Assessing The Impact Of The Phillies’ New TV Deal
We learned recently that the Phillies had reached agreement with Comcast SportsNet on a 25-year, $2.5 billion TV deal that also grants the club an equity stake and rights to ad revenue. (Though the advertising split is not yet known, that is a somewhat unusual provision that could add significant value, note Matt Gelb and Bob Fernandez of the Philadelphia Inquirer.) The deal, which kicks in for the 2016 season, had long been rumored to be in the works.
The new, $100MM average annual revenue stream certainly promises to provide a boost over the $35MM average the club enjoyed under its previous deal. But the cash flow will not jump to nine figures overnight: by my calculations, with somewhere between a 3 and 4% annual bump built into the deal, the Phils will start out drawing something in the realm of $65MM for 2016. (And, of course, the future revenue streams must be discounted in assessing their present value, though that fact is equally true of other teams' deals.)
Comparing the $100MM average across the league, Philadelphia's deal seemingly places it in roughly the position that was expected for the size of its market. (Click here for an earlier update from Wendy Thurm of Fangraphs on league-wide TV deals.) When factoring in revenue, equity, and other components, the Philadelphia pact falls in the realm of the Rangers' and Angels' recent deals, according to Maury Brown of Forbes. Thurm tweets that the terms are "in line" with expectations given the market size, while noting that the MLB franchises in Los Angeles, New York, and Boston all have greater packages when network equity is accounted for. (Twitter links.) Gelb and Fernandez call the deal "commensurate with recent packages across baseball."
Ultimately, however, the deal does not appear to provide a basis for a serious leap in the club's current or future payroll as against the rest of the league's well-off franchises. As Ryan Lawrence of the Philadelphia Daily News wrote just over two months ago, it seemed possible that the new deal would boost the previous $35MM annual revenue figure to over $200MM per year, with an annual figure above $150MM "highly probable." Those kinds of numbers would have outpaced other recent TV contracts.
Though Lawrence acknowledged that predicting deals based on recent comparables constituted "guesswork," his earlier discussion indicates that the Phils did not ultimately break new ground with their deal. In other words, it does not appear that Philadelphia landed the "Dodgers-esque" deal that some observers thought possible — at least in terms of impact on relative spending capacity. With the club's ratings dropping a remarkable 40% in each of the last two seasons, going from first in the game to seventh in the process, one can't help but wonder what impact the team's on-field downturn may have had on negotiations.
Depending upon one's perspective, then, the deal could be seen as something of a disappointment. But there is value in holding serve, especially with some predicting a looming bubble. It could be that the run-up in the TV deal market is at an end, and at a minimum the Phillies appear to have secured their market position as one of the league's top spenders.
As Lawrence reports, the team seems to be characterizing the deal as a continuation of its current trajectory. According to team president David Montgomery:
"[The new contract] might not represent quite a significant change as what occurred in other markets. But we continue to believe, thanks to the tremendous fan support, that we'll continue to be one of the top five clubs in payroll each year. … But, as we proved last year, payroll alone doesn't guarantee success. We want to focus on making the best player decisions possible."
Montgomery echoed those comments in explaining that the club's payroll was not expected to undergo major changes, as Gelb reports:
"I don't see us going any higher than where we've been. For us, the secret is to spend it well, not necessarily tied to how much. Since we moved in here, we have been able to be a club that is substantial in its payroll. I assume we will continue to be in the top four or five of the game. Hopefully we'll make some good decisions and people will see an improved club in 2014. That's what we believe."
Indeed, as those comments would indicate, Philly has pursued a strategy of fairly measured offseason spending. While time will tell how the new TV deal impacts the Phillies and the broader market, the early indication is that it will not provide a dramatic new infusion of cash into the marketplace, but will allow Philadelphia to retain its foothold amongst the more financially flexible MLB clubs.
Minor Moves: Brandon Wood, Eric Farris, Conrad
We'll keep track of today's notable minor moves here …
- Rounding out a trio of infield depth signings, the Padres have inked Brandon Wood to a minor league deal with no Spring Training invite, according to Corey Brock of MLB.com (via Twitter). The 28-year-old last saw MLB action in 2011. Playing in the Royals and Orioles systems at the Triple-A level last year, Wood .226/.262/.329 line in 252 plate appearances.
- The Twins have re-signed infielder Eric Farris to a minor league deal without an invite to Spring Training, Chris Cotillo of MLBDailyDIsh.com tweeted yesterday. Farris, who will turn 28 before the start of the year, has seen very limited MLB action in his career. He registered a .249/.303/.313 line in 452 plate appearances last year across the Double-A and Triple-A levels.
