The "leak" that MLB was kicking around the idea of playing all the 2020 season in a quarantined bubble in Arizona had many people wondering if it is even possible.
The idea is to have all 30 teams live and play in Arizona. No long distant travel. Half of the leagues have spring training facilities in Arizona.
All the teams would be quarantined in their hotels. There would be no fans at any games. The players would be shuttled to parks and hotels.
It is like the players would be inmates in professional baseball jail.
If the idea takes root, a late May early June start was mentioned in reports. That would mean baseball could be the first professional sport to return to action. It would also mean that players would be isolated from the public and their families for 4 months or more.
The reason is simple: medical experts believe there will be no vaccine for COVID-19 for at least a year. Then whether it is effective treatment is uncertain as the virus will continue to mutate.
The players want to play. The players do not get paid if they do not play. The players want to get paid.
The owners want to play games. The owners do not get any revenue without games. The owners want to get paid.
Even if this is a feasible solution, the human cost could be great. For example, will a veteran baseball player who has already made his multi-millions want to stay away from his family during a pandemic? Maybe not.
What happens when the first isolated player comes down with the virus? Is the whole team shut down? What about the hotel workers and team staff? Are they also isolated? The problem with any quarantine is that there will always be some outside contact. Vendors have to supply the hotel. Teams come and go on buses. The locker room is being used by three teams a day. Players will not be in hazmat suits 24/7.
What happens when a player gets injured? Are teams going to start the isolation with their full 40 man rosters? So teams will be paying players not on the active 26 man rosters? If a player gets injured, he will have to leave confinement to get treatment. He may not be allowed back into the quarantine area because he could have possibly exposed in the outside world. Does the 15 day disabled list turn into a 30 day (15 off and 15 in self-isolation)?
Owners project that 30 percent of their revenue is from fan attendance. If there are no fans, will the players take a 30 percent pay cut? The players are upset with service time issues. A pay cut on top of that would be hard to take.
Arizona summers are hot. Surface of the sun hot. If you have 30 teams trying to play 15 games a day, where will they play? There is only one domed stadium in Phoenix. Night games at spring training facilities? West coast time night games may not cut it for East Coast television broadcasts.
Will MLB force feed new rule changes under the guise of unique circumstances? For example, the runner at second to start the 10th inning. Or not having any extra inning games (allowing ties). Or having a 10 run slaughter rule after 5 innings.
MLB is thinking of ways to salvage its season. But as the days and weeks drag on in shuttered businesses, work at home environments and daily death tolls reported on newscasts, people may slowly lose interest in rebooting any professional sports season.
Showing posts with label television. Show all posts
Showing posts with label television. Show all posts
April 8, 2020
March 30, 2015
THE BUBBLE BURST?
Ricketts and the Cubs are counting on a huge network-cable channel bonanza in 2020.
However, the landscape of television and consumer entertainment options is changing fast.
If the Cubs were counting on a Dodger-TW megadeal, think again.
However, the landscape of television and consumer entertainment options is changing fast.
If the Cubs were counting on a Dodger-TW megadeal, think again.
Time Warner Cable is expected to lose $1 billion in its deadl involving the Dodgers television rights, according to the New York Post.
The company acquired the right
to air Dodgers' games on SportsNet LA in 2013. The reported contract was
worth $8.35 billion over 25 years. Time Warner Cable believed providers
such as DirecTV or Dish Network would pay to carry the channel, but
that hasn't been the case thus far.
Time Warner Cable hasn't lowered
its demands, which means roughly 70 percent of Southern California
households will be unable to watch games for the second year of the deal. The company is reported asking for about $5 per subscriber in order for providers to carry the channel.
That would make SportNet LA the
third most-expensive sports channel in the United States, according to a
survey conducted by SNL Kagan, a consulting firm. And, according to the
Post at least, Time Warner would rather take a $1 billion hit than
bring down its price:
Sources told The Post that the market rate for the channel is more likely $3 per subscriber per month, meaning the charge will be almost $1 billion when adjusted over the life of the contract or in the region of $700 million in present-day terms.
“Comcast will be made whole,” said the source, suggesting this mess had to be cleaned up as a condition of Comcast’s proposed deal to acquire Time Warner Cable.
