FEB. 23: The total value of the contract is now believed to exceed $1.5 billion, and it also contains an equity stake in the network, Piecoro writes in a followup piece. Piecoro spoke to D-Backs CEO Derrick Hall, who said that while the team stands to benefit financially, there won’t be a sudden increase in spending late in the offseason. The Diamondbacks have been spending this offseason under the assumption that this deal would be completed, Hall explained. While there’s a signing bonus with the contract, increased rights fees won’t kick in until next year.
Hall called the contract “game-changing” for his team, adding: “It puts us on par with a lot of our colleagues. Any increase in revenues, as we’ve said in the past, will go directly toward our (organization). It will help the franchise. It will help the product on the field.”
FEB. 18: The Diamondbacks and FOX Sports Arizona have agreed to a new television contract that is believed to be worth more than one billion dollars in total, reports Nick Piecoro of the Arizona Republic.
Arizona’s current television contract, which expires at season’s end, has an average annual vaue of about $31MM per year, Piecoro notes. He adds that the new contract is believed to at least triple that amount. It’s unclear how much the total value of the contract is, because the length of the deal isn’t currently known, but club officials have recently said they were discussing lengths in the 15- to 20-year range. Piecoro reports that there are indications that the new deal is indeed in line with those previously discussed parameters, which would suggest the total value is at least $1.4 billion.
Piecoro writes that the impact on the team’s payroll isn’t immediately known, though as he points out, the increased revenue won’t vault the D-Backs into the division-rival Dodgers’ financial stratosphere. The Dodgers’ TV deal averages out to roughly $334MM annually, according to a Forbes report from March 2014, trailing only the Yankees, whose annual revenue from the YES Network averages out to about $385MM.
Recent examples of this type of mega-contract include the Rangers, Mariners and Phillies, each of whom have AAVs in excess of $140MM, per Forbes. Piecoro notes that since the Rangers signed their 20-year, $1.7 billion deal in 2010, nearly a third of the teams in the league have inked similar contracts. Per Forbes, the previous top 10 television revenues belonged to the Yankees, Dodgers, Phillies, Rangers, Angels, Mariners, Mets, Red Sox, Giants and Padres.
It should be noted that the increased revenue won’t necessarily be distributed evenly over the duration of the contract. As MLBTR’s Jeff Todd pointed out last year in assessing the Phillies’ new television contract, Philadelphia’s TV revenue did not immediately jump to the $100MM average of their 25-year, $2.5 billion agreement. Rather, the increase was built in incrementally, with a three- to four-percent annual bump slowly building over the course of the deal. Jeff estimated that the Phillies’ first year under the new contract produced roughly $65MM in revenue (before factoring in equity stake and ad revenue), and it’s very possible that the D-Backs’ new contract is structured in a similarly incremental fashion. So, while the roughly $60MM discrepancy between the AAVs of contracts old and new may cause D-Backs fans to envision an enormous spending spree next winter, the team’s $92MM payroll may increase in a more gradual sense than those mean figures would initially suggest.