Philly Front Office

For those of you with real lives, here is a quick summary of the Diamond Sports fiasco:

• When Disney bought Fox, they were forced to sell off the regional sports networks (RSNs) that came with the purchase. These were gobbled up by Sinclair Broadcasting Group for around $10b and a new company, Diamond Sports Group, was formed.
• Due to cable cutting, the venture went from very lucrative (about $3.8b yearly revenue for Diamond) to insolvent in just a few years.
• Diamond alleged that Sinclair was basically skimming from the company, leaving Diamond in a position to not pay its obligations.
• Diamond filed for bankruptcy protection and sued its parent company.
• Just recently and after almost 2 years, Diamond emerged from bankruptcy thanks to modified rights deals with its remaining teams and a cash infusion from Amazon.
• Despite signing lucrative rights deals, the teams that aligned with Diamond for their tv broadcast rights have seen their cash cow dry up.

This situation has a bigger impact on baseball due to its lack of a salary cap. MLB teams pool a lot of money, but not all of it. One of those disparities is local broadcast rights. Teams contract these rights individually, but 14 MLB clubs were affiliated with Diamond. During the bankruptcy process, Diamond outright cut their contracts with several teams. By the end, only 7 teams reached reworked agreements with the company: Angels, Braves, Cardinals, Marlins, Rays, Royals, and Tigers. Apparently, the new deals run through at most 2028 (this is important).

The 7 teams (plus the Rockies) that were left in the wind by Diamond are now using MLB for their broadcast needs. What the hell??? Basically, MLB came in to manage the assets and employees these teams were using in order to produce the broadcast, then worked out deals with local cable companies to ensure the teams would still be available on local tv while keeping the streaming rights in house at MLB.tv. Thanks to this arrangement, there would be no more local blackouts on MLB.tv which is, frankly, much better for the consumer.

One HUGE problem with this arrangement is the lack of local rights money for these teams. This is a big knock to the bottom lines of the Brewers ($33m+), Diamondbacks ($68m), Guardians ($55m), Padres ($47m), Rangers ($111m), Reds ($60m), Rockies ($57m), and Twins ($54m) (yearly RSN revenue as per mlbtraderumors.com). Now this is only one source of revenue, and I am sure they are getting extra cash straight from MLB, but these teams weren’t exactly big earners anyway (except the Rangers who are apparently starting their own network). For example, the Phillies are estimated to be receiving $125m+ per year from Comcast while the Dodgers are pulling in around $200m each year from Spectrum Sports Net. Some of this money is split with the have-nots, but it’s still a huge advantage.

The Phillies are printing money, so why do we care? Well because this helps us silly! These 8 teams without their own broadcasting contracts and the other 7 without long terms stability are likely going to have to cut back spending. The Padres, Rangers, and Cardinals are not going to be spending with the big boys anymore. The Diamondbacks, Twins, and Reds are going to have to sell their guys when normally they would have tried to extend them. The Braves are run by a conglomerate that is only interested in making a profit so we will see how this affects them (unfortunately, they are already criminally underpaying Albies and Acuna so they are probably fine).

It’s not all roses for the Phillies though. When half the sport is in financial turmoil, that is not a healthy business. Something is going to have to change. MLB owners might be the worst collection of rich boy crybabies ever assembled, so you better believe they will be making noise the first second they can come collective bargaining time. The current CBA expires at the end of 2026, just in time for the national broadcast rights deals to go up for bidding (they expire in 2028), and when the longest Diamond deal ends (also 2028). If enough owners cry poor, you will likely see them lock out the players again until there is more revenue sharing agreement among all parties. This is not something the Phillies or the players want by the way. That’s a different article though. Until then, good news for the Phillies that everyone else took a bad bet.

PS…I am truly sorry and embarrassed that I could not find a way to include a Diamond Dallas Page reference into this post.