“Unless the deal closes, there will not be another [Dodgers] season shown outside of Time Warner Cable. I don’t believe they’ll get carriage,” a source told The Post.
Time Warner Cable has reportedly attempted to rectify the situation in recent weeks, but there has been no progress, according to the Los Angeles Times. The company has also denied that it is facing such a massive loss.
"Time Warner Cable has no plans to take a write-down in connection with its Dodgers contract," the company said late Tuesday in a statement. "In fact, TWC does not carry an asset on its balance sheet related to the Dodgers and, therefore, there is no asset for it to write down now or in the future."
If Time Warner Cable were to
"take a write-down" that would mean the company would have to admit that
the rights to air Dodgers games is a declining asset. This would have a
huge impact on their financial situation if the reported figures are
true.
Another point to be made is that the Dodgers cable deal has caused the values of all baseball franchises to skyrocket. So much so that the Cubs have sold minority interests in the holding company - - - which is selling slices at peak prices (and before this latest news). One could argue that all baseball franchises are now substantially overvalued as no cable operator-TV partner in the future is going to make a similar Dodger-TW mistake.
March 14, 2015
A CRACK IN THE DAM
This is a very curious development in Forbes magazine.
Forbes reports that there is a potential deal in which a South Korean sovereign fund would invest in the Los Angeles Dodgers. The twenty percent investment values the Dodger assets at $3 billion according to two sources with knowledge of the negotiation said Forbes.
Three years ago Guggenheim Baseball Management bought the Dodgers from the divorcing McCourts. That deal placed a value of $2 billion on the team and Dodger Stadium, and a value of $2.3 billion including 260 acres of surrounding real estate. The current negotiations with the South Korean investors is for about 20% of the team and stadium but does not include the nearby real estate or the regional sports channel created by by the Dodgers and Time Warner. The deal the Dodgers have with the Dodger network pays the team a total of $8.35 billion over 25 years with the money guaranteed by Time Warner Cable.
The Cubs have also sold a minority stake in the holding company for the Cubs assets, including Wrigley Field and real estate developments. It was reported the Cubs needed to raise $350 million to complete the real estate projects, including the rehab of Wrigley Field.
But this does show a weakness in the baseball business model. A successful, large positive cash flow business that baseball is touted as does not suddenly have two of its big market teams selling off large chunks of ownership (abet minority stakes) if everything is going great. There would be no need to find investors.
But in the Dodgers case, their network roll out was a disaster. TW tried to extract too high carriage fees with other California cable and sat-tv systems so 75 percent of the Dodger viewers were without broadcasts last season. Suddenly, the new network cash cow looks like a diseased beast of burden.
Other teams, like the Angels, have huge dead money contracts on their books which have choked this off season's roster rebuilding. The Mets are still on financial thin ice after the Madoff scandal. Mets owners have tried to sell a minority stake for several years but don't want to give up control.
Former commissioner Bud Selig used to crow about how great and profitable baseball was under his tenure. But that tide may be turning faster than we think.
Forbes reports that there is a potential deal in which a South Korean sovereign fund would invest in the Los Angeles Dodgers. The twenty percent investment values the Dodger assets at $3 billion according to two sources with knowledge of the negotiation said Forbes.
Three years ago Guggenheim Baseball Management bought the Dodgers from the divorcing McCourts. That deal placed a value of $2 billion on the team and Dodger Stadium, and a value of $2.3 billion including 260 acres of surrounding real estate. The current negotiations with the South Korean investors is for about 20% of the team and stadium but does not include the nearby real estate or the regional sports channel created by by the Dodgers and Time Warner. The deal the Dodgers have with the Dodger network pays the team a total of $8.35 billion over 25 years with the money guaranteed by Time Warner Cable.
The Cubs have also sold a minority stake in the holding company for the Cubs assets, including Wrigley Field and real estate developments. It was reported the Cubs needed to raise $350 million to complete the real estate projects, including the rehab of Wrigley Field.
But this does show a weakness in the baseball business model. A successful, large positive cash flow business that baseball is touted as does not suddenly have two of its big market teams selling off large chunks of ownership (abet minority stakes) if everything is going great. There would be no need to find investors.
But in the Dodgers case, their network roll out was a disaster. TW tried to extract too high carriage fees with other California cable and sat-tv systems so 75 percent of the Dodger viewers were without broadcasts last season. Suddenly, the new network cash cow looks like a diseased beast of burden.
