Jays TV deal questions

[jaysfan2014]

As you know, the Phillies just signed a 25-year deal worth $2.5B for their TV rights.

 

Anyone know how much the Jays get from their TV deal, or is it similar to deals like the Yankees, Red Sox, Orioles and Nationals get, in which the teams have part ownership or own their networks? For example Yankees own YES, Red Sox part own NESN, Nats and Orioles own parts of MASN..

[Laika]

Rogers essentially sells the TV rights to themselves for a fraction of a penny on the dollar.

[jaysfan2014]

Of course, we don't know Boston or New York's TV deals, as like the Jays, they partially own their networks.

[Ziggyy108]

I always wondered if owning the network actually hurt the Jays. I have no idea how it works though, but the Dodgers and such seem to be benefiting greatly from being able to sell their tv rights

[jaysfan2014]

Keep in mind though, selling TV rights can backfire, as shown by the mess in Houston with Comcast Sportsnet Houston. Houston was supposed to make $80M/year on their deal, but instead the network is in Chapter 11 bankruptcy protection. This could happen in other markets as well if the rights bubble bursts, and networks can't get the ratings to support the costs.

[Abomination]

I always wondered if owning the network actually hurt the Jays. I have no idea how it works though, but the Dodgers and such seem to be benefiting greatly from being able to sell their tv rights

 

The only way it might hurt the Jays is that Rogers is also committed to turning a profit, and we don't know the exact amount that the Jays games make to their bottom line (the financials are fairly vague on the hard details). Overall though, having no "middle man" also wanting to make a profit can really only be a positive for us.

[Brenner]

You would actually think it would give the jays more incentive to be good as the Jays/Rogers are the direct benefactor. For some of these other teams if they suck they still get their TV monies, making them less dependent on attendance and actual interest in the team especially if they sell their tickets regardless. Most networks would want the team to be good to increase viewership but lack the control to make it happen. Rogers has that same incentive if not more so with the potential of a whole country but also the control to try to make it happen.

[TDotttt2005]

Its actually kind of complicated, but I think this will answer your questions... Because MLB looks at the financials of only the Blue Jays Baseball Club LP entity, Rogers Sportsnet is forced to pay them a "Market Rate" for the TV rights. Otherwise, for revenue sharing purposes, the Blue Jays could say they only receive $1 for their TV rights, and thus look like they are losing a lot of money, and be able (at least under the old system) to get transfer payments under the revenue sharing agreement.

 

Of course, this is all on paper. In reality, who knows how much they really get. I think they main thing to remember when you are thinking of this, is that you have to look at Rogers as a whole. Not just the Jays, Sportsnet, Fan590, Rogers Cable, etc... In reality, the scheme is brilliant, and very profitable.

 

In looking at the flow of payments:

 

Blue Jays Baseball Club <--Rogers Sportsnet/Fan590 (Rights Fees ie. Money paid by Networks to Teams to be able to show their games) <--Rogers Cable (Carriage Fees ie. Money paid by cable companies to TV Networks to be able to carry their signal) AND Advertising Revenue (Premium Fees are charged for Sports Content these days with the Advent of DVR, as Sports is the only programming that people seem to watch live nowadays. For advertisers, this is key, as viewers cant fast forward past the commercials)

 

So in normal circumstances, the Baseball Team gets money from the Network. The Network gets money from advertisers and cable companies. Cable Companies get money from their subscribers. At each arrow there are revenues and expenses related. In the Rogers case, there really are no expenses (except on paper between Rogers Entities), only Revenue. Its pretty brilliant. Rogers Cable customers pay their Cable Bill, and Advertisers pay to put on commercials, but because Rogers owns the TV and Radio Networks, there are no Carriage Fees. Because Rogers owns the Blue Jays, there are no Rights fees. The Profit Margin taken at each arrow goes directly to Rogers.

 

All in all, Rogers is Banking. And remember, this is before one ticket is purchased. There really is no reason our payroll shouldn't be Yankee/Dodger-esque.

Edited January 7, 2014 by TDotttt2005

[jaysfan2014]

Agreed. It could be worse, like Atlanta, which has a horrid TV deal that leaves them at a disadvantage to bigger markets like Philly, New York and Washington, and faces long-term issues with their roster as the young players like Heyward and Freeman reach arbitration. Even a new stadium won't help that team. Until Atlanta gets a new TV deal, they will continue to be at a disadvantage, similar to the Rays.

[TwistedLogic]

I have a feeling the Jays lose out by having Rogers own the network and rights, because I don't think Rogers is re-investing nearly as much as other teams with similar market sizes. That being said, I don't know how smart it is to sign 25-30 year TV contracts in 2013, I would be pretty comfortable in saying that it wouldn't surprise me if tv is all but extinct long before these contracts run out.

[Abomination]

I have a feeling the Jays lose out by having Rogers own the network and rights, because I don't think Rogers is re-investing nearly as much as other teams with similar market sizes. That being said, I don't know how smart it is to sign 25-30 year TV contracts in 2013, I would be pretty comfortable in saying that it wouldn't surprise me if tv is all but extinct long before these contracts run out.

 

I doubt it'll be extinct, but you raise an interesting point in whether or not the stations have internet broadcast rights or not. Also, even if everything regarding broadcasting remains the same 25 years for now, unless the contract escalates every year (like the Phillies do), the team could be devastatingly hamstrung 20 years from now like some are currently if tv contracts continue to explode.

[TwistedLogic]

How could it hurt them? This s*** is a farce, the Jays are making this club 100's of millions every year, as NJH said....pennies on the dollar, there country wide market makes them astounding amounts of money on saved revenue. They're filthy rich, and letting it pour in, this and receiving the Television revenue hand outs, lol.

