The Reds and FOX Sports Ohio have agreed to a 15-year extension of the current television contract, which will now run through the 2032 season, reports Zach Buchanan of the Cincinnati Enquirer. Their current contract had been set to expire at the end of the 2017 campaign.
Terms of the deal weren’t disclosed, but Reds COO Phil Castellini stated Wednesday that the extension will provide the Reds with a “nice increase” in their yearly rights fees, per Buchanan, which currently pay the team about $30MM annually. The contract also comes with an unspecified equity stake in the network for the Reds. However, Castellini also indicated that the Reds’ new television contract is still a small-market deal relative to monster contracts signed by other teams in recent years. The D-backs and Cardinals, for instance, each signed new television contracts that were valued at more than a billion dollars over the past three years (1.5 billion in Arizona’s case).
As Buchanan points out, though, the fact that Castellini somewhat downplayed the size of the deal doesn’t mean it can’t afford the team with a substantial increase. The Padres, he observes, play in the 28th-ranked U.S. television market but still landed a 20-year television contract worth one billion dollars back in 2012. The Reds, who play in the 34th-ranked market, likely fall shy of that deal but could still see a marked uptick in yearly television rights fees.
Castellini notes that the dip in the team’s attendance (and, subsequently, overall revenue) impacted the talks somewhat, but he stressed that all of the added revenue will go toward improving the on-field product. “…[A]s you all know, we budget this team to break even,” the COO explained. “We don’t pull any money out of the franchise. So we will continue to reinvest all topline revenues back into the product, and we define the product as player development, scouting and the major-league payroll, everything that goes into what (general manager) Dick (Williams) does to put the team on the field as well as the game-day experience at Great American Ball Park.”
Reds fans probably shouldn’t anticipate an immediate hike in the payroll, however. For starters, the team is still in the midst of a rebuilding effort that began in 2015, and it’s unlikely that they’ll make a large splash on the free-agent market (especially in a weak year for free agency). Secondly, as has been the case with other television contracts around the game, the increases in revenue are built in gradually as opposed to one mammoth leap in the first year of the deal. Specific details on the nature of those increases remains unclear, but it’s worth noting that the Reds haven’t exactly operated like many other small-market teams around the game. Cincinnati, for instance, averaged a $112.1MM payroll from 2013-15 and signed players like Joey Votto, Brandon Phillips and Homer Bailey to significant contract extensions (albeit with varying levels of success). The team has also been aggressive on the international market at times, signing Aroldis Chapman to a six-year, $30MM contract as a free agent that proved to be one of the game’s great bargains over the life of the pact. Likewise, Cincinnati inked right-hander Raisel Iglesias to a seven-year, $27MM contract that looks like a promising investment to this point as well. Currently, the Reds project to have an $88.5MM payroll on Opening Day next year, though that figure will of course change due to their offseason maneuverings.
Per Buchanan’s report, the Reds looked into the possibility of establishing and operating their own regional sports network, but it was deemed too difficult to get off the ground, specifically due to potential difficulties in negotiating distribution fees with cable providers and ensuring that the network would be accessible enough for fans.