Other teams, like the Angels, have huge dead money contracts on their books which have choked this off season's roster rebuilding. The Mets are still on financial thin ice after the Madoff scandal. Mets owners have tried to sell a minority stake for several years but don't want to give up control.
Former commissioner Bud Selig used to crow about how great and profitable baseball was under his tenure. But that tide may be turning faster than we think.
January 7, 2015
BACK TO THE WELL
The Cubs have crawled back to WGN-TV to broadcast the last 45 games of their schedule,
through the 2019 season. The games will not be televised on the WGN America superstation.
The Tribune reports that last season, WGN-Ch. 9 paid about $250,000 per game and lost $200,000 per game because of weak advertising revenue, sources said. The new rights agreement is likely more favorable for WGN and could play out better than last year’s deal, sources said, despite a later start on ad sales.
Launching a regional sports network in 2020 could mean big bucks for the Cubs, who earned about $60 million last season as the team split its schedule between Comcast SportsNet Chicago and WGN-TV.
The loss of 45 games would equate to losing 27 percent of potential local broadcast revenues. Even if the Cubs take substantially less (which WGN had previously offered only a "profit sharing deal" on game telecasts, i.e. meaning nearly nothing based on last season's poor ad sales), it is still better than losing fan interest.
The Cubs need the 45 games broadcast more than WGN needs to show them. People are still creatures of habit; if a fan does not have the opportunity to watch a non-televised Cub game, he or she will find something else to do. And if that something else is just as enjoyable, then he or she may stop watching games on TV in order to experience different forms of entertainment. This is the problem the Dodgers will face in 2015 after 75% of the their local fan base could not watch 2014 Dodger games due to cable operators balking at the Dodgers license fee demands.
If the Cubs are going to launch their own network in 2020, it needs to keep its loyal base in tact and grow the Millennials.
Millennials are defined as the generation of people born between the early 1980s and the early 2000s. Perhaps the most commonly used birth range for this group is 1982-2000. The Millennial Generation is also known as Generation Y, because it comes after Generation X — those people between the early 1960s and the 1980s. It has also been called "the Peter Pan or Boomerang Generation" because of the propensity of some of them to move back in with their parents, perhaps due to economic constraints, and a growing tendency to delay some of the typical adulthood rites of passage like marriage or starting a career.
Millennials have been characterized in a number of different ways. On the negative side, they've been described as lazy, narcissistic and prone to jump from job to job. The 2008 book "Trophy Kids" by Ron Alsop discusses how many young people have been rewarded for minimal accomplishments (such as mere participation) in competitive sports, and have unrealistic expectations of working life.
Time magazine said polls show that this group demands flexible, unrealistic work schedules and more 'me time' on the job, while needing nearly nonstop feedback and career advice from their managers. In the story, "The Me Me Me Generation," it begins: "They’re narcissistic. They’re lazy. They’re coddled. They’re even a bit delusional. Those aren’t just unfounded negative stereotypes about 80 million Americans born roughly between 1980 and 2000. They’re backed up by a decade of sociological research."
A 2012 study found Millennials to be "more civically and politically disengaged, more focused on materialistic values, and less concerned about helping the larger community than were GenX (born 1962-1981) and Baby Boomers (born 1946 to about 1961) at the same ages," USA Today reported. "The trend is more of an emphasis on extrinsic values such as money, fame, and image, and less emphasis on intrinsic values such as self-acceptance, group affiliation and community." The study was based on an analysis of two large databases of 9 million high school seniors or entering college students.
They have also been described in positive ways. They are generally regarded as being more open-minded, and more supportive of gay rights and equal rights for minorities. Other positives adjectives to describe them include confident, self-expressive, liberal, upbeat and receptive to new ideas and ways of living.
The next generation fan base is going to be a tough sell for traditional sports leagues. They do not crave escapism through sports fanaticism, since they view the world already revolving around themselves.
They may be more adapt at new technology and how to consume new forms of entertainment like short YouTube video content created by their peers, or streaming web shows on demand. Whether they have the patience to sit and watch a three hour baseball game is suspect.
through the 2019 season. The games will not be televised on the WGN America superstation.
