Just when you thought the television and cable window for local broadcast rights fees would be closing, another large baseball contract was made.
The Phillies have agreed to a new local TV contract with Comcast SportsNet, according to the Philadelpha Daily News. Terms of the deal weren't announced, but it is estimated that the overall value of contract is more than $1 billion. The contract is between 20-25 years in length and is worth a "massive"
amount of money, according to a source. The Phillies were already
getting roughly $35 million per year in their current deal with CSN, and the
new contract will begin once the current deal expires following the 2015
season. $35 million times 20 years is $700 million on the low end, and one would expect the Phils would have gotten an annual boost of at least $10 million per season.
Cable operators appear content on locking up baseball as content in long term contracts, even though overall cable viewership has been declining. A local cable operator must believe that the sunk costs in broadcasting 81 home games is sufficient to off-set declining ratings.
It is also unclear how the extra revenue will impact the Phils' player payroll. The Phillies were an older team that missed its championship window. Many of their starters are on the trade block, and there will be a rebuilding process for the next several years.
A Philadelphia newspaper columnist ran the numbers of the contract, 25 years at $2.5 billion, and found that if one takes into account inflation, the Phils are not getting the full $100 million in revenue value over the course of the contract, but only approximately $1.65 billion. Part of the problem the writer said is that 34 percent of such a deal is set to the league office for revenue sharing between all the clubs. He figures that in reality, the Phils current $25 million local broadcast revenue deal will only effectively double to $51 million. However, he says that in year 20, that $50 million is not going to buy a $50 million player in today's dollars. In twenty years, today's $50 million player will cost $70 million.
So the new deal does gives the Phils new revenue to at least keep pace, in the short term, with rising player contracts and team expenses. But clearly, these mega-deals are not the major cash windfalls people are led to believe in.