- The Padres have signed infielder Brooks Conrad to a minor league deal that does not include a Spring Training invite, reports FOX Sports' Ken Rosenthal (via Twitter). Conrad signed on with the Hanshin Tigers after a tough 2012 MLB campaign, but things failed to pan out in Japan for the soon-to-be 34-year-old. In just 69 plate appearances for Hanshin, Conrad posted a .175/.319/.281 triple-slash.
- You can keep track of any players currently in DFA limbo via MLBTR's DFA Tracker. Three players are still awaiting a final disposition: Santos Rodriguez (White Sox),Rafael Ortega (Rangers), and Adys Portillo (Padres).
Phillies Agree To New TV Contract
SATURDAY, 9:54am: The Phillies' ownership stake in CSN Philadelphia will stand at 25% under the new deal, report John Ourand and Eric Fisher of Sports Business Daily, though it is not known what the team's previous position was. The rights fee will be paid out on a schedule that increases about 3 to 4% per year, averaging out to $100MM per season over the 25-year term.
FRIDAY, 1:38pm: The Phillies' new deal with Comcast SportsNet is for 25 years, according to MLB.com's Todd Zolecki. The contract is worth $2.5 billion in addition to an equity stake and ad revenue, tweets Matt Gelb of the Philadelphia Inquirer.
THURSDAY, 9:26pm: The Phillies have agreed to a new local TV contract with Comcast SportsNet, David Murphy of the Philadelphia Daily News reports. A CSN spokesperson confirmed the deal in an e-mail to Murphy. Terms of the deal weren't announced, but Kevin Cooney of the Bucks County Courier Times reports that the contract is between 20-25 years in length and is worth a "massive" amount of money, according to a source. The Phillies were already getting roughly $35MM per year in their current deal with CSN, and the new contract will begin once the current deal expires following the 2015 season.
Given the length of the new deal, the Phillies seem set to be the latest team to earn over $1 billion from their TV rights. As Murphy notes, however, it's too soon to know how the extra revenue will impact the club's player payroll, as the Phils have (if anything) seemingly been looking to trim payroll though they knew this TV windfall was in the offing.
Read more at http://www.philly.com/philly/blogs/sports/phillies/Phillies-television-partnership-with-Comcast-SportsNet.html#0s2s5OYjX8tSjLg1.99
AL East Notes: Orioles, Yankees
We'll kick off the first weekend of 2014 with a few quick AL East notes …
- The Orioles have had trade discussions with the Mets involving not only Ike Davis, but also Daniel Murphy and Lucas Duda, reports Educardo Encina of the Baltimore Sun. But, as we learned already with regard to Davis, the talks never gained much traction given the Mets' focus on picking up a top young arm from the Orioles' system.
- Baltimore's first priority is adding starting pitching, writes Roch Kubatko of MASNsports.com, taking precedence over the search for a DH and the possibility of adding a reliever. The O's are not shopping at the top end of that market, however. Meanwhile, the club's interest in Kendrys Morales is "waning," Kubatko senses. When asked whether the Baltimore roster was good enough to challenge for the post-season as presently constructed, executive VP Dan Duquette walked cautiously: "I think we have more work to do to accomplish that, but we're making progress. We added a couple left-handed hitters and there are some opportunities to help our pitching staff."
- Looking forward, the Yankees have six deals on the books that are likely to prove a burden, opines Brendan Kuty of NJ.com. The list (with remaining guaranteed years and money): Alex Rodriguez (four years, $90MM), Mark Teixeira (three years, $69.375MM), Ichiro Suzuki (1 year, $6.5MM), C.C. Sabathia (three years, $71MM), Jacoby Ellsbury (7 years, $153MM), and Derek Jeter (1 year, $12MM). Of course, each of these contract situations carries different kinds of concerns. Three are somewhat unsurprisingly problematic back-ends of long-term deals, though there is still some hope that the Yanks will get some value out of the remainder of those contracts. Two appear to be fairly substantial short-term drains for an organization that hoped to get under the luxury tax threshhold, but otherwise will not impact finances past 2014. And one is a freshly-inked long-term contract that could become a problem in the future — much in the way the earlier Rodriguez, Teixeira, and Sabathia contracts have shaken out of late — but which was presumably necessary to lure a top-tier talent to the Bronx.
Quick Hits: Schilling, Royals, Morales, Podsednik
It's strange that a top-flight pitching talent would be traded five times, but that's exactly what happened to Curt Schilling, CBS Sports' Dayn Perry points out. Schilling had been traded three times before his career really got going as a 25-year-old with the Phillies in 1992. As one might imagine, the teams that traded Schilling didn't make out very well — he was dealt with Brady Anderson for Mike Boddicker, then with Steve Finley and Pete Harnisch for Glenn Davis, then straight-up for Jason Grimsley. By that time the Phillies traded him, he was very valuable, but the Phillies only got Vicente Padilla and change for him, and when the Diamondbacks dealt him, the only players they got who turned out to have value were Jorge De La Rosa and Brandon Lyon. Here are more notes from around baseball.
