How Much MLB Will Make From Television Deals in 2020

According to Forbes, Major League Baseball grossed a record $10.7 billion in 2019. This number was up from $10.3 billion in 2018. Those numbers are projected to continue to grow in 2020 due to media rights, new and existing sponsorship deals and ticket revenue, which has been stagnant for quite some time. Speaking of new sponsorships, baseball fans across the country may notice something a little different when they watch their favorite team take the field this season – the presence of a “Swoosh” on their uniform. In 2020, MLB will launch their Nike uniform deal, which only cost the apparel giant $1 billion. Even with growing revenues, a 162-game schedule and new uniform deals, baseball still trails the National Football League in professional sports league revenues by close to $3 billion (NFL makes over $13 billion per year). The most significant revenue driver in Major League Baseball today are their lucrative media rights deals and they are lucrative…

The Television Deals

At present, MLB holds three major media rights deals with Fox, ESPN and Turner Sports. In 2018, MLB pocketed approximately $1.5 billion when combing payments from all three of the above networks. The deals with ESPN and Turner Sports are set to expire at the end of the 2021 season. They have already started discussing extending their contracts, which is exactly what Fox did in 2018. Their new media deal starts in 2022 and runs through 2028 to the tune of $5.1 billion. At present, the deal with ESPN is reportedly worth $5 billion while Turner’s bill is worth $2.4 billion. Major League Baseball Commissioner Rob Manfred will begin negotiating the extensions of these two deals this year and one can be sure they will both be valued at more than their present number. One could say it is ironic because baseball ratings continue to drop every year, however it is believed that engagement is on the rise. Viewers are now going to other sources to get updates, watch games and check stats than turning on the television. Anyone that has a smart phone (which is everyone) is saying “duh” right now, but the fact of the matter is the media landscape is quite different than it was 20-30 years ago when MLB had sky-high ratings. One also has to consider that a Major League Baseball season is 162 games long, it’s a dramatically different dynamic than the NFL, who airs one game per team a weekend (not counting a bye, of course).

The Networks Pull

The question is really this: If baseball viewership is down, how are these networks making money on these deals? Look at Fox for example: They air Saturday regular season games, the All-Star Game, several postseason games including the World Series and also broadcasts games in Spanish on Fox Deportes. The actual number that they make from airing these games is a mystery, however it has to be making them something for them to renew their contract with a 30% price hike. The same can be said for Fox and Turner, which also figure to add dollars to their existing deals. When it’s all said and done, Major League Baseball is projected to pump their media revenue to over $2.2 billion from $1.5. Something that hasn’t even been considered is each individual team has a local network deal in play as well. Look at the two biggest markets in the country – Los Angeles and New York. The Yankees just bought back the YES Network from Disney for a whopping $3.47 billion. The Dodgers deal with Spectrum Sportsnet LA earns them over $250 million per season. The television deals in Major League Baseball are very healthy what we may think about viewership is a total myth.

Adding New Media

MLB Commissioner Rob Manfred has spoken freely about the possibility of adding new media partners to the league. Could there be such a thing as too many? Fox, Turner and ESPN each airing their games of the week and playoff games yet we would be looking at more? If the demand is there they will do it, but ultimately Manfred’s biggest push is online, not traditional TV. For example, MLB announced a deal with digital player DAZN in 2018 that covered 3 years for $300 million. The partnership includes a live show each week night that is available to subscribers. The show offers live look-ins around the country to games in progress – similar to NFL’s RedZone. The “whip-around” show was intended to add some action for viewers and draw in new audiences. This will be the second full-season with DAZN this year. To date it hasn’t generated much buzz, but it’s hard to imagine that deals as such are doing to slow down as everything becomes digital. It would not come as a surprise if Manfred commits to more digital related deals vs. network deals over the course of the year. The way viewership is evolving it would be the right thing to do while keeping Fox, Turner and ESPN on board.

Teams Make Money

Major League Baseball teams across the league can complain about a lot of things – one thing they can’t complain about is the revenue sharing pie growing. The league has done their part in ensuring revenues grow year-over-year and the teams benefit from the extra money coming in. When each team adds their local network deal, merchandise, ticketing etc. to the MLB-wide revenue sharing pie, there is financial strength in baseball right now. Individual franchises may not clutter the list of most lucrative professional sports organizations, but the notion that baseball is fading, viewership is down and the league is in trouble is brutally false. Baseball continues to expand globally and as mentioned in the opening revenues are going to continue to grow for the foreseeable future.

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