A Right-Sized Reckoning Is Coming for Major League Baseball

[Trov]

6 minutes ago, DJL44 said:

So $10M off streaming, plus whatever they're still making from cable/satellite.

 

5 minutes ago, TheLeviathan said:

I don't think you're going to be able to do both without running into all kinds of problems with blackouts or negotiations.  You're splitting the pot and everyone will drop their rates since they aren't getting exclusivity.

Exactly what Leviathan says.  You cannot get both streaming for your team, and local cable/sat unless you enter that into contract with the local provider, who will never agree to it.  Why would someone agree pay for your product, when you will undercut them and sell streaming to fans?  They only would if you sell the rights for very low cost.  

[LA Vikes Fan]

11 minutes ago, nicksaviking said:

MLB has already lost a generation of fans by only being concerned with short term profits. It's going to take years for them to build back up, if they can do it at all.

And if they can't get the yearly dividends that they used to from TV deals, I'm guessing there will be a lot of owners selling and cashing out on the huge equity they've gotten in the decades since the bought the teams. But new owners now without the decades of equity and smaller profits will just mean smaller and smaller payrolls. At some point, the non-major market owners are going to have to tell the large market owners and the MLBPA, that there's three options. Near complete revenue sharing like every other pro league, contract all the non-major markets or boot the major markets from the league. If there's a fourth option that keeps things as they are, I haven't heard anybody suggest it yet.

This is likely where baseball is headed as a business. I think most if not all of us on this board would strongly argue for the NFL model of near complete revenue sharing. Unfortunately the Dodgers, Yankees, Mets, and maybe Cubs would not, and MLB cannot survive as a viable entity without those markets. I see a significant shakeout coming starting with teams that just have never caught on like Miami and Tampa. Allowing in private equity money may be a short-term patch but those guys are very bottom line oriented. They will squeeze the teams at the payroll and other levels like something you've never seen before. The only model that really works outside of the big markets is the vanity model where a billionaire owner doesn't care above money, only winning on the field. There aren't very many people like that. That isn't how you become a billionaire. 

I'm hoping that the interim step is the 13 soon to be orphaned teams form a collective package on Apple TV, Hulu, Prime or some similar service.  Local contracts can show half the games, and all are available through a streaming platform and on MLB.com without blackouts. The streaming services might be willing to overpay to buy inventory and get a foot in the sports door, especially those that have access to public capital markets for seed money. That will give MLB time to figure out the next step.  I do think the next step is going to be pretty ugly. 

[laloesch]

And honestly, A LOT of people can't afford $300 plus cable bills PLUS streaming packages for Hockey, Baseball, etc.  They've priced themselves out of reach and it's starting to hurt revenues for these conglomerates.  It's all swirling the drain, getting ready to be flushed.

[Vanimal46]

4 minutes ago, Trov said:

 

Exactly what Leviathan says.  You cannot get both streaming for your team, and local cable/sat unless you enter that into contract with the local provider, who will never agree to it.  Why would someone agree pay for your product, when you will undercut them and sell streaming to fans?  They only would if you sell the rights for very low cost.  

Except that’s exactly what the Padres did. Padres fans were still able to watch them if they had a cable or satellite package. The article I posted earlier didn’t include revenue from cable and satellite, and I’m sure they lowered the price because of lost exclusivity. But that’s the route the Twins and others have to take. It’s not going to make up the $50 million lump sum from Bally, but those days are over. Get a few million from Comcast, DirecTV, Dish, Hulu, YouTube TV, etc. Then get a couple million from FOX 9+, and recoup the rest from streaming. 

[DJL44]

3 minutes ago, Trov said:

Exactly what Leviathan says.  You cannot get both streaming for your team, and local cable/sat unless you enter that into contract with the local provider, who will never agree to it.  Why would someone agree pay for your product, when you will undercut them and sell streaming to fans?  They only would if you sell the rights for very low cost.  

They shouldn't want exclusivity. That is the old, dead model and it isn't returning. Sell the broadcast rights cheaply, increase the audience size as large as you can and make as much money possible on advertising. They should want Twins games available on basic cable packages.

They had a model that was 100% subscriptions and 0% ads. They need a new model that is 20% subscriptions and 80% ads.

[Otaknam]

The biggest problem is that the major markets, like New York and Boston, and maybe LA, have unlimited revenue streams through their own cable networks. This financial advantage is so great that these teams can actually overpay a player with extended contracts, fully realizing that for the last several years of the contract the player’s skills will be too diminished to help the team. But that doesn’t matter to them as long as they get several years of production. When the player’s skills diminish over the last two or three years of the contract, that is just throw away money that they have little concern about. Ohtani’s contract with the Dodgers is an example:

• Deferred payments: $680 million of Ohtani's salary is deferred and will be paid out in $68 million installments on July 1 each year from 2034 to 2043 
  Payroll: Ohtani will be on the Dodgers' payroll for 20 years !

