A notable sports business insider believes that teams like the New York Yankees and New York Mets could benefit in a major way from rumored plans for MLB to go from regional media rights deals to national packages.
There are many different ways MLB teams make money each year. Merchandise, ticket sales, and revenue-sharing are a few. But the yearly revenue clubs receive via their local television deals is a huge part of balancing their budgets. Especially for mid and small market teams. However, many of those organizations took big hits two years ago when Diamond Sports Group filed for bankruptcy.
The parent company for Bally Sports showed the fragility of the fractured regional TV system MLB has, and it costs clubs huge sums of money that have affected their payroll outlook ever since. Unsurprisingly, there has been a lot of speculation over the last year that the league could try and consolidate all its TV deals and shop them to networks and streaming services to get billion-dollar deals just like the NFL and NBA.
However, such an idea is far more problematic in MLB because organizations like the New York Yankees, Boston Red Sox, Los Angeles Dodgers, and New York Mets earn big bucks from their local TV deals or the networks they created around them. They are unlikely to hand that over for the betterment of the league when they already put 48% of their local revenue into the revenue-sharing pool.
Television deals were a part of CNBC senior sports reporter Michael Ozanian’s new 2025 MLB team valuations. And during a conversation with Sportsnaut this week, he was asked about the possibility of a larger national MLB TV package in the future. He firmly believes the league and many teams want to head in that direction, but he thinks there is only one way they will be able to talk the Yankees, Mets, Dodgers, and other wealthy clubs into signing off on handing over their regional rights.
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Could the days of the New York Yankees and New York Mets taking part in revenue-sharing soon end?
“There are things a lot of people would like to see happen when we are talking about the ultimate path toward increasing major league baseball team value,” Ozanian began by saying. “Those things would be, 1. You get some sort of salary cap. But with that, you’ve got to have a salary floor. And then you mentioned, how do you transition from local TV to national, where the money is split?
“What I think you’re going to have to do to get there is, if you’re going to get teams like the Yankees and the Dodgers to forego some of their local TV money for national, you’re going to have to give them something in return,” he said. “And I think that would have to be less revenue sharing… The Dodgers, the Yankees, the Red Sox, the Cubs, the Giants, they’re basically subsidizing seven or eight teams at the bottom and keeping them in business.
“You’re going to have to go to the Yankees and Dodgers and say, ‘You’re not going to have to put in that money anymore’ because there is no incentive. How are you going to get the Dodgers to give up $200 million a year in local TV money and still say to them, ‘Oh, and you still have to contribute $140 million to revenue sharing.”
The wealthiest teams in the league make huge sums of money from their strong brands and huge fan bases in major cities like New York, Los Angeles, and Chicago. While giving up their TV money would hurt, not having to throw nearly half their income into a pot that is disbursed throughout the league would certainly interest them. Especially since they stand to gain a lot more revenue from such a scenario.
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