflection point where the ability to charge for baseball broadcasts is greater than the ability to pay for them?

Baseball is different than the NFL in that most fans only want to watch THEIR team and are not entertained by watching other market's teams.  That may not resonate with us hard-core BB fans on this site but IMO it does with the normal fan.

Are we starting to see this model decay with the symptom being the slow FA market this year?  Have BB contracts and the amount that owners make hit that threshold where something has to give?  I have always believed, given the runaway contracts in BB (an all major sports for that matter), that this will eventually catch up to them and the golden goose will have been killed.

Let me know your thoughts on whether we have hit or close to hitting that magic threshold.  There are exceptions (Ohtani and the Dodgers) of course, but overall, it appears to me that broadcast rights vendors are aware that they can no longer receive enough revenue to fund the ball team's demands based on their payrolls and owner's greed.

This is what I’ve been trying to point out. The root cause of all this is that the number of people interested in baseball or certainly their willingness to pay for it has shrunk dramatically.  It seems like people are just trying to make $10 plus $10 equal $125. The delivery of tv viewing is the consequence of this problem not the problem itself. And this could be the tip of the iceberg as the people that will pay to watch baseball tend to be older and there are fewer of them every day. 

[Peter Labuza]

4 hours ago, Johnny Ringo said:

I would tell Mr. Labuza and Mr. Bonnes that if you want to write about finance and bankruptcy particulars then know something about them or consult someone who does. I realize that this isn't the Wall Street Journal but do we want to have grownup discussions or not? 

The part you disagree with is that DSH/Amazon gained leverage by no longer needing to be in bankruptcy proceedings because of an influx of cash from settled litigation and a new investor. That seems pretty logical that it would increase business opportunities.

The fact that the Twins went from definitely no going back to Bally to having conversations the last two months also suggests that other opportunities did not manifest. It's been reported that the deadline to get a broadcast partner in place is now 10 days from now.

As I noted, DSH's lawyer specifically said they no want to discuss options with the teams for a multi-year stake. 

Some of this is just basic facts. I never once wrote in my piece that "billionaires are greedy / stupid." I did say that Amazon has a practice of business that has not necessarily been beneficial to its partners. 

[NotAboutWinning]

8 hours ago, Fatbat said:

MLB has to be shook up at the influx of white knight $$$ coming into the banko proceedings.  The plan to eventually control all of  their broadcasting rights in house is most likely up in flames.  If the last remaining individual teams negotiate a multi year deal with the new org structure , its a done deal. Amazon and their partners will own it and control it for many years. Is that good for the fans? Maybe in the short term but how high will streaming fees go? How will the revenue be divided?  
so many questions! Even in the short term, will MLB acquiesce to the proposal or will they object?  

Very interesting point! MLB may have slept through a huge opportunity to take the wheel!

[Fatbat]

12 minutes ago, NotAboutWinning said:

Very interesting point! MLB may have slept through a huge opportunity to take the wheel!

After listening to Gleeman and the geek podcast, they bring up several interesting topics/concerns and senarios. The MLB lawyers seemed to be blind sided. What if the banko judge doesn’t go along with the proposal and throws out the whole reorganization plan. What kind of negotiation power do the twins have since they are mid market with no contract. Are they gonna get last years A/R. $8B old value. $1B new value and $8B Liabilities/ A/P.  It kinda boils down to Amazon buying more n for pennies on the dollar and will teams with expiring contracts in the next year or two take the easy $$$ contracts from Amazon or will they not.  
If I were sitting in the Pohlads media office with Co lawyers, I would try a strategy of a starting a bidding war even tho they dont have much leverage but the sales point would be.  Other teams will follow us if the revenue is ever increasing and stable. The game of baseball and its broadcast/streaming has to be viable, affordable and attractive to old fans, new fans and future generations. Like it or not, that’s probably with Amazon. 