   

  Most teams cannot operate like that. The result is there are a handful of teams with unlimited wealth, while everyone else will be cutting payroll. Maybe it’s time for a MLB salary cap and salary basement, similar to what the NFL has done. Bob Costas proposed a salary structure like this over twenty years ago. It just equalizes the playing field and makes the league more competitive, instead of just a handful of teams able to pay exorbitant salaries, with everyone else left with scraps contract wise. That requires some actual judgment on how to spend on contracts, which is why the NFL teams have salary cap specialists. 

[TheLeviathan]

1 minute ago, Vanimal46 said:

Except that’s exactly what the Padres did. Padres fans were still able to watch them if they had a cable or satellite package. The article I posted earlier didn’t include revenue from cable and satellite, and I’m sure they lowered the price because of lost exclusivity. But that’s the route the Twins and others have to take. It’s not going to make up the $50 million lump sum from Bally, but those days are over. Get a few million from Comcast, DirecTV, Dish, Hulu, YouTube TV, etc. Then get a couple million from FOX 9+, and recoup the rest from streaming. 

Right, but you are looking at 10-15M total.  Eyeballs can see your product, but at 30% of the previous return.

[Vanimal46]

Just now, DJL44 said:

They shouldn't want exclusivity. That is the old, dead model and it isn't returning. Sell the broadcast rights cheaply, increase the audience size as large as you can and make as much money possible on advertising. They should want Twins games available on basic cable packages.

They had a model that was 100% subscriptions and 0% ads. They need a new model that is 20% subscriptions and 80% ads.

Kris Lindahl and Nicollet Law are salivating at the thought of playing 20 ads per game! 

[USNMCPO]

53 minutes ago, USAFChief said:

The article also says the Padres are still available via local cable/satellite systems.

 

That seems like the key to me.

Get rid of the blackouts, which will mean less money from cable/satellite, but add some revenue back through streaming. 

 

I agree. It has to be an all the above type deal or it will fail miserably.

[Vanimal46]

Just now, TheLeviathan said:

Right, but you are looking at 10-15M total.  Eyeballs can see your product, but at 30% of the previous return.

True, but we need to start somewhere. Increasing their reach gives them more opportunities for new fans attending Target Field. And if the team is good, subscriber numbers will increase. 

[TheLeviathan]

2 minutes ago, Vanimal46 said:

True, but we need to start somewhere. Increasing their reach gives them more opportunities for new fans attending Target Field. And if the team is good, subscriber numbers will increase. 

I agree, this is the way forward unless MLB has the guts to 100% share media revenue.

But I never see this model returning even half of previous levels of revenue.  It is rght for fans, but is that much of a haircut viable to owners?

[Riverbrian]

Lots of complication with this but... Ultimately... First and Foremost... You have to increase interest in Baseball. Nothing is solved or sustainable without increasing interest in baseball. Even if you haven't figured out how to monetize that interest. You still have to increase interest in baseball. Selling exclusivity is a self imposed handicap to increasing interest in the game of baseball. 

Selling exclusivity is the exact opposite of what baseball needs because it limits accessibility. No RSN is going to be able to sell advertising at a decent rate without significant audience to charge those prices and their audience sized will be lowered significantly if consumers can watch the product elsewhere.

Exclusivity is part of the deal if you want that short term money meanwhile that exclusivity that you sold sets forth an inevitable downward spiral of waning interest because exclusivity limits accessibility.      

It is simply way past time to cut out the middle man and take control of your product. The regional sports networks have account managers who sell advertising. The Twins can also employ account managers who sell advertising and keep the profits that RSN's made for themselves which hopefully more than they paid for the rights. No middle man necessary. By handling it in-house... the Twins will be able to sell advertising across all platforms which is something the RSN's can't do. By combining your platforms, blackouts are no longer necessary,  accessibility is a reality, the middle man profits are now yours, interest is increased and maybe you sell a few more Royce Lewis jerseys in Vermont.     

Yes... the downfall of the RSN is going to be a tough adjustment in the short term but it's fantastic news long term. 

This isn't as simple as we got 45 million dollars from the RSN, let them take the risk and do all the work. It isn't as simple as the Padres have 40,000 subscribers and as result made X amount from those subscribers.  

How quickly can the Twins can put this together. Let's find out. They failed in their swiftness last year.   

 

[RpR]

I do not have cable TV at my other house, so I listen to them on the radio.

