San Francisco Giants shortstop Brandon Crawford (35) tries on television camera before the Major League Baseball game between the San Diego Padres and the San Francisco Giants on August 29, 2019 at Oracle Park in San Francisco, California.
Bob Kupbens | Icon Sportswire | Getty Images)
Major League Baseball is at the media rights negotiating table and has a wild card to play.
The league’s deal with Disney-owned ESPN is in renewal discussions and the outcome could change the look of baseball on national television during the week. Some media experts believe that MLB’s Monday and Wednesday package is valued at between $ 150 million and $ 200 million a year.
The chatter started circulating when The Athletic reported that ESPN is poised to part ways with some of its baseball content. History led to predictions that MLB media rights fees could collapse.
“I think they’re going to be sold, just not for $ 350 million,” media law expert Dan Cohen told CNBC. Cohen, senior vice president of Octagon’s global media legal advisory division, believes MLB will lower the price of the package if it does. Not much.
“MLB doesn’t want to give those rights away for free,” Cohen said. “There’s value to nationally televised baseball games on Monday and Wednesday.”
The thing is, it’s not an exclusive value. And it makes MLB creative for its future, with gambling permission as leverage.
Rhys Hoskins # 17 of the Philadelphia Phillies runs down Gio Urshela # 29 of the New York Yankees during a summer camp game at Yankee Stadium on July 20, 2020 in New York City.
Jim McIsaac | Getty Images
MLBs double play
To help its network partners overcome losses due to Covid-19, the league gave them permission to use limited commercials for sports games.
MLB controls which ads are shown during games, although there are still restrictions on sports game ads. During the pandemic season when networks only played a few games, MLB approved the ads and helped its partners.
According to the Wall Street Journal, the National Football League took a similar move earlier this month. The league made more ad slots available to its national media partners during postseason games and the Super Bowl LV.
Sports game companies like DraftKings and FanDuel spend millions on marketing. One of the best options for them is to buy ads related to sports content.
The spending should continue. This means that the MLB can again increase the number of commercials it serves for networks. The partners will collect their dues and pay MLB a slice. In a way, the league protects its media rights.
ESPN has a reason to devalue the MLB package. And again, the games on Monday and Wednesday are not exclusive.
In 2012, it was agreed to pay the MLB $ 700 million annually in an eight-year contract for $ 5.6 billion. ESPN receives an exclusive Sunday game and rights to the Home Run Derby.
But regional sports networks also broadcast the games on Monday and Wednesday, which does not encourage consumers in the market to watch the ESPN broadcast.
“If the (New York) Yankees or (Philadelphia) Phillies games are available on a regional network, they get the most ratings, and ESPN isn’t doing well with its national game,” said the longtime television executive and former president by CBS Sports Neal Pilson.
“I’ve always wondered why ESPN had this package in the first place,” added Pilson. “And if you give it up now, I think it will be a smart move.”
Octagon analysts have used 108 out of 114 games over the past three years to determine the average viewership for the ESPN package Monday through Wednesday without ESPN2 broadcasts. The results: an average viewership of 761,434 in 2018, which fell to around 632,000 in 2019.
The number of viewers dropped to an average of 358,947 in 2020, but sports viewers were also affected by the pandemic, social unrest and the US President’s race.
“I call them semi-exclusive,” added Cohen. “Sometimes you talk about the big markets – New York, LA, Chicago, Boston, Philly – but you still miss 90 percent of the rest of the country.”
But without exclusivity and other league rights, like the National Hockey League, which is up for tender, MLB could have a new home for its package.
ESPN and MLB declined to comment due to active negotiations.
MLB gets creative
ESPN reportedly plans to cut its annual fee by around $ 150 million. Assuming MLB starts its price at this number or higher, the company plans to get creative with its offerings to justify the cost.
Gambling advertising can attract networks. Another is the actual game, since MLB controls what can be displayed, it has a say in the marketing that networks can use on the screen.
According to people with knowledge of the negotiations, the league does not believe it needs to lower the value of the package and will use their broadcast permissions to protect it.
Cohen suggested that Sinclair might be interested in a partnership.
The company owns 14 regional networks that broadcast MLB games. There is a streaming game with stadium sponsored by Jerry Reinsdorf, owner of the Chicago White Sox, one of the most powerful owners of the MLB club.
Sinclair could pay for itself with the national package, inject some of its content into the stadium, and sell more ad spaces with the permission of MLB.
NBCUniversal is closing its sports network this year and moving media rights to the more accessible USA network. The station has a history in sports and NBCUniversal has just done a play for wrestling with its Peacock service, which grabs the rights to stream WWE games in the US, MLB on US, and also get special advertising coverage.
“There’s a lot to consider,” said Cohen. “I think they can get pretty smart and creative.”
MLB also has partnerships with Twitter, Facebook, and YouTube, which means that it seems that streaming options already exist. With the streaming model, MLB could get short-term deals similar to NFL’s Amazon package and create flexibility as it wouldn’t be tied to a partner in the long run.
And if ESPN goes away, MLB will still be ahead in the media rights card game.
The league has already received new rights fees with Turner Sports from Fox Sports WarnerMedia. The latter adds a Tuesday game to the coverage. The network will pay over $ 3 billion to keep baseball.
Whatever the game, MLB seems to have its wild card and ready to play. And don’t forget, there are additional postseason games that can be added to the deck. For this, however, MLB needs the permission of a top media rights partner – the Players Union.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.