Major League Baseball turned to its preferred voice of pomp and circumstance, Bob Costas, to make a major announcement two weeks ago.
“Tonight,” Costas intoned, “marks the dawning of a new era of Padres television coverage.”
This was not hype about the San Diego Padres themselves, about which we have heard (and written) plenty this year.
This was a peek into the future of how fans might watch their favorite team — the Padres, the Dodgers, the Angels, whomever — in the years ahead.
“We’re not changing history,” Costas said. “We’re taking history into a new age.
“Padres baseball — presented by Major League Baseball — is officially on the air.”
I’m a Dodgers fan. Why should I care about anything involving the Padres, if it does not involve beating them?
If you lived in San Diego and you wanted to watch the Padres, you needed to buy a cable or satellite subscription, or a streaming package. Now you have the option to buy a streaming subscription to watch the Padres — only the Padres, and with no obligation to buy all those other channels you don’t want.
For how much? And who’s doing the streaming?
MLB is doing the streaming, via MLB.TV, just as the league has done for years with out-of-market packages. The price for Padres fans: $19.99 per month.
Can I still watch on Bally Sports San Diego?
No. MLB now is producing those broadcasts, and it has made them available to cable and satellite companies serving San Diego. What that means to fans: You still can see the games, but on a different channel number.
I’m a Dodgers fan and you still haven’t told me why I should care about what is happening to that fourth-place team.
If you’re a fan — whatever your team — you want to watch your team wherever you are, and however you want. What is happening now in San Diego is what MLB envisions happening everywhere: watch your team via cable, satellite or streaming, with a subscription that includes lots of channels, or only to the stream that carries your team’s games. That last option is not currently available to Dodgers or Angels fans.
Blackout rules long have protected cable and satellite companies, because those companies pay channels such as Bally Sports West a fee for each subscriber, whether or not that subscriber watches the channel. However, cable and satellite companies are losing subscribers every year. That means the rights fees Bally channels pay to teams go up each year, while the subscriber revenue goes down.
What happened to Bally Sports?
Its parent company filed for bankruptcy in March. The company wants to stay in business but cut costs, under the auspices of the bankruptcy court. Bally’s walked away from what it said was a money-losing deal with the Padres. With several other teams, Bally’s asked the court for permission to keep its deals but reduce the payments it made to those teams.
What did the judge say?
No. The judge didn’t make this comparison, but that would have been similar to the Angels trying to cut the salary they owed to Albert Pujols because he did not perform in Anaheim like he did in St. Louis. In bankruptcy court, a company can keep its contracts or walk away from them, but it cannot unilaterally renegotiate them.
If Bally’s walks away from a team, how does that financial hole get filled?
In bankruptcy court, Major League Baseball Commissioner Rob Manfred testified that contracts from Bally’s and other local rights-holders usually account for 20% to 30% of a team’s annual revenue.
The Padres’ deal with Bally’s averages $60 million per year. Angels owner Arte Moreno said his team’s Bally deal pays $112 million this year. (To this point, Bally is paid up with the Angels.)
For this year, Manfred testified the league would guarantee the Padres and any other team in that situation would get a minimum of 80% of what they would have gotten from Bally’s.
Within two to three years, the league believes, those teams could make at least as much as they do now, if not more.
Is that feasible?
That could depend on how the streaming wars shake out: If the channel that carries your team costs $19.99 per month, and 10 other channels you like to watch cost the same, just how much are you willing to pay for your entertainment? Or might your new streaming package resemble your old cable package?
And are you really going to pay for all the outlets you need to see all your team’s games today — for example, Bally Sports West (Angels) or SportsNet LA (Dodgers), plus ESPN, Fox, Apple+ and Peacock?
The Phoenix Suns (NBA) and the Vegas Golden Knights (NHL) have said they plan to include over-the-air channels (free TV) in their future broadcast plans. Has MLB started to explore whether over-the-air channels might make sense as part of broadcast plans for at least some of its teams?
MLB holds streaming rights for some teams, but not all. How long does MLB anticipate it might take for the league to collect the rights and permissions necessary to offer every fan the chance to watch any team in any market?
Two to four years. But that does not account for another critical factor: How might teams agree to split revenue from those streaming offerings?
Should all streaming revenue be shared equally, as out-of-market streaming revenue is now? Should the Dodgers keep 100% of their local streaming revenue and the Kansas City Royals keep 100% of theirs, which could exacerbate revenue disparity in the sport? Or can teams agree on a middle ground?
If Bally Sports is not threatening to walk away from its Angels deal at the moment, which local teams should be most worried about the Bally bankruptcy?
The Kings and Ducks. The Kings’ contract with Bally Sports just expired. The Ducks’ contract with Bally Sports expires after next season. Because the NHL regular season was just about done when the bankruptcy filing took place, Bally chose to deal with MLB teams first. The company hasn’t said how it plans to approach the NHL (and NBA) teams with which it has deals.