By Phillip Swann
The TV Answer Man –@tvanswerman
TV Answer Man, I keep reading that teams might get less money from the regional sports channels in the future because of all their financial troubles. Won’t this start to affect player salaries? I saw an article that said (Shotei) Ohtani could get $500 million or even $600 million in his next contract. That seems crazy considering what’s going on? Right? — Sam, Hermosa Beach, California.
Sam, I think you make a good point. Diamond Sports, which runs 19 Bally Sports regional sports channels, just declared bankruptcy and is likely to seek new financial arrangements with the teams for their broadcast rights. Warner Bros. Discovery has said it’s no longer interested in holding the rights to their three AT&T-named RSNs. And MASN, the TV home of the Washington Nationals and Baltimore Orioles, is embroiled in a myriad of messes, both legal and financial.
And those are just the RSNs that we know are having serious money worries. It’s possible that other regional sports nets are having similar, if somewhat less significant, issues underneath the surface. After all, they are dependent on the same economic model that has taken a chunk out of Diamond Sports — carriage fees, which are shrinking due to declining pay TV subscribers.
While the national sports networks, such as ESPN, NBC and Fox, as well as new streaming entrants such as Amazon and Google, still seem eager to pay big bucks for rights, it’s difficult to envision a scenario where TV revenue for some MLB, NHL and NBA teams doesn’t decline in the coming years, if not coming months. (The NFL is immune to the regional sports network crisis because their broadcasts are national.) And it seems to me that could start to affect how much at least some teams pay for their star players.
Fans might say that the teams, and their billionaire owners, are still rich and can afford to shell out the big bucks regardless of a RSN revenue decline. But those billionaire owners didn’t get to be billionaires by ignoring the expenditures/revenue line in their worksheets. If revenue dips, they will pull the reins on salaries.
Of course, the league commissioners are aware of this looming issue and are already taking steps to limit the damage if needed. MLB, for example, is contemplating an attempt to take back the broadcast rights and running the Bally Sports teams (and perhaps the AT&T teams) as a league business. Commissioner Rob Manfred apparently believes that the league and its teams can eventually generate as much revenue (if not more) through carriage fees and MLB TV subscriptions.
He may be right. But until that’s proven, talk of $600 million contracts feels a bit tone deaf, doesn’t it?
Sam, hope that helps. Happy viewing and stay safe!
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— Phillip Swann