The Tribune reports that last season, WGN-Ch. 9 paid about $250,000 per game and lost $200,000 per game because of weak advertising revenue, sources said. The new rights agreement is likely more favorable for WGN and could play out better than last year’s deal, sources said, despite a later start on ad sales.
Launching a regional sports network in 2020 could mean big bucks for the Cubs, who earned about $60 million last season as the team split its schedule between Comcast SportsNet Chicago and WGN-TV.
The loss of 45 games would equate to losing 27 percent of potential local broadcast revenues. Even if the Cubs take substantially less (which WGN had previously offered only a "profit sharing deal" on game telecasts, i.e. meaning nearly nothing based on last season's poor ad sales), it is still better than losing fan interest.
The Cubs need the 45 games broadcast more than WGN needs to show them. People are still creatures of habit; if a fan does not have the opportunity to watch a non-televised Cub game, he or she will find something else to do. And if that something else is just as enjoyable, then he or she may stop watching games on TV in order to experience different forms of entertainment. This is the problem the Dodgers will face in 2015 after 75% of the their local fan base could not watch 2014 Dodger games due to cable operators balking at the Dodgers license fee demands.
If the Cubs are going to launch their own network in 2020, it needs to keep its loyal base in tact and grow the Millennials.
Millennials are defined as the generation of people born between the early 1980s and the early 2000s. Perhaps the most commonly used birth range for this group is 1982-2000. The Millennial Generation is also known as Generation Y, because it comes after Generation X — those people between the early 1960s and the 1980s. It has also been called "the Peter Pan or Boomerang Generation" because of the propensity of some of them to move back in with their parents, perhaps due to economic constraints, and a growing tendency to delay some of the typical adulthood rites of passage like marriage or starting a career.
Millennials have been characterized in a number of different ways. On the negative side, they've been described as lazy, narcissistic and prone to jump from job to job. The 2008 book "Trophy Kids" by Ron Alsop discusses how many young people have been rewarded for minimal accomplishments (such as mere participation) in competitive sports, and have unrealistic expectations of working life.
Time magazine said polls show that this group demands flexible, unrealistic work schedules and more 'me time' on the job, while needing nearly nonstop feedback and career advice from their managers. In the story, "The Me Me Me Generation," it begins: "They’re narcissistic. They’re lazy. They’re coddled. They’re even a bit delusional. Those aren’t just unfounded negative stereotypes about 80 million Americans born roughly between 1980 and 2000. They’re backed up by a decade of sociological research."
A 2012 study found Millennials to be "more civically and politically disengaged, more focused on materialistic values, and less concerned about helping the larger community than were GenX (born 1962-1981) and Baby Boomers (born 1946 to about 1961) at the same ages," USA Today reported. "The trend is more of an emphasis on extrinsic values such as money, fame, and image, and less emphasis on intrinsic values such as self-acceptance, group affiliation and community." The study was based on an analysis of two large databases of 9 million high school seniors or entering college students.
They have also been described in positive ways. They are generally regarded as being more open-minded, and more supportive of gay rights and equal rights for minorities. Other positives adjectives to describe them include confident, self-expressive, liberal, upbeat and receptive to new ideas and ways of living.
The next generation fan base is going to be a tough sell for traditional sports leagues. They do not crave escapism through sports fanaticism, since they view the world already revolving around themselves.
They may be more adapt at new technology and how to consume new forms of entertainment like short YouTube video content created by their peers, or streaming web shows on demand. Whether they have the patience to sit and watch a three hour baseball game is suspect.
September 1, 2014
A BREWING STORM OF CHANGE
If the whole financial apple cart rides on the Cubs creating their own "Dodger" cable channel, then there are going to be more potholes in the road to 2020.
The Hollywood Reporter reports that MLB is facing its toughest anti-trust suit to date. It involves the very lucrative television rights revenue streams.
Major League Baseball could be on the cusp of enduring something almost unimaginable: The end of the lucrative system by which professional baseball games are televised by region, consumers pay high prices for out-of-market package fees, and some digital telecasts are blacked out in home markets.
With the prospect that sports broadcasting might forever change, the league is seeking permission to file an interlocutory review of U.S. District decision that ruled against MLB's motion for summary judgment in the claims in a proposed class-action lawsuit.