I have and still do listen to a LOT of games on the radio; this year many times I just followed the game on MLB Gameday as I had no interest in watching on the television.

I did on occasion change channels when a player/s that I like to watch were at bat but I am never paying money just to watch any sport.

[Mike Sixel]

MLB tried to buy the Fox regionals before diamond outbid them. They'll definitely try to take this in house somehow.

[bean5302]

Streaming the games is the future. MLB should own it's content and the cable networks can pay for it if they want. That's the only model which protects MLB and its teams from the utter disaster of the past couple years, and the long time problems they've had.

Now is the time to make changes and protect the sport's assets with the RSN's largely out of the situation.

Even if there is a 10-20% reduction in revenues, it won't make a huge impact on teams payroll.

 

[Jocko87]

48 minutes ago, nicksaviking said:

Can't agree with this. The revenue from sports betting is insane, the billionaire's would happily take this income regardless of the health of their sport. The NFL owners are thriving and they're the ones pushing the sports betting the hardest.

I can see that, but the result is the same.  My problem with it is no billionaire is killing their golden goose on purpose.  They have been aware of the TV problem far longer than us.

The NFL playing the role of the Titanic is fitting. We all know the story.  I imagine it will happen somewhere between games in Cairo and Kazakhstan. 

NBA salaries aren't exactly self supported. I could got on.

It's the modern business failing writ large. Everyone is so focused on growth as the metric rather than running a healthy business. Many companies buy other companies for the illusion of growth to the detriment of the overall business.

It's not great if you are a fan, but someone has to pay for these things. You and everyone you know could go to every game and it wouldn't make a dent.

[Jocko87]

1 minute ago, bean5302 said:

Streaming the games is the future. MLB should own it's content and the cable networks can pay for it if they want. That's the only model which protects MLB and its teams from the utter disaster of the past couple years, and the long time problems they've had.

Now is the time to make changes and protect the sport's assets with the RSN's largely out of the situation.

Even if there is a 10-20% reduction in revenues, it won't make a huge impact on teams payroll.

 

Wut?

[Jocko87]

1 hour ago, Mike Sixel said:

I can almost guarantee that another level of the minors is gone.... Especially with college baseball increasing. The owners will want someone else to pay four development.

I don't think so. It would be the best way to get a baseball LIV league. 

Also putting any stock in an NIL involved product is incredibly risky. That system will be drastically different in a couple years.

[Rhyno006]

I can't help but wonder if as part of all of this there will be some push, assumed by the player's union, for some sort of a salary floor and cap to ensure a more guaranteed money pool for the players. It would seem logical to me on the surface at least, as it would provide the players some security that teams would have to spend a certain amount and maybe even help to narrow the gap between the top and bottom teams.

More competition should mean better ratings, etc? Maybe? Hell I don't know, this looks to get worse before better for sure.  

 

[TwinsDr2021]

17 minutes ago, Riverbrian said:

Lots of complication with this but... Ultimately... First and Foremost... You have to increase interest in Baseball. Nothing is solved or sustainable without increasing interest in baseball. Even if you haven't figured out how to monetize that interest. You still have to increase interest in baseball.

100% this, doesn't matter how you get the product to the fans, if the product isn't exciting to the fans it doesn't really matter. Every year it seems like baseball has made it easier to not watch the game, just check in on it, TV, gamecast whatever it is. It is turning into the NBA IMO, no reason to watch unless the star I like is playing or maybe tune in at the end of the game.

[Mike Sixel]

4 minutes ago, Rhyno006 said:

I can't help but wonder if as part of all of this there will be some push, assumed by the player's union, for some sort of a salary floor and cap to ensure a more guaranteed money pool for the players. It would seem logical to me on the surface at least, as it would provide the players some security that teams would have to spend a certain amount and maybe even help to narrow the gap between the top and bottom teams.

More competition should mean better ratings, etc? Maybe? Hell I don't know, this looks to get worse before better for sure.  

 

What does a floor really do? Should the white Sox sign a bunch of mediocre veterans and block young players, just to spend? They'll still be terrible. But make no progress to being better long term.

I really don't know the answer....

[FlyingFinn]

So, I'm hearing that Christian Vasquez and his $10 million next year ain't moving anywhere, for better or worse.

Curious, do we think the Twins knew all this was coming when they signed Correa?

Also, there may be a lot of minimum salary guys available in February who are pretty good. This is when and where I expect the Twins to shop.

[Riverbrian]

1 minute ago, FlyingFinn said:

Curious, do we think the Twins knew all this was coming when they signed Correa?

