NEW YORK (AP) — Concerned about a possible bankruptcy for the company that owns local broadcasting rights to 14 of the 30 Major League Baseball teams, the league has formed a new economic study committee that will gather next week at the owners’ meetings in Palm Beach, Florida.
The existence of the committee was disclosed to The Associated Press by a person familiar with the planning who spoke on condition of anonymity because no announcement had been made.
The committee also will examine revenue disparity among MLB clubs.
Los Angeles Dodgers chairman Mark Walter and Detroit Tigers chairman Chris Ilitch are among the committee members, the person said.
Baseball executives have said in recent weeks that the sport needs to prepare in the event that rights-fee payments are not made by Diamond Sports Group, the subsidiary of Sinclair Broadcast Group that operates networks under the name Bally Sports. Cable networks have lost subscribers and revenue in recent years due to cord-cutting.
Diamond owns rights to the broadcasts for the Arizona Diamondbacks, Atlanta Braves, Cincinnati Reds, Cleveland Guardians, Detroit Tigers, Kansas City Royals, Los Angeles Angels, Miami Marlins, Milwaukee Brewers, Minnesota Twins, St. Louis Cardinals, San Diego Padres, Tampa Bay Rays and Texas Rangers.
Billy Chambers, who had been Sinclair’s chief financial offer, started work this week with MLB in a new position as executive vice president for local media.
The Walt Disney Company acquired the regional sports networks in its purchase of 21st Century Fox in March 2019.
In August, Sinclair said it had bought 21 regional sports networks and Fox College Sports from Disney in a deal that valued those assets for $10.6 billion.
At the time, Disney sold the equity it acquired from Fox in the Yankees’ YES Network to a newly formed investor group that includes Yankee Global Enterprises and Sinclair, a group that held the 80% of YES not previously held by the Yankees, for a total enterprise value of $3.47 billion.
Sinclair also holds rights to many NBA and NHL teams and has a joint venture interest in Marquee Sports Network, which broadcasts the Chicago Cubs.
This offseason, salaries have risen following last year’s agreement on a five-year labor contract with the players’ association. And payrolls rose 12.6% to a $4.56 billion last year, breaking the previous record set in 2017, and are set to go even higher this year. The New York Mets, entering their third season under owner Steve Cohen, currently project a payroll of about $370 million — which would smash the previous high of $291 million by the 2015 Los Angeles Dodgers.
MLB’s newest study committee follows a pair in the past quarter-century. One was a joint management-union committee that began after the 1990 lockout and recommended in 1992 to eliminate salary arbitration and make players be eligible for free agency after three years instead of six while rejecting management’s suggestion of a salary cap.
The other was a committee that met in 1999 and 2000, recommending higher luxury tax rates, sharing 40-50% of local revenues after ballpark expenses and unequal distribution of new national broadcasting, licensing and internet revenue to assist low-revenue clubs that met a payroll minimum.
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Comments (1)
Rexjeep says:
February 6, 2023 at 9:40 am
As one of the founders of regional sports networks, we built a profitable business. We became part of Liberty Sports where I served as CEO. When the networks merged with Fox, they began changing the way the networks operated and the economics became much tougher. After the sale to Disney it was clear they were on a difficult trajectory. With the explosion of streaming came a revised economic model. The prior model was a taxation model where subscribers paid for channels they may never watch, but the fees were still economic for the consumer. Today media has moved to the Ala-carte model. Which means you pay for individual channels that have your interest. Often the consumer ends up paying more than his old cable subscription. This satisfied the complaint that consumers were paying for channels they don’t watch. What is missing from the dicussion is they paid very little for those channels and it allowed for the creation of new content. When the regional sports channels launched in the early 80’s they launched as premium pay channels. This failed and the rights fees were reduced to half of the previous agreements and the networks were moved to basic cable and the taxation model. Teams had to come together and agree to take less money in order to keep the revenue source active. This will have to happen again and no one will be happy with the end result, but the teams have the ability to preserve a still significant revenue stream.