In Judge Scheindlin's ruling, she determined that MLB's antitrust exemption doesn't apply "to a subject that is not central to the business of baseball, and that Congress did not intend to exempt — namely, baseball’s contracts for television broadcasting rights." As a result, she allowed the plaintiffs to pursue claims that MLB, Comcast and DirecTV have violated antitrust law by making anticompetitive agreements that negatively impact the output, price and perhaps even quality of game telecasts.
MLB is quite disturbed by the opinion and now wants to go before the 2nd U.S. Circuit Court of Appeals to present this issue: "Whether the professional baseball exemption to the antitrust laws bars Plaintiffs' claims against Major League Baseball with respect to Major League Baseball's territorial broadcast rules and structure."
Baseball's antitrust exemption dates back nearly a century and has been addressed in several big court cases, including Supreme Court rulings. However, legal scholars have debated whether the antitrust exemption merely covers labor matters like restrictions on free agency or goes further. Over the years, Congress has adjusted sports broadcasting rules but hasn't offered substantial clarity on the matter.
In a memorandum to support the interlocutory appeal filed on Wednesday, MLB says that every appellate court has "held that the exemption applies broadly to the business of baseball and is not limited to any particular facet of that business."
The ruling is important because it could upset the original club power and control over territorial licensing fees. Washington and Baltimore are current in court over their television territorial rights and provisions which stem from the Expos relocation into part of the Orioles territory. The Oakland A's have been stymied by the Giants who have much of the territory south into Silicon Valley as their exclusive domain. The A's could not move to Santa Clara. Baseball was not happy about it, but it will not upset the club's rights set forth in their original charters.
Exclusive territorial rights extend to radio and television broadcasting games. The home team controls the airwaves in their own community (or share it with a dual club city like New York or Chicago). Any team that comes into a pre-existing team's market will have to pay to do so.
The concept of exclusive local broadcasting has been eaten away by MLB itself, with its own cable channel and national television contracts with several networks who push games to everyone just about every night of the week. The advent of digital mobile apps and streaming video has taken away the territorial reach of over-the-air broadcast signals. The league would like to continue to package baseball as seller; but clubs protect their local rights like a Tiger mom to her cubs.
If baseball loses it stronghold on local broadcast rights, and national television deals, the overall price for "baseball as a commodity" will fall. In some circles, like large market teams, that could be a significant loss of revenue. Further complicating matters is large cable carriers have stopped paying for more sports channels because the fee structure is not supported by their average customers. The new Dodger network wallows in obscurity in the LA market because no transmission deals were made with other carriers. Some reports say that three-quarters of LA fans have lost their ability to see Dodger games.
The Cubs are banking on a huge revenue boost with television money. This is betting on the old baseball revenue model which is being attacked internally and externally in the courts.
The Hollywood Reporter reports that MLB is facing its toughest anti-trust suit to date. It involves the very lucrative television rights revenue streams.
Major League Baseball could be on the cusp of enduring something almost unimaginable: The end of the lucrative system by which professional baseball games are televised by region, consumers pay high prices for out-of-market package fees, and some digital telecasts are blacked out in home markets.
With the prospect that sports broadcasting might forever change, the league is seeking permission to file an interlocutory review of U.S. District decision that ruled against MLB's motion for summary judgment in the claims in a proposed class-action lawsuit.
In Judge Scheindlin's ruling, she determined that MLB's antitrust exemption doesn't apply "to a subject that is not central to the business of baseball, and that Congress did not intend to exempt — namely, baseball’s contracts for television broadcasting rights." As a result, she allowed the plaintiffs to pursue claims that MLB, Comcast and DirecTV have violated antitrust law by making anticompetitive agreements that negatively impact the output, price and perhaps even quality of game telecasts.
MLB is quite disturbed by the opinion and now wants to go before the 2nd U.S. Circuit Court of Appeals to present this issue: "Whether the professional baseball exemption to the antitrust laws bars Plaintiffs' claims against Major League Baseball with respect to Major League Baseball's territorial broadcast rules and structure."
Baseball's antitrust exemption dates back nearly a century and has been addressed in several big court cases, including Supreme Court rulings. However, legal scholars have debated whether the antitrust exemption merely covers labor matters like restrictions on free agency or goes further. Over the years, Congress has adjusted sports broadcasting rules but hasn't offered substantial clarity on the matter.
