Brandon Crawford (35) of the San Francisco Giants tries his hand with 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 | Sportswire icon | Getty Images)
The Major League Baseball is at the media rights negotiating table and has a wild card to play with.
The league deal with Disney-owned ESPN is under discussion, and the outcome could change baseball’s appearance on national TV during the week. Some media experts believe the MLB’s Monday and Wednesday package is worth $ 150 million to $ 200 million a year.
The conversation began to circulate when The Athletic reported that ESPN is willing to part with some of its baseball content. The story led to predictions that MLB media rights rates could collapse.
“I think they will be sold, but not at the asking price of $ 350 million,” media rights expert Dan Cohen told CNBC. Cohen, the senior vice president of Octagon’s global media rights consulting division, said he believed MLB would reduce the asking price on the package if that was the number. Not much, however.
“The MLB is not looking to assign these rights for free,” said Cohen. “There is value for baseball games broadcast on national television on Mondays and Wednesdays.”
The point is that it is not an exclusive value. And it is making MLB creative about its future, with permission for sports gambling as a lever.
Rhys Hoskins # 17 of the Philadelphia Phillies defeated 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 double play
To help its network partners overcome losses due to Covid-19, the league has granted them permission to use limited points for sports gambling ads.
The MLB controls which ads run during games, although there are still restrictions on advertisements for sports gambling. During its pandemic season, when the networks were deceived games, the MLB approved the ads and helped its partners.
The National Football League did a similar action earlier this month, according to the Wall Street Journal. The league provided its national media partners with more ad spaces during the postseason and Super Bowl LV games.
Sports game companies like DraftKings and FanDuel are spending millions on marketing. One of the best options for them is to buy ads related to sports content.
Spending should continue. This means that the MLB can once again increase the number of ad spots it offers to networks. Partners will collect their fees and pay a slice to MLB. In a way, the league is protecting its media rights.
Nothing exclusive
ESPN has a reason to devalue the MLB package. And again, Monday and Wednesday games are not exclusive.
In 2012, she agreed to pay MLB $ 700 million annually in an eight-year $ 5.6 billion deal. ESPN wins an exclusive Sunday game and rights to the Home Run Derby.
But on Monday and Wednesday, regional sports networks also broadcast the games, giving market consumers no incentive to watch ESPN broadcast.
“If (New York) Yankees or (Philadelphia) Phillies games are available on a regional network, they get the most ratings, and ESPN doesn’t do very well with their national game,” said the former TV executive. longtime president of CBS Sports Neal Pilson.
“I always wondered why ESPN got this package in the first place,” added Pilson. “And if they are giving up now, I think it is a smart move.”
Octagon analysts used 108 of the 114 games in the past three years to determine the average audience on the ESPN Monday-Wednesday package, not including ESPN2 broadcasts. The results: an average viewership of 761,434 in 2018, which dropped to approximately 632,000 in 2019.
The audience dropped to an average of 358,947 in 2020, but the sports audience was also impacted by the pandemic, social unrest and the U.S. presidential race.
“I call them semi-exclusive,” added Cohen. “Sometimes you’re talking about big markets – New York, LA, Chicago, Boston, Philadelphia – but you’re still losing 90 percent of the rest of the country.”
But, without exclusivity and other league rights, such as the disputed National Hockey League, the MLB may have a new home for its package.
ESPN and MLB declined to comment due to active negotiations.
MLB getting creative
The reports suggest that ESPN wants to cut its annual fee by about $ 150 million. Assuming that MLB starts its price at this price or more, it plans to be creative in its offers to justify the cost.
Gambling ads can attract networks. Another is the game itself, since the MLB controls what can be displayed, it has a say in the marketing that networks can use on the screen.
According to people with knowledge in negotiations, the league does not believe it needs to decrease the value of the package and will use its broadcast permissions to protect it.
Cohen suggested that Sinclair may be interested in a partnership.
The company has 14 regional networks that broadcast MLB games. There is a streaming game with Stadium, which was supported by Chicago White Sox owner Jerry Reinsdorf, one of the most powerful owners of the MLB club.
Sinclair could pay for itself with the national package, inserting some of its content at the Stadium and selling more ad spaces with MLB’s permission.
NBCUniversal is abandoning its sports network this year and is transferring media rights to the most accessible network in the USA. The channel has a history in sports, and NBCUniversal just played a fighting game with its Peacock service, stealing WWE game broadcast rights in the U.S. And with live entertainment, the main force protecting the cable model, NBC Sports could make a move for MLB in the US and gain special access to ads as well.
“There is a lot to consider,” said Cohen. “I think they can be very 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 obtain short-term deals similar to the Amazon NFL package and create flexibility, since it would not be restricted to a long-term partner.
And if ESPN leaves, MLB is still ahead in the media rights card game.
The league has already secured new royalty rates with Fox Sports WarnerMedia’s Turner Sports, the latest of which is adding a game Tuesday to its coverage. The network will pay more than $ 3 billion to maintain baseball.
Whatever the play, the MLB appears to have its wildcard and ready to use. And don’t forget, there are still extra postseason games that can be added to the deck. But for those, the MLB will need permission from an important media rights partner – the players’ union.
Disclosure: Comcast owns NBCUniversal, which is the parent of CNBC.