Over the past few years we saw a number of teams affected financially by the struggles of several Regional Sports Networks (RSNs). But now, the MLB and MLBPA have agreed to a way to help these teams losing out on TV revenues.
According to Evan Drellich of The Athletic, Major League Baseball and the Players Association have agreed to alter the collective bargaining agreement. In this agreement, teams losing TV money will be eligible for up to $15 million each, receiving this from a portion of their competitive-balance-tax. Drellich added that there is an estimated limit of $75 million in league-wide payments.
In order to qualify for this compensation, teams will need to have had their local media revenue decline from either the 2023 or 2022 season. The arrangement is good for one year, being called the “media disruption distribution.”
Drellich received the memo that the MLBPA sent out to players, which stated that they believe this compensation will end up resulting in clubs having more money to spend this coming offseason in free agency.
“We believe this agreement should positively affect the player market by softening the impact of revenue declines, by increasing the number of clubs who have monies to spend, and by undermining the ability of clubs to weaponize recent developments in RSN markets,” the MLBPA wrote in the memo.
When Diamond Sports Group, the parent company of the Bally Sports Networks, decided to file for Chapter 11 bankruptcy in March of 2023, they made it clear that their intention was to “continue to broadcast quality live sports.”
However, we notably saw numerous teams including the Arizona Diamondbacks and the San Diego Padres dropped by Diamond Sports Group in the middle of last season, forcing the MLB taking over the teams’ broadcasts which has continued into this season.
Meanwhile, several teams including the Cleveland Guardians, Minnesota Twins and Texas Rangers all had to negotiate pay cuts in one-year deals with Diamond for 2024.
Other teams including the Colorado Rockies, the Houston Astros, Seattle Mariners and Pittsburgh Pirates may also be eligible for the “media disruption distribution” that came with Warner Bros. Discovery pulling out of the RSN business altogether last year.
There could be even more teams eligible for this new compensation from the MLB. But regardless, this is certainly a sign that the league sees RSNs as a business model that is currently failing many teams.
