With Major League Baseball being suspended for an uncertain period of time as we all deal with this coronavirus/COVID-19 pandemic around the world, there’s a lot of questions that remain unanswered about the game itself. As was discussed earlier this week when speaking about how all of this could alter the plans for new Cincinnati Reds outfielder Nick Castellanos and how he could approach the options in his contract that he signed this offseason – team revenues are going to play a big factor into the game of baseball moving forward. And without games being played, there’s certainly going to be a loss in revenue on a few different fronts.
Craig Edwards of Fangraphs took a dive into the television revenues. There’s actually a lot of really good information in the article, so you should be sure to click the link and read it, but there are two points within the article that stick out the most. The first big point is that the national and local television contracts seem to be leaving most teams in great shape. The reasoning there is that those stations who would have the games being played right now make a large majority of their money from the subscription everyone pays to their cable company to have the station rather than from the advertising sold during games – so they aren’t taking a big hit as long as people continue to have the station as a part of their “cable package”.
Most teams regional sports networks fall into that category. But a team like the Chicago Cubs, for example, who are now on the Marquee Network and aren’t in with Comcast in Chicago, could really be taking a beating right now.
The Reds deal is with Fox Sports Ohio – which is on the largest providers in the greater Cincinnati area. They aren’t on a few outlets, such as Dish Network and a few of the streaming platforms – but that represents a rather small portion of overall customers, too. When it comes to the Reds, this does leave them in a good spot as far as still being able to count on the local television money still coming in. The same thing applies for the national television money that is split up between all teams.
Now, if there is no season played at all – that’s when things could get a bit more “interesting”. The second to last paragraph from the article says this:
Soshnick also mentioned force majeure clauses that might apply in the case of a pandemic, though the language differs by contract. Many of the RSNs airing major league games are at least partially owned by the teams themselves. While teams are going to lose money at the gate, they might also make a push to get in as many games as possible, less for the gate sales (which might explain a call for doubleheaders, which aren’t normally big attendance drivers) and more to ensure there are as many games on television as possible. We don’t know the minimum number of games the networks have promised nor do we know the exact pay structure for the RSNs — whether they are paying a flat fee or on a per game basis — but the push for as many regular season games as possible might be driven more by television concerns than by having paying fans in the seats. For teams that own their RSNs, so long as they meet the minimum number of games required by cable providers, that income could serve as an insulator, as the networks profits wouldn’t be significantly affected so long as cable providers remained pleased.
One thing we’ve seen happen a lot with the new television deals is that instead of taking more cash per year in the television contracts, teams are taking a bit less – but also asking for and getting a stake in the regional sports network. There’s several reasons for that – perhaps the biggest one being that the ownerships can claim it’s not baseball revenue when the MLBPA asks for “XY%” of baseball revenue to be given back to the players in salary and benefits. That’s left a majority of teams in baseball owning at least a part of the channel that broadcasts their games.
We’re all in a wait and see mode right now when it comes to sports and when they’ll return. But there’s still a business side to how this all plays out, too. While the 2020 season isn’t going to be normal in any way, shape, or form if it even happens – what does or doesn’t happen could ultimately play a big role in the next decade of the game even when it does return.