Let’s Update the Estimated Local TV Revenue for MLB Teams

In the four years since I last attempted to determine major league teams’ local television revenue, much has changed in the Regional Sports Network landscape. Four years ago, FOX was the dominant player, owning a majority of the channels, with NBC and AT&T having their own shares as well. Last year, Sinclair completed the purchase of FOX’s RSNs, bought into the Yankees’ YES Network, and partnered with the Cubs to help create them their own network. That big FOX RSN purchase came at a price half that of the initial estimates; Sinclair also attempted to purchase the AT&T RSNs up for auction before AT&T determined the potential selling price was too low.

In addition to the network ownership changes, seven of the 30 teams’ contracts have been up for renewal, with substantial changes to what we previously knew about the broadcast situations of the Braves, Nationals, and Rockies. As was the case four years ago, these numbers are estimates and do not include money from ownership stakes in networks. For the former, I’ll go into a little more detail where I had to speculate the most. For the latter, I’ll illustrate how an ownership share can be incredibly important. For all long-term deals, I assumed a 4% annual increase across the length of the contract. And while much is uncertain regarding this season and its duration, the estimates here are for a full, standard season (2019), both for ease of comparison and their utility in the future.

With that out of the way, please find the 2019 estimates below; the previous numbers here. The numbers in the “Deal” column represent the number of years, as well as the deal’s value:

MLB Team Estimated Television Contracts
Team 2020 Revenue Deal Start End Ownership Info
Dodgers $239 M 25/$8.35 B 2014 2038 50% LINK
Angels $138 M 20/$3 B 2012 2031 25% LINK
White Sox $120 M 2020 25% LINK
Yankees $115 M 30/$5.7 B 2013 2042 30% LINK
Red Sox $104 M 2006 80% LINK
Cubs $100 M 2020 Yes LINK
Mariners $89 M 18/$1.8 B 2014 2031 71% LINK
Braves $86 M 2008 2027 No LINK
Nationals $77 M Arbitration 2006 2028 21% LINK
Phillies $70 M 25/$2.5 B 2016 2040 25% LINK
Astros $70 M 20/$1.6 B 2013 2032 No LINK
Rangers $66 M 20/$1.6 B 2015 2034 10% LINK
Cardinals $65 M 15/$1 B 2018 2032 30% LINK
Tigers $64 M 2009 2021 No LINK
Giants $63 M 25/$1.75 B 2008 2032 30% LINK
Dbacks $58 M 20/$1.5 B 2016 2035 Yes LINK
Mets $54 M 25/$1.3 B 2006 2030 65% LINK
Orioles $54 M 2006 2028 79% LINK
A’s $48 M 21/$1 B 2009 2029 No LINK
Rays $48 M 2019 No LINK
Reds $48 M 2018 2032 Yes LINK
Indians $47 M 10/$400 M 2013 2022 No LINK
Padres $46 M 20/$1 B 2012 2031 20% LINK
Pirates $44 M 2020 No LINK
Royals $44 M 2020 2026 No LINK
Twins $43 M 12/$480 M 2012 2023 No LINK
Rockies $42 M 2020 No LINK
Brewers $28 M 2013 2020 No LINK
Marlins $20 M 15/$270 M 2006 2020 No LINK
Blue Jays 100% LINK

Four years ago, I estimated local television revenues of roughly $1.5 billion. Despite a somewhat uncertain landscape, that number has risen to $2.1 billion, an increase of around one-third and 8% annually.

On Ownership Shares
Some of the values above don’t necessarily represent what a team receives. Owning part of the network can add significant revenue for owners. As Daniel Kaplan wrote for The Athletic in February when discussing the Mets’ difficult sale:

One banking source, who has been in touch with Allen & Co., said for the first time SNY is available if a bidder is interested. It had always been curious why SNY was not part of the Cohen deal. Without the separate media income, the team loses tens of millions of dollars. And, said one legal source, the team receives a below-market payment from SNY, not an unusual occurrence when the team and regional sports channel are owned by the same entity (by minimizing team revenue, the club limits its potential revenue sharing with other MLB teams).

High-revenue teams can shield some of their revenue from revenue sharing by making it a part of owning an RSN, which aren’t considered part of the pool divided among all the teams. As a hypothetical example, let’s look at the Red Sox’s figure of $104 million, which the club received from NESN, a network the club has an 80% stake in. Let’s say there are 4.5 million NESN subscribers and NESN receives $6 from the cable providers for each subscriber (these numbers are hypothetical and not actual figures). Those figures add up to $324 million. Let’s add 10% in advertising revenue to bring the networks revenues up over $350 million. We’ll subtract the $108 million for the Red Sox payment, and then maybe half that for the Bruins and end up with $194 million, a figure not too far from Forbes’ $180 million estimate for the operating income for the network in 2017.