I believe so

 

[nicksaviking]

24 minutes ago, Riverbrian said:

Lots of complication with this but... Ultimately... First and Foremost... You have to increase interest in Baseball. Nothing is solved or sustainable without increasing interest in baseball. Even if you haven't figured out how to monetize that interest. You still have to increase interest in baseball. Selling exclusivity is a self imposed handicap to increasing interest in the game of baseball. 

 

 

And they've spent the better part of two decades neglecting this, yet they act like they will solve it over night. If they can do it at all, it will take decades to repair.

[Rhyno006]

14 minutes ago, Mike Sixel said:

What does a floor really do? Should the white Sox sign a bunch of mediocre veterans and block young players, just to spend? They'll still be terrible. But make no progress to being better long term.

I really don't know the answer....

I have no idea how to answer that, but from a player perspective if you don't want the ChiSox or Rays spending less that 40 mil a year on a roster a salary floor would be a way to keep the player pool as a whole better compensated. It may not work that way, which is why I pose the thought. Just throwing stuff at a wall here.

I obviously have no control over any of this, but all I know is that I am seeing less and less options of being able to watch my favorite baseball team over these last few years. I went to two of the Seattle games in May and had a great time. But neither of my kids can watch them consistently unless they are on a national broadcast, so their interest is pretty fair overall. Hard to want to plan a trip as a family to go see them when they don't know who half the players are because they've made no attachments to them by watching them play on TV. Kind of goes along with the theme others here have mentioned: MLB needs to figure out a way to garner more interest in MLB in order to grow the sport.

[Riverbrian]

1 minute ago, nicksaviking said:

And they've spent the better part of two decades neglecting this, yet they act like they will solve it over night. If they can do it at all, it will take decades to repair.

 

o·ver·due

/ˌōvərˈdo͞o/

adjective

1.1 having been needed for some time.

"major league baseball accessibility reform is way past overdue"

 

 

 

 

[Craig Arko]

11 minutes ago, Bigfork Twins Guy said:

A few thoughts...

• The owners and union will never agree and will sink the ship before they do because they think ONLY of their interests.
• The large markets will do the same and kill their sport because they do not want to share.
• Non-large market teams will all cut back on salaries and the mid-level veteran player will be squeezed out.
• People will not pay for streaming PLUS their cable packages.  Also, people will not pay for the primary streaming package (the one they use for all non-sports viewing) PLUS a sports-only streaming package.
• People will not pay for MULTIPLE streaming packages.  E.g. some games on Apple, some on Amazon, some on Paramount, etc.  The teams will need to pick ONE streaming package if they want fans to purchase it.
• People will not pay for a total sports streaming package.  Who wants to pay for sports that they do not enjoy just to see maybe the one sport (or one team) that they do enjoy.
• Using supply and demand principles, player salaries are going to have to come down more in line with regular salaries.  It's up to the union whether or not that is somewhat evened out or a few making millions and a ton of minimum level players.
• It's going to be an interesting year!

Yes, I could see a strike/lockout pretty much taking an entire season or more, which will only be the first domino knocked over. 

[Riverbrian]

20 minutes ago, nicksaviking said:

And they've spent the better part of two decades neglecting this, yet they act like they will solve it over night. If they can do it at all, it will take decades to repair.

No doubt... It's going to take some time to repair. We have to get a lost generation back but they can be brought back. 

New people are born every day.

Marketing can and does change opinions.

Old Spice was on the brink of collapse. They took a new approach out of desperation, did some clever marketing and today in 2024... I have Old Spice under my armpits as I type this. 

 

[Jocko87]

21 minutes ago, Riverbrian said:

No doubt... It's going to take some time to repair. We have to get a lost generation back but they can be brought back. 

New people are born every day.

Marketing can and does change opinions.

Old Spice was on the brink of collapse. They took a new approach out of desperation, did some clever marketing and today in 2024... I have Old Spice under my armpits as I type this. 

 

Again, look to golf.

The only air that allowed LIV to breath was a "high on Tiger" PGA tour that doesn't seem to have put any effort into what a post Tiger world looked like. 

It doesn't have to be all Savannah Bananas but MLB is playing chicken with pushing the minors into college and independent leagues.  Couple of cool innovations and it will only take one interested sovereign investment fund to decide, "sure, I'll take that".

Throw some marketing at it and the kids are gone.

[Jocko87]

45 minutes ago, Bigfork Twins Guy said:

A few thoughts...

• The owners and union will never agree and will sink the ship before they do because they think ONLY of their interests.
• The large markets will do the same and kill their sport because they do not want to share

The rest of your points are spot on and already happening.  I do have to push back on the thought of anyone killing their golden goose over some fake win in a contract, on purpose.

They are fully capable of doing it by mistake.  Malfeasance/incompetence and all that.