In 2014, there is no greater flex of the muscle for a Major League Baseball team than the size of their local television contract. The New York Yankees set the bar high with the creation of their very own network in the YES Network. Then this past year, the Los Angeles Dodgers inked a massive deal with Fox Sports for a reported 25 years and $8.5 billion. And that was coming out of bankruptcy (Dodgers get to keep $6 billion under the court agreement) and a new ownership group. The Seattle Mariners and Root Sports set a very solid number for the mid-market teams at $115 million per year.
This time it was the Philadelphia Phillies' turn to step up to the plate and negotiate their local television home run. By the initial looks of it, they may have hit this one out of the park.
Late last week, the Phillies and Comcast SportsNet inked a 25 year, $2.5 billion deal that will take the two through the 2041 season (begins in 2016). The $100 million per year average is almost three times the last deal, which was an estimated $35 million annually.
Focusing on simply the dollars, though, means that a major chunk of the deal could be easily forgotten. Just as big is that the Phillies gain a 25 percent ownership stake in Comcast SportsNet Philadelphia as well as a share of the advertising revenue brought in by the network.
Source: Phillies' 25-year TV rights deal with Comcast SportsNet is worth $2.5 billion in addition to an equity stake and some ad revenue.
— Matt Gelb (@magelb) January 3, 2014
Near impossible to compare TV rights deals. Equity stake in successful RSN is important. Ad revenue sharing is unusual, too.
— Matt Gelb (@magelb) January 3, 2014
As Matt Gelb of the Philadelphia Inquirer pointed out, these are extremely important pieces in the deal's pie. These pieces put a bit of the burden of the deal's success on the Phillies' on-field success, which given the past two seasons of sub-par baseball, it's a fair burden for Comcast and the Phillies to share.It's easy to forget that the Phillies had the highest local television ratings in all of baseball in 2011. Although there has been a sharp drop since, those ratings show that the potential return on investment for Comcast SportsNet is high. Paired with the fact that Philadelphia is MLB's fourth largest media market, the deal looks fair to both sides.
This is all gibberish to the Phillies fans, though. They see dollar signs here, and until those dollars are spent on the on-field product, management is going to continue to hear it. The Phillies may not outspend the Evil Empire, but this deal with CSN cements them as a top five spender for the next 25 years.
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Kevin Rossi is a junior Drexel Sport Management major with minors in Communications and Business Administration. Since joining the SMTSU, Kevin has worked his way up the ladder to President. Currently, Kevin is also the Drexel editor for Philahoops.com. Kevin recently finished his second co-op with Temple University in their Athletic Communications office. Follow Kevin on Twitter @kevin_rossi.
Kevin, great write-up! I agree that Phillies fans will be utilizing this as a bullet to hit management until the Phillies find themselves back into winning ways.
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