For argument’s sake, let’s say there’s $150 million left at the end of the year for NESN; the Red Sox get $120 million of that amount on top of their rights’ fees and they don’t have to include that amount in revenue sharing. For teams like the Red Sox, Yankees, Mets, Mariners, and Orioles, this is a potentially significant amount of money. These revenues and profits are also in line with Sinclair’s statement that they expect $40 million to $50 million from the Cubs and Marquee (an expectation that assumed carriage by Comcast, which they don’t currently have). The Dodgers have the potential to reap money from their ownership share, though carriage issues have likely prevented an extra revenue stream. Even the teams with smaller ownership stakes can still receive some rewards, with the Nationals yearly dividend in the $5 million to $10 million range.

Other Assumptions

    • Unfortunately, the Blue Jays are omitted again, as Rogers owns both Sportsnet, which broadcasts Blue Jays games, as well as the team itself. The Media portion of Rogers, which includes the Blue Jays as well as multiple sports networks that broadcast MLB and the NHL, had over $2 billion in revenue last year and it’s difficult to parse those revenues without more information.
    • While we don’t know the duration of the deal between Sinclair and the Cubs, for our purposes, I assumed that the reported average annual value of $132 million was again spread across 15 years, which fits a neat $2 billion total.
    • While the White Sox figure is unknown, I took the $750,000 per game both the Cubs and White Sox received from NBC Sports Chicago in those clubs’ previous contract and prorated it over a full season for the White Sox. Without the Cubs, the network should have similar revenues given the lack of subscriber losses, and higher distributions to the three remaining clubs at NBC Sports Chicago.
    • For the Nationals, I used the club’s court-decided figure of close to $300 million for 2012-2016 and increased the rate by 4% annually, while for the Orioles, I used the estimate they attempted to pay the Nationals and increased that by 4% annually.
    • While the Rays never did get the $1 billion deal that was once reported, I used the team’s estimated revenues of around 20th in baseball and put them right around that spot.
    • I couldn’t find any credible information regarding the Pirates’ deal so I estimated their new contract at something close to what the Reds and Royals just negotiated, given their similar market size and prior deals.
    • The Rockies have a new deal starting after 2021, though not much is known about it other than that it wasn’t as much of an increase as was originally hoped.

To the extent more information comes available, this list will be updated.

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Craig Edwards can be found on twitter @craigjedwards.

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HamelinROY
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HamelinROY

The royals just signed a new deal and are still 5th from the bottom with realistically only one of those teams not going to pass them in the next year. Until baseball figures out a better revenue sharing system, there is no chance they’ll be able to compete on a consistent basis.

Shalesh
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Shalesh

The Rays and Indians only get $4M & $3M per year more than the Royals do on their local TV deals and they compete every year. As I’ve written before, wins cause payroll expansion a lot more than payroll expansion causes wins because the major driver of wins is an ongoingly great farm system. The Rays and Indians achieve this by hoovering up everybody in the Dominican Republic.

On Craig’s point about teams who own their networks get to shield their network’s income from the team’s income for revenue sharing purposes: duh, these are separate businesses — they should report income separately. If Craig is saying that the local networks have abnormally large profits because they’re underpaying the team for broadcast rights, then he should prove that’s the case by comparing network incomes around the league or against other networks in that team’s home market. Maybe that will be part 2 of Craig’s study since he’s only looking at the team’s take of the local TV deal here.

soddingjunkmail
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soddingjunkmail

“Proving” the case that teams who own their media companies are selling to themselves at a discount to circumvent revenue sharing is nearly impossible given both the lack of access and perfect comps.

That they have both the ability and strong financial incentive to do so is nearly enough for me though. YMMV.

Shalesh
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Shalesh

Reading is hard: “he should prove that’s the case by comparing network incomes around the league or against other networks in that team’s home market. Maybe that will be part 2 of Craig’s study.”

soddingjunkmail
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soddingjunkmail

Thanks for the snark!

I saw that, but I think each team has a unique situation with regards to market, place in success cycle, timing of contract, number of competing bidders, level of ownership stake in the media company, amount of public access to the terms of the contract, etc etc etc that make a comparison problematic at best. In short, there’s just not enough comparable data to shake out the noise.

Hope you have a great rest of your day.