Originally Posted by Chiefspants:
This sounds like a great opportunity for the MLB to do something forward thinking with half of their league to make sure more people can actually watch the games.
But I expect them to lose the ball in the sun on this, as usual.
https://www.stltoday.com/sports/base...a4d68050b.html
The broadcast company’s bankruptcy filing this week that burst professional sports rights-fee bubble will cause immediate financial concerns but ultimately force an overdue “reset” that shoves the industry and Major League Baseball away from a “broken” model toward a better, more accessible product for fans, a Cardinals executive said.
Diamond Sports Group, parent company of Bally Sports Midwest, the regional sports network partner of the Cardinals and Blues, submitted for bankruptcy protection late Tuesday night as it restructures $8 billion in debt. Some teams and leagues are bracing for a lower volume on revenues and the potential for broadcast deals to be unplugged.
The Cardinals are “pretty confident” there won’t be any interruption to their game broadcasts as the regular season opens March 30, club president Bill DeWitt III assured Friday morning.
They do hope for change to how games are broadcast — and soon.
“(Fans) care about the games. Are they watching the games?” DeWitt told the Post-Dispatch after meeting with sponsors on their annual visit to the team’s spring training complex at Roger Dean Stadium. “Right now, the reality is we have a lot of fans who want to and cannot watch the games anyway because of cord-cutting. Let’s say they’re Cardinals fans and there is no direct-to-consumer product for them. They can get every game but the Cardinals through MLB.TV. It’s already broken. I’m actually somewhat optimistic that this whole process will fix our distribution problems that we have right now. Which are real.
“From a fan’s standpoint, I actually don’t see it getting worse. I see it getting better,” DeWitt continued. “From a team standpoint, it’s scary. From a fan’s standpoint, they should be like, ‘Bring it on.’ Bring on a new model.”
The Cardinals have tied their spending on payroll to the $1.1 billion rights fee deal struck with Bally Sports Midwest that began in 2018, and the bulk of that payout remains in the years ahead. The Cardinals are owed around $70 million for the 2023 season.
A payment from Bally Sports to the Cardinals is due in April, and the club expects that to be paid on time and unaffected by the bankruptcy process.
“If they don’t make payments on rights fees that’s a problem for the industry, including us,” DeWitt said. “Our particular RSN is in a little bit better shape than some of the others. So, they say, if the entities are solvent they’ll probably get preserved as opposed to resetting. Short term, I think we’re in OK shape. When you go further out on the chessboard, I think there are a lot of ways this could go.”
As part of their broadcast rights deal, the Cardinals have a minority ownership stake in Bally Sports Midwest. That was originally seen as an additional source of revenue, a way to share in the profits of the broadcast that have since shriveled. The team has since sold a slice of that ownership back.
The Cardinals plotted their payroll plans and budget for the 2023 season knowing there was turbulence ahead for the existing rights-fee model. By opening day, they expected to have 80% of their tickets sold, and they had a season ticket renewal rate of greater than 90%. This past winter, the Cardinals and the 29 other major-league clubs received a $30 million share of Disney’s final payoff for a tech business purchase from MLB. The Cardinals positioned themselves to try and avoid any staff reduction or cutbacks in 2023.
“I think that’s premature … and in some ways the season, financially, is already pretty clear,” DeWitt said. “For next year, who knows? Tell me how we do on the field. I think ’23 looks good regardless, even if the Bally’s (situation) is some concern, we’ll figure out something. I’m not predicting short-term meltdown for our finances. There might need to be a readjustment if one of those scenarios leads to lower revenues for every club.”
What created this broadcast bind for teams like the Cardinals and RSNs like Bally Sports Midwest was the large purchase of the networks by Sinclair’s Diamond Sports Group and the sudden plummet of subscribers. For the past decade, live sporting events have been among the most desired broadcast properties because they were a rarity in a streaming world: appointment viewing with the inability to fast-forward through the advertisements. The cost of the sports channels could also be folded into a cable bill so that all subscribers were covering the cost, whether they watched the sports or not. The Cardinals were one of the teams that capitalized their reach and their ratings for a new deal as rights fees soared throughout baseball. That fueled spending on free agents and payrolls.
Cord-cutting led to a dramatic plummet in subscribers, reducing it by almost half in the past 12 years, and the numbers are still falling.
At the same time, sports teams, particularly MLB, have maintained an archaic blackout policy that limits a fan’s access to teams within geographic regions. In some areas where the Cardinals could reach fans through a streaming service, they and five other teams are blacked out. DeWitt told the sponsors Friday that a goal of any modernized broadcast plan should be “full distribution in the market.” He was blunt in his view of blackout restrictions.
“They stink,” he told sponsors. “You’re telling a customer who wants your product they cannot have it.”
Major League Baseball augmented its staff in the commissioner’s office to prepare for this rights-fee reckoning and is preparing to mobilize broadcast plans for any location that loses its rights deal and distribution due to Diamond Sports’ bankruptcy. They may offer those games to local fans via streaming. Teams, like the Cardinals, are workshopping “what if” scenarios. DeWitt outlined three possible outcomes.
Diamond Sports could continue to run viable RSNs and work with the Cardinals and other teams for a new agreement. Or, a third party could purchase the RSNs out of Diamond Sports’ bankruptcy and then teams are dealing with a new partner.
Or, MLB “gets into the business of broadcasting,” DeWitt said.
That would eliminate the RSNs but it also would radically alter rights fees so that teams and leagues get the revenue they generate and have to address disparity between markets.
“We don’t know which one is going to play out,” DeWitt said. “Those are three of the options. There are varying degrees of angst about each.”
Even as the channels change, there is one signal coming through clear.
Change.
“If we can get this going — even if it takes a disaster in local media to make that happen,” DeWitt said. “It’s both a cause for angst but also a cause for an opportunity as well for the industry to do a reset that would provide us with the framework for a better arrangement.”
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