- The Royals are interested in free agent DH/1B Kendrys Morales, Jim Duquette of MLB Network Radio tweets. The Royals already have a similar player in Billy Butler, but Duquette also notes that signing Morales would give the Royals the chance to trade Butler for pitching. The Royals would have to sacrifice their first-round pick, No. 18 overall, if they were to sign Morales, who declined a qualifying offer.
- Scott Podsednik is interested in continuing his career, Jason Mastrodonato of MassLive.com writes. The outfielder, who will be 38 in March, hit .302/.322/.352 with eight stolen bases in 216 plate appearances with the Red Sox in 2012. He did not play in 2013.
West Notes: McHugh, Astros, Mariners, Giants
Pitcher Collin McHugh has published a fascinating chronicle (at ESPN New York) of his year in baseball, which includes stints with the Mets and Rockies. McHugh ended the calendar year by getting claimed by the Astros, and at the end of his article, he lists what seem to be the key differences between the two franchises, at least for someone in his situation. One of the more interesting of those is that the Rockies' Triple-A affiliate in Colorado Springs is just 45 minutes from Denver, while the Astros' Triple-A team in Oklahoma City is six hours from Houston. That's not something a fan would consider, but it's part of the reality of life on the fringes of the big leagues. Here's more from the West divisions.
- The Astros announced that they've named Kevin Goldstein their Director of Professional Scouting. They also named Stephanie Wilka their Specialist of International Operations and Associate Counsel, and Pete Putila their Coordinator of Baseball Operations. Goldstein, who joined the Astros organization in 2012, was previously a writer for Baseball Prospectus and ESPN.
- The Mariners want to add a top-notch starting pitcher, and the Robinson Cano signing demonstrates a kind of "urgency" or "desperation," so their pursuit of Masahiro Tanaka could get wild, Jeff Sullivan of USS Mariner writes. The market for Tanaka could reach the point where paying his price no longer makes sense, though, and if it does, it might be better for the Mariners to sign someone like Ubaldo Jimenez for half of what Tanaka will cost.
- It's unclear whether the Giants might consider signing Brandon Belt to an extension, but if they did, the Anthony Rizzo, Allen Craig, Paul Goldschmidt and Billy Butler deals might provide a basic framework, writes Grant Brisbee of McCovey Chronicles. Belt is a Super Two, which means the Giants control him for the next four years, but at arbitration prices. Brisbee suggests a fair deal for Belt might be something like five years and $42MM, with an option for 2019.
East Notes: Braves, Rays, Berry, Red Sox
With an unfavorable TV deal, the Braves are becoming the Rays, SB Nation's Grant Brisbee argues. That's a bit hyperbolic, as Brisbee acknowledges, but the Braves' payroll has fallen from third in the big leagues in 2000 to 16th in 2013, because their payroll hasn't really risen since then, while it has for most other teams. That's a trend that could continue, unless the Braves' new stadium dramatically changes their fortunes. That means they have to rely more on making smart moves than on spending money. Here's more from around the East divisions.
- James Loney says the Rays, Brewers, Pirates and Astros all made him similar offers, Roger Mooney of the Tampa Tribune tweets. "I felt [Tampa Bay] was going to be the best option and this is where I wanted to be," Loney says.
- If the Rays keep David Price in 2014, they will have a higher payroll than they had in 2010, when it was $72.8MM, Mooney reports. That's not a sustainable figure in the long term, Rays GM Andrew Friedman says, but the team has a chance to be "great" in 2014 (Twitter links).
- The Orioles are still interested in re-signing Francisco Rodriguez, Roch Kubatko of MASNsports.com reports. The Orioles could then use him as a backup plan at closer in case Tommy Hunter struggles. Fernando Rodney might cost too much for them, Kubatko suggests.
- Orioles executive Dan Duquette says newly-acquired outfielder Quintin Berry is a strong defensive outfielder and "he's shown good on-base capability, particularly against RH pitching," Kubatko tweets.
- It's not likely the Red Sox will sign or trade a starting pitcher before the beginning of spring training, tweets Scott Lauber of the Boston Herald writes. Boston currently has a solid set of starting pitching options in Jon Lester, John Lackey, Clay Buchholz, Jake Peavy, Ryan Dempster and Felix Doubront, plus Brandon Workman, Allen Webster and others. Lauber's tweet suggests the Red Sox will not attempt to trade someone like Lackey, and they will not sign Masahiro Tanaka.
