San Francisco Giants Shortstop Brandon Crawford (35) tries his hand at the TV 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, CA.
Bob Kupbens | Icon Sportswire | Getty Images)
Major League Baseball is at the media rights negotiating table and has a wild card to play.
Disney’s league deal with ESPN is undergoing renewal talks, and the result could change the look of baseball on national television during the week. Some media experts believe that the MLB package for Monday and Wednesday is worth between 150 and 200 million dollars a year.
The discussion began to circulate when The Athletic reported that ESPN was willing to part with some of its baseball content. The story has led to predictions that MLB’s media rights fees could plummet.
“I think they will be sold, just not at the asking price of $ 350 million,” media rights expert Dan Cohen told CNBC. Cohen, senior vice president of Octagon’s global media rights consulting division, said he believes MLB will lower the asking price per package if that is the figure. Not much, though.
“MLB is not looking to give up these rights for free,” Cohen said. “There is value for nationally televised baseball games on Monday and Wednesday.”
The problem is that it is not an exclusive value. And it makes MLB creative about its future, with permission for sports games as leverage.
Rhys Hoskins # 17 of the Philadelphia Phillies takes 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
MLB’s double game
To help its network partners overcome the losses caused by Covid-19, the league has given them permission to use limited advertising space for sports gambling.
MLB controls which ads run during games, although there are still restrictions on sports gambling ads. During its pandemic season, in which networks were games with short changes, MLB approved the ads and helped its partners.
The National Football League made a similar move earlier this month, according to the Wall Street Journal. The league has offered its national media partners more advertising space during the post-season and Super Bowl LV games.
Sports gambling companies such as DraftKings and FanDuel spend millions on marketing. One of the best options for them is to buy ads around sports content.
Expenditure should continue. This means that MLB can once again increase the number of commercials it offers to networks. Partners will collect their fees and pay MLB a slice. In a way, the league protects its media rights.
Nothing exclusive
ESPN has a reason to devalue the MLB package. And again, the games on Monday and Wednesday are not exclusive.
In 2012, it agreed to pay MLB $ 700 million annually in an eight-year, $ 5.6 billion transaction. ESPN receives an exclusive Sunday game and rights to the Home Run Derby.
But on Monday and Wednesday, regional sports networks also broadcast the games, giving consumers in the market no incentive to watch ESPN.
“If the (New York) Yankees or (Philadelphia) Phillies games are available on a regional network, they get most of the ratings, and ESPN doesn’t do so well with its national game,” said longtime TV director and former CBS Sports president. Neal Pilson.
“I’ve always wondered why ESPN has that package in the first place,” Pilson added. “And if he gives it up now, I think it’s a smart move.”
Octagon analysts have used 108 of 114 games over the past three years to determine the average number of viewers on ESPN’s Monday-Wednesday package, not including ESPN2 broadcasts. Findings: an average viewing of 761,434 in 2018, which decreased to approximately 632,000 in 2019.
Spectators dropped to an average of 358,947 in 2020, but sports spectators were also affected by the pandemic, social unrest and the US presidential race.
“I call them semi-exclusive,” Cohen added. “Sometimes you talk about the big markets – New York, Los Angeles, Chicago, Boston, Philly – but you’re still missing 90% of the rest of the country.”
But lacking the exclusivity and other rights of the league, such as the National Hockey League, which is bidding, MLB could have a new home for its package.
ESPN and MLB declined to comment because of active negotiations.
MLB gets creative
Reports suggest that ESPN wants to reduce its annual fee by about $ 150 million. Assuming that MLB starts its price at this figure or more, it intends to get creative around its offers to justify the cost.
Gambling ads can attract networks. Another is the game itself, because MLB controls what can be displayed, has a say in the marketing that networks can use on screen.
According to people with knowledge of negotiations, the league does not believe that the value of the package should decrease and will use its broadcasting permissions to protect it.
Cohen suggested that Sinclair might be interested in a partnership.
The company owns 14 regional networks that broadcast MLB games. It has a streaming game with Stadium, which was played by Chicago White Sox owner Jerry Reinsdorf, one of the strongest MLB club owners.
Sinclair could pay with the national package, fueling some of its content in the Stadium and selling more advertising slots with MLB permission.
NBCUniversal is giving up its sports network this year and moving media rights to the more accessible network in the US. The channel has a history in sports and NBCUniversal has just made a battle with its Peacock service, which captures the rights to broadcast WWE matches in the US. And with live entertainment, the main force protecting the cable model, NBC Sports could play MLB in USA and get special access to ads.
“There’s a lot to consider,” Cohen said. “I think I can get pretty smart and creative.”
MLB also has partnerships with Twitter, Facebook and YouTube, which means it already seems to have streaming options. Using the streaming model, MLB could get short-term deals similar to the NFL’s Amazon package and create flexibility because it wouldn’t be blocked in the long run for a partner.
And if ESPN moves away, MLB is still ahead of the media rights card game.
The league has already secured new fees with Turner Sports, owned by Fox Sports WarnerMedia, which is adding a Tuesday game to the cover. The network will pay over $ 3 billion to keep baseball.
Whatever the game, MLB seems to have a wild card and ready to use. And don’t forget, there are still additional post-season games you can add to the package. But for them, MLB will need the permission of a top partner in media rights – the players’ union.
Disclosure: Comcast owns NBCUniversal, which is the parent company of CNBC.