 

And this is also why they will never sell the team.

[TwistedLogic]

This also bothers me, when they can run this club at 170 plus million a year.

 

Rogers could comfortably run this team north of 200M without suffering losses.

[Stangstag]

Rogers could comfortably run this team north of 200M without suffering losses.

 

Yup.

[Abomination]

Rogers could comfortably run this team north of 200M without suffering losses.

 

That's not so clear. Through Q3 this year I think they pulled in something like 50M profit in the media division which includes the Jays, but more than JUST the Jays.

[Abomination]

That's a fallacy, they hide their coin with the Birds.

 

I'm not sure they can hide it too much within the media division. It wouldn't include cross-promotional value, extra people buying Sportsnet packages to see the Jays, or value of naming rights, but should include everything else (I think).

[TheHurl]

The on paper transaction for their TV contract is $36 Million per year. Which puts the Jays right in the middle of the pack on TV contracts.

[TwistedLogic]

I forget where I read that Rogers was gaming the system and were getting far more than that 36M on-paper figure.

[TheHurl]

Rogers is paying the $36M, to the Jays side of the books. It's all paper transactions but certainly is factored in the Jays budget. Is Rogers turning a profit beyond that...you better believe they are but I kind of thought that was the purpose of a business.

 

Quick simple math for those saying they could easily be putting the payroll up to $200M, that's would put them at approx. $86M per year for TV. Which would be top 5 in baseball I believe.

[TheHurl]

Also would like to add that 34 percent of all Local TV revenue goes to the MLB and then redistributed to the 30 teams equally so I imagine that this number is based off of a formula (Yankees wouldn't choose $90M if this weren't the case).

 

 

The good news for the Royals is that the Dodgers, and any other team that signs a monster local TV deal, send 34 percent of that annual revenue to Major League Baseball, according to Uhlich.

 

MLB then distributes the money evenly among all 30 teams. However, teams are finding a loophole. Money made off a team’s equity stake is not shared.

 

Chris Bevilacqua, the founder and CEO of Bevilacqua Media Company, explained last year on Forbes’ “SportsMoney” program:

 

“What you really are seeing is teams that are becoming media companies, they’re taking equity ownership properties,” Bevilacqua said. “So once you get into owning the actual media and having the intellectual property rights, the economics just become greater and greater.”

 

But there is risk, too. The Dodgers’ deal is expected to call for a network dedicated to the team (a la The Longhorn Network). If advertisers don’t pay as expected, that could cut into a team’s profits.

 

And there is a chance for viewer backlash. The Dodgers’ deal means another channel for cable companies to pay for, and that cost is passed along to the viewer, whether or not they are fans.

 

Read more here: http://www.kansascity.com/2013/01/24/4029709/baseball-tv-deals-growing-more.html#storylink=cpy

[ElNik2013]

While Rogers may not be paying full market rate for the Jays' broadcast rights, the Blue Jays already have a big enough budget to put a contending team on the field. In fact, I think they had a top-10 budget last year, to go along with their top-10 catcher.

[jaysfan2014]

Here's FanGraphs' take:

 

http://www.fangraphs.com/blogs/philliles-new-tv-deal-tempering-regional-sports-networks/

 

There are serious concerns about whether those TV deals are sustainable, as cable companies refuse to pay the ridiculous carriage fees offered by those RSNs. Also noted is that the Dodgers TV network is already in financial trouble, as like in Houston, no cable/satellite company will pay the carriage fees, which could leave Time Warner Cable having to make a huge writedown on their investment. In some ways, we should appreciate that we aren't at risk of a TV deal backfiring and potentially crippling the channel owners and the baseball team.

[connorp]

This was much more of a hot topic when jays payroll was less than $100m and looked like that was where it would stay.

[jaysfan2014]

True. But some of these deals are getting out of hand. Cable companies and subscribers aren't going to keep paying increasing rates indefinitely. Some of the deals are stupid as well.

 

For example, the Angels deal's hope for profitability depends on the Angels gaining penetration in California (which they aren't, as attendance and ratings have continued to fall every year since the team stopped contending after 2009. The new ownership of the Dodgers will likely make things worse for the Angels.)

 

As I mentioned, failure for RSNs to get subscribers and cable companies to pay carriage fees could be disastrous for the cable companies who own the RSNs, the same ones giving ridiculous deals to teams like the Rangers, Dodgers, Angels, etc, which in turn could be financially crippling to the MLB franchises if the RSNs end up in bankruptcy protection, which has already happened in Houston with Comcast SportsNet Houston. Luckily, the Astros have the lowest payroll in MLB, but it could hurt them long-term when the team contends.

[connorp]

I have zero empathy for the HOU franchise. I see it as one of worst orgs in pro sports as a business model. I know theres many prospect buffs on here that disagree.. But to me, when youre in one of the biggest cities in US in a sport state.. Its s***** business to bleed the s*** out of the mlb welfare system and put an absolute garbage product on the field in name of rebuild..actually looks like theyre starting to understand that

[Atothe]

I have zero empathy for the HOU franchise. I see it as one of worst orgs in pro sports as a business model. I know theres many prospect buffs on here that disagree.. But to me, when youre in one of the biggest cities in US in a sport state.. Its s***** business to bleed the s*** out of the mlb welfare system and put an absolute garbage product on the field in name of rebuild..actually looks like theyre starting to understand that

 

They're not playing around they want the number 1 pick for the next two drafts so their draft bonus is bigger and they draft a top 3 talent every single year. They went to the extreme but I think Jeff luhnow is gonna turn that franchise around and they will be successful for years to come