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The Twins cut their payroll by $30 million last offseason, with the uncertainty surrounding their TV deal known to be a major factor in this decision. Fans were rightfully angry, and over the weekend, ownership figurehead Joe Pohlad found himself (poorly) fielding questions about this decision and its impact on the team's outcome this season.
I'm not here to defend the payroll slashing, nor the stated reasoning behind it: that a professional baseball team must necessarily be operated as a traditional business, with bottom lines treated as the top priority. But what I will say is that the Pohlads are not alone in their agenda.
The reason their payroll cut last offseason was so conspicuous and widely noticed was, first and foremost, because of the horrible timing, coming off a breakthrough season and playoff run. But it's also because the Twins were first in line for something that the rest of the league is soon to experience: the realities of a bursting TV revenue bubble, with massive implications on the economics of baseball.
I believe the Twins were the canaries in the coal mine. On Wednesday, Evan Drellich of The Athletic reported that Diamond Sports Group intends to scrap its agreements with all but one MLB team (Atlanta) next year. That means that 11 teams broadcasting with the Bally Sports affiliation, including nine that were under contract, would need to find a new home or renegotiate with the hated media conglomerate. Drellich later corrected his report to clarify that only two teams were formally dropped, but it sounds like Diamond is positioning itself to sever ties more broadly.
Local TV revenue has long been Major League Baseball's sweet, sweet honey hole. That's because teams have been able to cash in on cable packages featuring (and charging for) their broadcasts, even from subscribers who don't watch or care about the games. The proliferation of streaming models and evolution of viewing behaviors have turned this convention on its head.
The arrival of this disruptive moment is causing a lot of extraordinary things to happen. Twins ownership and their ill-advised payroll slash is one example. Another would be Bally Sports going dark out of nowhere on Comcast in the middle of last season, cutting off cable viewers for months. Zooming out, we have this prolonged and contentious legal battle playing out between Diamond and Major League Baseball, with no end in sight.
Look, there are definitely some bad actors here, but everyone involved is at the mercy of forces beyond their control. The paradigm has shifted. The money no longer adds up or works in the same way it once did. It's just not going to be possible for (most) baseball teams to rake in revenue like they did for the past few decades, via an inflated and unsustainable model.
Over the past couple of months, I've had conversations with some people who've been around the game for a long time, and these conversations have solidified a belief that's been stewing in my brain: MLB is headed for a reckoning. The league will figure out a broadcasting system that gives fans access to the games, and it'll still be plenty profitable, but the days of teams earning like they were accustomed to will soon be over--at least outside of mega-markets like New York.
When that comes to pass, you better believe we're going to see a lot of "right-sizing" from owners across the land, who are equally frugal to the Pohlads--if not more so. Keep in mind that even with their severe reductions, the Twins still ranked 19th among MLB teams in payroll, outspending all but one AL Central team.
The Twins claim they have no intentions of further cutting payroll, which is not the most uplifting news given the slashing that already took place. But if the rest of the league's spending is about to drop collectively around them, Minnesota's $130-million payroll may put them in a better relative position. And if the salaries that free agents are able to command decline precipitously (which I fear is going to be the case), the Twins front office may have a better chance to acquire impact talent with their extremely limited spending flexibility. To put it crudely: everyone else's loss can be their gain.
Players and agents are going to be angry. Teams are going to get ripped off. It's going to be ugly, and frustrating. But it's been a long time coming. The bubble is on the verge of popping for the business of baseball, and Twins fans have already gotten a taste.
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