[Johnny Ringo]

18 hours ago, Peter Labuza said:

The part you disagree with is that DSH/Amazon gained leverage by no longer needing to be in bankruptcy proceedings because of an influx of cash from settled litigation and a new investor. That seems pretty logical that it would increase business opportunities.

The fact that the Twins went from definitely no going back to Bally to having conversations the last two months also suggests that other opportunities did not manifest. It's been reported that the deadline to get a broadcast partner in place is now 10 days from now.

As I noted, DSH's lawyer specifically said they no want to discuss options with the teams for a multi-year stake. 

Some of this is just basic facts. I never once wrote in my piece that "billionaires are greedy / stupid." I did say that Amazon has a practice of business that has not necessarily been beneficial to its partners. 

As far as I know, no plan of reorganization has been approved by the bankruptcy court, so this leverage you speak of is specious. Even if it is approved, I would say that it only elevates Bally to, once again, the position of a viable option.

The Twins made a mistake. They didn't see the collapse of cable and the RSN model coming and it caught them flat footed. 

Why is all this happening? There is a bigger picture issue here. The Twins/MLB can't figure out to replicate the revenue streams they enjoyed from cable bundling.

To replace $55 million net you likely need $65 million gross. Can the Twins find 650,000 households to pay $100 each to watch their games? I don't think they can. In fact, I don't think they can come close. 

If you slap the games on a new or existing streamer (Amazon) you still need to recreate the revenue stream. How many non-Twins fans want their Amazon bill to go up because the games are now on there?  

The technology to view the games is not the gating factor. Right now, the math is. 

 

[Major League Ready]

12 hours ago, Johnny Ringo said:

As far as I know, no plan of reorganization has been approved by the bankruptcy court, so this leverage you speak of is specious. Even if it is approved, I would say that it only elevates Bally to, once again, the position of a viable option.

The Twins made a mistake. They didn't see the collapse of cable and the RSN model coming and it caught them flat footed. 

Why is all this happening? There is a bigger picture issue here. The Twins/MLB can't figure out to replicate the revenue streams they enjoyed from cable bundling.

To replace $55 million net you likely need $65 million gross. Can the Twins find 650,000 households to pay $100 each to watch their games? I don't think they can. In fact, I don't think they can come close. 

If you slap the games on a new or existing streamer (Amazon) you still need to recreate the revenue stream. How many non-Twins fans want their Amazon bill to go up because the games are now on there?  

The technology to view the games is not the gating factor. Right now, the math is. 

 

It's not math,  I think the assumptions here limits the potential revenue stream.

The first assumption is that would be that fans are only willing to pay $100 for 162 games and 6 months of entertainment.  That won't cover the cost of one decent dinner out for a couple.  The family spends $266 to attend a single MLB game.  IDK the tipping point but $100 seems low.  MLB is in trouble if that's all people are willing to pay.

There is also an assumption here that the pricing model only includes a monthly option.  Streaming allows for a multi-tier pricing model.  They could offer 20 or 40 game bundles for the average fan.  Obviously, this would be more expensive on a per game basis than a season pass but this would provide a lower price point option.  They could also charge separately for playoff games.  Perhaps free playoffs could be an incentive to buy a season pass.

The most impactful assumption here is the absence of advertising revenue which is more valuable than streaming fees.  IDK  how many minutes of advertising there are per game + pregame + postgame but multiply that number by 162 and that's far more valuable than the fees charges to viewers.

I don't think it's math in this analogy where "math" means economics.  They need to find a model and a partner that can maximize the value of the advertising fees.

[Fatbat]

Don't the twins have 2 potential buys? One for the streaming rights and one for the tv broadcast rights?  There has to be a little built in leverage there.
If the Twins can split that market, can’t they shop the streaming rights to 5 or 6 different services?  IF the banko judge approves everything, Amazons $115M will just be seed $$$ so they can negotiate long term deals with bigger mark teams as current deals expire.  The long term play must be for them to own a majority of team contracts and sell big bundles to daily viewers and more expensive 1 game or weekend type passes to casual fans. You could have super fans paying $200/season to stream 20 teams’ games or $75/season to stream 3 teams games. Casual fans could pay $5 for a weekend series pass to watch their fav team.  