The Teams That Could Use Stephen Drew The Most
Agent Scott Boras has a quality starting shortstop on his hands in free agent Stephen Drew. Drew, 31 in March, bears the stigma of costing a draft pick to sign. But in 2013 for the Red Sox, he hit .253/.333/.443 in 501 plate appearances and was worth 3.4 wins above replacement according to FanGraphs. That tied for eighth-best in baseball among shortstops.
If you are a believer in projection systems, Drew will not be a top ten shortstop in 2014. Using an average of projected 2014 WAR from Steamer, Oliver, and where available, ZiPS (all from FanGraphs), Drew ranks 23rd among starting shortstops with 2.0. Starlin Castro and Jose Iglesias rank below Drew, but they are close enough that he wouldn't be a clear upgrade. We're left with six starting shortstops on whom Drew would be an upgrade, based on these projections: Jonathan Villar of the Astros, Derek Jeter of the Yankees, Ruben Tejada of the Mets, Pedro Florimon of the Twins, Alcides Escobar of the Royals, and Adeiny Hechavarria of the Marlins. Let's look at each situation individually.
- Astros: The Astros want to see what Villar, 23 in May, can do over the course of a full season. The Astros viewed the outfield as a place to potentially add a hitter, so they acquired Dexter Fowler in December. They also picked up first baseman/left fielder Jesus Guzman in another trade that month. For the Astros to displace Villar and give up the #33 pick in the draft, Drew would have to come at an extreme bargain. The Astros do not look like a fit, even if Drew would give them an extra win in 2014.
- Yankees: GM Brian Cashman told Peter Gammons in late December his team won't be signing Drew, which is a fairly rare comment on a specific free agent. Drew would only cost the #53 pick in the draft. But even if it makes some sense in a spreadsheet, adding him as insurance for Jeter could be controversial. Plus, the Yankees made a large commitment to Jeter and have more pressing needs right now.
- Mets: One rival GM thinks the Mets are feigning disinterest in Drew, according to Gammons, as he would be an upgrade on Tejada. Drew makes a ton of sense for the Mets, who would only have to surrender the #82 draft pick. The Mets are by far the best match for Drew.
- Twins: The Twins have spent $86.75MM on four free agents so far this winter, with 97% of that going toward pitching. Their draft pick cost would be #43, and I don't see why they wouldn't give Drew serious consideration. However, they seem set with Florimon.
- Royals: The Royals have spent big on free agents Omar Infante and Jason Vargas this winter, but don't seem interested in upgrading on Escobar even if they could afford Drew.
- Marlins: The Marlins have added four position players through free agency this winter, but they seem set with Hechavarria manning shortstop for years to come.
What about Drew's old team, the Red Sox? He may have less than 100 big league plate appearances to his name, but 21-year-old phenom Xander Bogaerts projects to be better than Drew in 2014. Re-signing Drew would mean not receiving a supplemental first round pick for losing him, so there is a cost in that regard. Drew makes sense if the Red Sox are wary of using Bogaerts and Will Middlebrooks as their starters on the left side of the infield, though.
It seems the Mets and Boras will continue to play chicken regarding Drew, but GM Sandy Alderson does have the upper hand in that no other suitor is emerging. It seems to be the right time for a Mystery Team to step in. One Hail Mary option for Boras could be to market Drew as a potential second or third baseman in 2014, for teams with entrenched shortstops. Once again, Boras is tasked with pulling a rabbit out of his hat on a free agent client.
Minor Moves: Quintin Berry
Here are today's minor moves from around baseball.
- The Orioles have announced the signing of outfielder Quintin Berry to a minor-league deal with a spring training invitation. Berry, 29, played for three different Triple-A teams in 2013, hitting .191/.309/.257 in 381 plate appearances between them. He also appeared in 13 regular-season games and three postseason games with the Red Sox. In 2012, he played in 94 games for the Tigers, during which he stole 21 bases without being caught.
Reds Unlikely To Make Big Moves
The Reds are unlikely to make any splashy moves this offseason, John Fay of the Cincinnati Enquirer reports. "It’s been very quiet," says GM Walt Jocketty. "I haven’t had one discussion with another team or an agent. That could change next week. But I think if we do anything, it will probably be a smaller type of deal." Fay notes that the Reds have no, or almost no, money left in their budget.
That means that the Reds are unlikely to re-sign Bronson Arroyo, and it also means they won't pursue higher-end free agents like Nelson Cruz and Stephen Drew, about whom Jocketty flatly says, "We don’t have the money."
One player the Reds could end up getting is former star Indians outfielder Grady Sizemore, MLB.com's Mark Sheldon reports. "We have [talked]," says Jocketty. "I'm not sure where that is right now. With the holidays, not much has happened." Due to injury trouble, Sizemore has not played since 2011, so if the Reds were to sign him, it would almost certainly be a minor-league deal.