MLB Could Lose $150M Per Year With Its New Deal

As more options spur on the streaming wars, the belief inside media circles is that cable news and live sports are the only advantages cable has left. However, this does not mean that every professional sports league can name its price when negotiating broadcasting rights. The NFL can, but the NBA can’t hold onto its viewers and MLB’s current distribution model has obstacles.

According to The Athletic’s Ken Rosenthal, MLB is bracing for a reduced deal with ESPN. MLB and ESPN are discussing a $3.85 billion, seven-year agreement worth $550 million per year. The previous deal was for eight years at $5.6 billion, which is $150 million more a year than the currently discussed deal. For MLB, that’s a significant reduction.

While ESPN was hit particularly hard during the pandemic, it’s not clear if COVID-19 factored into its contract talks with MLB. ESPN reportedly held the same position on MLB before the pandemic.

Rosenthal says that the decrease in revenue stems “in part from ESPN reducing the number of games it does not carry exclusively by more than half.” In the deal, ESPN would keep Sunday Night Baseball, the Home Run Derby, and a number of postseason games.

MLB is also finding other outlets reluctant to take on the games ESPN would give back. As Fox, NBC, and CBS have learned with Thursday Night Football — the ceiling on non-exclusive sports packages isn’t that satisfying. Thus, the remainder of national Monday and Wednesday baseball games could go for a reduced price. That said, MLB could make up for the lost revenue elsewhere.

“This is mostly about value of exclusive vs. non-exclusive games,” media consultant Patrick Crakes tweets. “Of note, MLB will receive significant revenue for new expanded playoff round so economic impact of new deals not fully known yet. Also, RSNs could get more exclusive inventory.”

In addition, MLB will receive increases from its two other national broadcast partners, Fox and Turner. 

“The league’s seven-year, $5.1 billion deal with Fox, reached in November 2018, produced an increase from $525 million annually to $728.6 million,” Rosenthal writes. “The seven-year, $3.75 billion deal with Turner, struck in June 2020, produced an increase from $325 million annually to $535 million.”

Overall, though ESPN continues to make disastrous programming decisions, its live rights division is actually improving.

Industry experts predict ESPN/ABC will get into the next Super Bowl rotation. In December, ESPN reached a 10-year agreement with the SEC. The blockbuster deal gives CBS’s former SEC game of the week and the SEC Football Championship Game to ABC. The UFC is also doing well under ESPN+’s umbrella. And if the network can save money on MLB while losing half of a low-monetizable package of games, it won’t be considered a loss.

Written by Bobby Burack

Bobby Burack covers media, politics, and sports at OutKick.


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