Monday, November 26, 2012

Rays Spend on Longo

You can't have news like the Rays lock Evan Longoria up through 2022 without a dose of stadium speculation.

I've written several times before about the Rays' impending windfall from re-negotiated television revenues, but Cork Gaines postulates today that 2017 television revenues are the reason for Longoria's raise:
How can the Rays afford to give Longoria a $100 million contract extension? And the simple answer is “television revenue.”

First, there are the new national television contracts signed by Major League Baseball with Fox, TBS, and ESPN, which will double the Rays’ national television revenue to approximately $50 million per year. That is an extra $200 million over the next eight years alone.

In addition, the Rays will also see a huge boost in local television revenue after their current TV deal expires in 2016. That’s significant because Longoria’s new extension begins in 2017. And based on the Rays strong television ratings, and deals recently signed by MLB teams, the Rays’ next TV deal could be worth $50-100 million per year*. That would be an increase of 150-500% over the $20 million annually they are receiving now.

So by 2017, the Rays total television revenue could be $150 million per year. That would be ~$100 million increase in revenue every year without selling any extra tickets. And just another reason why the attendance problem is overstated.
I don't know if I fully embrace the theory since the Rays are already one of the most profitable teams in baseball, according to Forbes, but Gaines is certainly right that committing another $100M over six years to the team's marquee hitter shouldn't be too hard of a pill to swallow.

One thing I do know: the Examiner website, which allows writers to post nonsense like "Longoria's extension gives Rays new leverage in stadium talks" as long as you're willing to click on it, needs to get its head examined.

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