[NotAboutWinning]

Wow, the Twins are in a tough spot. The only team with no broadcast or streaming agreement. Those 5 teams that are in the Amazon proposal still have Diamond/Bally's producing the broadcast... Easy feed to Amazon for streaming. It doesn't seem that MLB is willing to work a Diamondbacks/Padres type of deal, or it would be done by now. Going back for a 1 year deal with Bally's is going to be tough since the Twins announced no blackouts to their fans. Opening day just a couple months away. Probably should have had a plan before they broke up with Bally's.

[Peter Labuza]

12 hours ago, Johnny Ringo said:

As far as I know, no plan of reorganization has been approved by the bankruptcy court, so this leverage you speak of is specious. Even if it is approved, I would say that it only elevates Bally to, once again, the position of a viable option.

 

 

I'll just note that bankruptcy judges are not there to make policy, Yes it needs approval, but given the huge influx of $600 million + the plans as noted by DSH/Amazon on a plan to profit, the judge will almost certainly approve it. Usually when a judge keeps proceedings going is because of other issues that need to be settled in other courts. 

[Johnny Ringo]

11 hours ago, Peter Labuza said:

I'll just note that bankruptcy judges are not there to make policy, Yes it needs approval, but given the huge influx of $600 million + the plans as noted by DSH/Amazon on a plan to profit, the judge will almost certainly approve it. Usually when a judge keeps proceedings going is because of other issues that need to be settled in other courts. 

Golly. I am trying to be nice.  There is a million miles between "making policy" (whatever that means) and approving an initial plan of reorganization. 

The judge's responsibility is to maximize the value of the estate for the benefit of the creditors pursuant to plans of reorganization put before the court. At times, the company's plan is counter to that goal. In that case, the court has a duty to reject that plan in favor of competing plans advocated by other parties.  

But whether this plan is approved or not, as my grandmother would say" what does that have to do with the price of tea in China?" 

Twins fans don't care about us debating our jurisprudence bona fides.  They care about watching the Twins easily and at an easy price.

I would guess Amazon's interest here is very specific; attaching themselves to the surviving (non- rejected) Bally contracts. I see no other reason why they would need or want Bally's.

So whether all of this means anything to the Twins and the broadcast of their games is unclear.  

Maybe it provides a 2024 solution. Maybe not. But I will be shocked if it is at a price that the Twins like very much.

 

[August J Gloop]

On 1/19/2024 at 1:49 PM, Peter Labuza said:

I absolutely agree, and I think Amazon is a big win in the near term.

Let's play this out. Ballyzon gets their faux-mini-merger. AMZN now has the stream rights for 5 teams. Those 5, plus 6 more have existing Bally's linear deals. 5 teams are with out any deal. The other 14 have some sort of Linear deal and likely some complicated blackout encumbered streaming situation due to their linear deals (like NESN and YES - have to have cable to get the online option).  AMZN doesn't get anything out of Bally's being on cable or satellite. They actively don't want it on youtubeTV or fubo. 

We have to ask how is 600 Million enough to run 14 networks (the 11 plus TEX, CLE, MIN) for a month, let alone a whole baseball season? Consider that 500 million is for the 'separation from Sinclair', which definitely means a large chunk is going to executive bonuses. They essentially are guaranteeing that they'll operate at a loss again or that they have the capability to negotiate long term deals worthy of funding 4.7 BILLION DOLLARS in debt (which they don't).

RSNs don't work anymore. It's just basic math. AMZN knows this and is clearly positioning to shut down MLBs ability to even televise half the league at all as early as this season, unless their streaming demands are met.  

That doesn't sound like even a near term good for anyone.