Baseball fans should consider being careful what they wish for regarding the seemingly inevitable demise of regional sports networks (RSNs).
Yes, Diamond Sports Group’s recent filing for bankruptcy puts the television broadcast agreements that Bally Sports Networks have with 14 Major League Baseball teams in possible jeopardy. Many fans of those 14 clubs — which include the St. Louis Cardinals, Texas Rangers, Milwaukee Brewers, and Minnesota Twins — are hoping this development frees up local TV rights to be picked up by a streaming platform.
Currently, fans in those 14 markets who cut the cord with cable and satellite providers have been unable to watch their favorite teams locally because of Diamond’s failure to work out carriage deals with popular streaming outlets like YouTube TV and Hulu + Live TV. And many of them aren’t interested in subscribing to Bally Sports’ own streaming package for $19.99 per month. Especially if they just want to watch baseball for six months and have no use for local NBA and NHL coverage. (A few of those markets don’t have a local NBA or NHL team, either.)
Amid the bankruptcy proceedings, Diamond is attempting to get out of broadcast agreements with the Arizona Diamondbacks, Cincinnati Reds, San Diego Padres, and Cleveland Guardians. Those four clubs cost Diamond more in rights fees than they generate in cable contracts and ad revenues. MLB intends to pick up the broadcast packages for those teams and stream those games for free if that happens.
Fans of the other 10 teams tied to Bally Sports deals are hoping for a similar outcome. Though that would be highly unlikely, Diamond apparently is not close to an agreement with MLB that would help the company get out of bankruptcy, as it has with the NBA and NHL. Furthermore, Diamond is arguing that MLB has no interest in such a deal, preferring to take back streaming rights for those 14 teams.
Yet would that really be the best development for MLB in terms of competitive balance? Baseball has long struggled with a significant financial disparity between large-market teams and those in mid-sized or small markets. According to Spotrac, the New York Mets will have the highest payroll for the 2023 season at $355 million. At the very bottom of the league, the Oakland Athletics’ payroll is a fraction (11 percent, to be exact) of the Mets’ at $40 million.
But the gap between teams playing in large media markets (and thus getting significant revenue from local TV contracts) versus small market clubs is nearly as vast. The Los Angeles Dodgers reportedly earn $239 million per year from their local TV contract, while the Pittsburgh Pirates get $60 million.
The Pirates are also one of three MLB teams who have a TV deal with AT&T SportsNet. Warner Bros. Discovery recently announced its intentions to transfer ownership of those RSNs to their respective teams and leagues. If a deal can’t be made, WBD will likely enter bankruptcy proceedings for the RSNs. So add the Pirates, Colorado Rockies, and Houston Astros to the team whose local broadcasts could be taken over by MLB.
But would the Pirates still get $60 million in local TV revenue under such an arrangement? Teams with local cable contracts were able to draw enormous fees by being part of a larger overall package in which even non-sports fans were paying fees for RSNs.
However, if these networks are no longer part of a cable bundle, can their broadcasts come anywhere close to matching those revenues from streaming packages? As The Ringer’s Bryan Curtis asked on The Press Box podcast, how many Pirates fans would have to pay $20 a month (or more) to generate $60 million per year? Even if RSNs began to feature sports betting broadcasts, would that draw enough revenue to make up the shortfall?
The Pirates aren’t competitive as it is, finishing last in the National League Central division in 2022 with a 62-100 record (31 games behind the first-place Cardinals). Pittsburgh also had the lowest payroll in the NL at $59 million. How does taking away $60 million — which essentially covers the Pirates’ player payroll — improve any chance of contending?
MLB commissioner Rob Manfred told the Wall Street Journal, “I think we can get into a mode where we are better able to say to fans: You can watch baseball on whatever platform you want to watch it.”
Manfred and MLB will also have to address the sport’s restrictive local market blackout rules to make game broadcasts as accessible as the commissioner envisions. Many baseball fans and observers likely know that Iowa, for example, is blacked out from six teams (Cubs, Twins, Brewers, White Sox, Royals, and Cardinals) locally. An MLB.TV subscription isn’t of much use in that region.
Reportedly, MLB is working on that very goal. But current TV contracts and local media rights deals create a ball of yarn that could take years to untangle. In the meantime, baseball’s elite teams could separate themselves even further from those less fortunate — or without lucrative local TV rights deals.
Having local broadcasts liberated from RSNs sounds appealing to fans who ditched cable and currently can’t watch their teams on streaming platforms. But losing those revenues could prevent their favorite teams from funding competitive — or even respectable — payrolls. Be careful what you wish for, baseball fans. The team you get to watch may not be nearly as good.
Ian Casselberry is a sports media columnist for BSM. He has previously written and edited for Awful Announcing, The Comeback, Sports Illustrated, Yahoo Sports, MLive, Bleacher Report, and SB Nation. You can find him on Twitter @iancass or reach him by email at iancass@gmail.com.