In a memorandum to support the interlocutory appeal filed on Wednesday, MLB says that every appellate court has "held that the exemption applies broadly to the business of baseball and is not limited to any particular facet of that business."
The ruling is important because it could upset the original club power and control over territorial licensing fees. Washington and Baltimore are current in court over their television territorial rights and provisions which stem from the Expos relocation into part of the Orioles territory. The Oakland A's have been stymied by the Giants who have much of the territory south into Silicon Valley as their exclusive domain. The A's could not move to Santa Clara. Baseball was not happy about it, but it will not upset the club's rights set forth in their original charters.
Exclusive territorial rights extend to radio and television broadcasting games. The home team controls the airwaves in their own community (or share it with a dual club city like New York or Chicago). Any team that comes into a pre-existing team's market will have to pay to do so.
The concept of exclusive local broadcasting has been eaten away by MLB itself, with its own cable channel and national television contracts with several networks who push games to everyone just about every night of the week. The advent of digital mobile apps and streaming video has taken away the territorial reach of over-the-air broadcast signals. The league would like to continue to package baseball as seller; but clubs protect their local rights like a Tiger mom to her cubs.
If baseball loses it stronghold on local broadcast rights, and national television deals, the overall price for "baseball as a commodity" will fall. In some circles, like large market teams, that could be a significant loss of revenue. Further complicating matters is large cable carriers have stopped paying for more sports channels because the fee structure is not supported by their average customers. The new Dodger network wallows in obscurity in the LA market because no transmission deals were made with other carriers. Some reports say that three-quarters of LA fans have lost their ability to see Dodger games.
The Cubs are banking on a huge revenue boost with television money. This is betting on the old baseball revenue model which is being attacked internally and externally in the courts.
August 18, 2014
A LITTLE LEAGUE OF THEIR OWN
A Sun Times article today paints a bad picture of Chicago professional baseball.
Jackie Robinson West All-Stars, a local team performing the Little League World Series, are crushing the pro teams when it comes to TV ratings.
The pre-teens’ Sunday afternoon battle against Las Vegas’ Mountain Ridge scored a 4.6 rating for WLS-Channel 7, according to ABC.
That means about 161,000 households in the Chicago market watched Jackie Robinson West fall 13-2 in their first defeat of the Little League tournament.
The White Sox faced off against Toronto at the same time Sunday in a game televised on WGN-Channel 9.The Sox game had a 1.0 rating, or about 35,000 local households — less than a quarter of the number tuned into the Little League game.
The Cubs didn’t fare a whole lot better than the Sox — ratings wise — in their game against the Mets, which started a bit earlier Sunday at 12:10 p.m. Shown on Comcast SportsNet Chicago, that game drew a 1.6 rating, or 56,000 households in the Chicago market.
Jackie Robinson West, the first all-black team to make it to the Little League World Series in three decades, notched a 2.4 rating on ESPN Thursday for its tournament opener at Lamade Stadium in South Williamsport, Pennsylvania. This rating still outpaces the CSN ratings for this season for Cubs (1.5) and Sox (1.4) telecasts.
It is apparent that Chicago baseball fans would rather watch little leaguers than major leaguers. JRW is a great news and feature story, and there are probably a lot of bandwagon jumpers watching them on television. But that is the point: people will watch winning teams play baseball.
Jackie Robinson West All-Stars, a local team performing the Little League World Series, are crushing the pro teams when it comes to TV ratings.
The pre-teens’ Sunday afternoon battle against Las Vegas’ Mountain Ridge scored a 4.6 rating for WLS-Channel 7, according to ABC.
That means about 161,000 households in the Chicago market watched Jackie Robinson West fall 13-2 in their first defeat of the Little League tournament.
The White Sox faced off against Toronto at the same time Sunday in a game televised on WGN-Channel 9.The Sox game had a 1.0 rating, or about 35,000 local households — less than a quarter of the number tuned into the Little League game.
The Cubs didn’t fare a whole lot better than the Sox — ratings wise — in their game against the Mets, which started a bit earlier Sunday at 12:10 p.m. Shown on Comcast SportsNet Chicago, that game drew a 1.6 rating, or 56,000 households in the Chicago market.
