Sunday, December 30, 2012

Maybe the Rays Won't Get Rich in 2017?

I've long contended the impatience in the Rays' campaign for a new stadium - even though they have a place to play until 2027 - stems from an impending windfall in 2017 from renegotiated television revenues that will make it harder for the team to cry poor.

In fact, since I first pointed it out, the Dodgers, Astros, and Padres were among clubs that increased -make that multiplied - their annual television revenues by enormous amounts.  But after the Indians sold their TV rights for $235 million with annual revenues climbing from $30 million to a modest $40 million, Maury Brown from the Biz of Baseball writes a cautionary tale of how MLB teams may have hit a "glass ceiling" when it comes to ballooning rights fees:
When put up against some of the other deals that have been reached, this one looks more like the “pre-boom” media rights sale we had been seeing. It also shows that you don’t paint media rights deals with the same brush...with some exceptions, sports TV deals are likely topping out.
There is a cumulative effect going on which render the explosion of media rights fees unsustainable. When you throw in the massive colligate conference sports network deals cropping up, the NFL’s massive rights deals, and regional agreements such as the Lakers with Time Warner Cable, it begins to add up. Where does the money to pay for these lucrative media rights deals come from? Subscribers. And, when you get subscription fees going through the roof, the carriers of the content, and ultimately, consumers begin to make noise.
"Don’t expect too many more of these massive deals to be reached," Brown continued, suggusting teams rush to get media deals done soon before "the window of opportunity closes."  But for the Rays, that would mean foregoing serious stadium leverage as soon as a new media rights deal was renegotiated.

Brown's theory leaves the Rays with a difficult long-term decision: spend the next couple of seasons accelerating the negotiations for new TV revenue or spend the next couple of seasons accelerating their negotiations for new stadium revenue.

The franchise can also hope Brown is just wrong.  But even if the Rays have to "settle" for a deal like the Indians' (the Cleveland TV market is very similar to Tampa Bay's), $40 million/year is significantly higher than the team's current television+radio revenues, last known to be only $13.4 million/year


  1. Noah,

    I'd like to compliment you on your Rays related thoughts. I found your blog a short time ago and have found the angles you present in your stories to be different than every other media outlet in the Tampa Bay area. Obviously there's no way to know at this time if your thinking in this column is correct, but I wouldn't bet against you. Keep up the good work.

  2. My pleasure. I'm a long time resident of the TB area that has loved baseball since I was a kid. I grew up watching spring training games and the St. Petersburg Cardinals and NY Mets at Al Lang Field. Needless to say I've been a regular at Tropicana Field since 1998. I sense a similar love of the game in your writing but appreciate you recognizing that there should be limits to the amount of money a city should be pressured into spending to support a professional franchise. I don't want to lose baseball but would understand if it happens. Eventually a city will accept a realistic evaluation of what a team is worth and tell them to pay their own way. Maybe we'll get lucky and keep our team.