As Major League Baseball deals with the ongoing fallout from the bankruptcy of Diamond Sports Group, we now have a clearer idea of the financial stakes of a dropoff in media rights revenue at the team level.
In a new story exploring the ramifications of local media evolution on the sale process of the Minnesota Twins, Evan Drellich of The Athletic reported that the players’ union provided its players with an estimate of how much local TV deals contribute to overall team revenue. That number, according to Drellich, ranges from 12 to 32 percent. On average, local media revenue represents 21 percent of overall team earnings.
That will almost certainly decrease as teams stop relying solely on cable bundles to bolster these deals. Many MLB clubs (as well as NBA and NHL teams) are moving to a hybrid model in which fans can watch through an over-the-air local channel or a direct-to-consumer (DTC) streaming service. Watching locally in this model is typically free, while out of market fans pay for subscriptions. Others will continue to use the old model for the near-term.
So far, it has proven difficult to get anywhere near similar revenue figures in this new reality. In July, commissioner Rob Manfred ballparked the San Diego Padres DTC subscriptions at 40,000. Using the $99 annual rate, that would amount to just $4 million. Even combining that figure with whatever teams receive from local stations for over-the-air broadcasts, revenue pales in comparison to previous figures. Drellich reported the small-market Twins received an estimated $54 million from their deal with Diamond in 2023.
Now, MLB is working to reimagine how it makes games available to fans. It could seek to bundle together a majority of teams’ streaming rights to sell a larger package either directly to fans or to an existing service like AppleTV+, ESPN+ or Netflix. Or it could allow teams to strike their own local deals and sell streaming packages to fans on their own. Big-market clubs are expected to resist bundling given the lucrative local deals they already have in place (including the Los Angels Dodgers with Spectrum SportsNet or the New York Yankees with YES Network and Amazon).
This evolution will likely be long and difficult for MLB, but the numbers are beginning to leak. This gives clarity to teams, player agents, and potential bidders in the media world who want to be part of the long-term solution.