Jackie Robinson West, the first all-black team to make it to the Little League World Series in three decades, notched a 2.4 rating on ESPN Thursday for its tournament opener at Lamade Stadium in South Williamsport, Pennsylvania. This rating still outpaces the CSN ratings for this season for Cubs (1.5) and Sox (1.4) telecasts.
It is apparent that Chicago baseball fans would rather watch little leaguers than major leaguers. JRW is a great news and feature story, and there are probably a lot of bandwagon jumpers watching them on television. But that is the point: people will watch winning teams play baseball.
November 26, 2012
THE NEW BUSINESS MODEL
The numbers are getting obscene.
The Dodgers will ink a new 25 year, $6 billion plus local television deal with Fox Sports.
The Angels just completed their own $3 billion local package.
The Cubs are going to start to uncouple the old Tribune broadcast contracts, beginning in 2014. The Cubs will be the last team to jolt their local television revenues.
Major league baseball's new national television contract is worth $12. 4 billion. It will kick $51.8 million to each team by 2014.
Professional baseball is no longer a sport. It is expensive television programming.
The Dodgers will soon bank annually $240 million in local television, plus $51.8 million in national revenue. The Dodgers will have to kick in 34 percent of local revenues back into the league subsidy pool, or $80 million. Even with that surtax, before the first game of the season starts, the Dodgers will have $211.8 million in revenue. With the luxury payroll tax set at $189 million (which clubs do not want to reach), before one patron buys a ticket for a game, the Dodgers are ahead in positive revenue by more than $22 million. If the Dodgers hold steady at 2011 ticket revenue numbers of $107 million per season, the team is a profit machine of more than $120 million per year.
Again, the revenue driver is not attendance in MLB. It is television contracts. In the Dodgers case, television revenue is 2.73 times more than attendance revenue.
Now, these television deals are long term contracts. The money is guaranteed no matter what the Dodgers record will be in the future. Cable operators are counting on a loyal fan base and ownership egos for a desire for championship seasons - - - to hold viewership and advertising ratings. But is there really an incentive for ownership with these huge television deals to continue to spend money on players to the lux cap max? Probably not. Owners and their investors want return on their investment. With these outrageously generous television deals for local rights, owners want to pocket as much profit as possible, and then flip the franchise at its peak value to a new ownership group.
There is a television "bubble" in regard to value of these television contracts. Just like with any other bubble commodity (real estate for example), there is a crash - - - a retreat back to the norm. The question is when that will happen. And who will be holding the hot potato when the bubble bursts.
The Dodgers will ink a new 25 year, $6 billion plus local television deal with Fox Sports.
The Angels just completed their own $3 billion local package.
The Cubs are going to start to uncouple the old Tribune broadcast contracts, beginning in 2014. The Cubs will be the last team to jolt their local television revenues.
Major league baseball's new national television contract is worth $12. 4 billion. It will kick $51.8 million to each team by 2014.
Professional baseball is no longer a sport. It is expensive television programming.
The Dodgers will soon bank annually $240 million in local television, plus $51.8 million in national revenue. The Dodgers will have to kick in 34 percent of local revenues back into the league subsidy pool, or $80 million. Even with that surtax, before the first game of the season starts, the Dodgers will have $211.8 million in revenue. With the luxury payroll tax set at $189 million (which clubs do not want to reach), before one patron buys a ticket for a game, the Dodgers are ahead in positive revenue by more than $22 million. If the Dodgers hold steady at 2011 ticket revenue numbers of $107 million per season, the team is a profit machine of more than $120 million per year.
Again, the revenue driver is not attendance in MLB. It is television contracts. In the Dodgers case, television revenue is 2.73 times more than attendance revenue.
Now, these television deals are long term contracts. The money is guaranteed no matter what the Dodgers record will be in the future. Cable operators are counting on a loyal fan base and ownership egos for a desire for championship seasons - - - to hold viewership and advertising ratings. But is there really an incentive for ownership with these huge television deals to continue to spend money on players to the lux cap max? Probably not. Owners and their investors want return on their investment. With these outrageously generous television deals for local rights, owners want to pocket as much profit as possible, and then flip the franchise at its peak value to a new ownership group.
There is a television "bubble" in regard to value of these television contracts. Just like with any other bubble commodity (real estate for example), there is a crash - - - a retreat back to the norm. The question is when that will happen. And who will be holding the hot potato when the bubble bursts.
Subscribe to:
Posts (Atom)