The Rays are discussing a new long-term television contract with FOX Sports Net that would run through the 2033 season, John Ourand and Daniel Kaplan of Sports Business Journal report. According to Ourand and Kaplan, the contract still has some “hurdles the two sides have to overcome” but could come with an annual payout “around” $82MM per year.
It’s important to note that that’s an average payout and wouldn’t kick in immediately; as is typically the case with newly structured television contracts, annual revenue increases are gradual in nature. Ourand and Kaplan note that the Rays are receiving “close to” $35MM from FOX Sports Sun in 2018, which is the final year of their current contract. The contract presently being negotiated would up that sum to somewhere in the neighborhood of $50MM in 2019, per the report. Yearly revenues would then escalate over the remaining 14 years of the contract.
Obviously, a substantial increase in television revenue for any team is of note. But it’s particularly worth monitoring with regard to the Rays, who were recently under an ownership directive to cut payroll and drew the ire of fans and their own player. Cost-cutting moves that sent Jake Odorizzi to the Twins and Corey Dickerson to the Pirates didn’t bring much in the way of long-term value to the organization.
The Rays also traded longtime face of the franchise Evan Longoria to the Giants in a move that saved them at least $60MM, though in doing so they added a largely MLB-ready infield replacement in the form of Christian Arroyo and also avoided losing leverage with Longoria, who is set to earn 10-and-5 rights (i.e. full no-trade protection) shortly after Opening Day 2018. Steven Souza, too, was traded to the D-backs last week, though that swap brought the Rays more prospect value, and the team quickly signed Carlos Gomez for a sum that was actually slightly greater than Souza’s salary to fill the void.
That the Rays mandated even a moderate level of payroll-slashing with a $50MM BAMTech payout (received by all 30 teams) coming their way this offseason as well as an expected increase of ~$15MM in television revenue next winter won’t do anything to cushion the blow for those who were disheartened by the team’s slate of offseason moves. But television rights, at present, are a decidedly lesser source of revenue for the Rays than much of the league. Paired with some recent promising, albeit preliminary developments in the team’s quest to build a new stadium in the Ybor City neighborhood of Tampa, Rays fans have some reason for cautious optimism when it comes to the team’s long-term payroll outlook. (Or, at least, they have more cause for optimism than they have in quite some time.)
A 15-year deal covering the 2019-33 seasons at an average annual value of roughly $82MM would place the total value of the new television contract at more than $1.2 billion. Certainly, given that the two sides haven’t yet pushed negotiations across the finish line and reportedly still face some “hurdles,” it’s worth keeping in mind that those numbers are not set in stone. Negotiations should continue in March, Ourand and Kaplan report, adding that one complicating factor is 21st Century Fox’s sale of its regional sports network group to Disney — a transaction believed to be valued at a whopping $52.4 billion.
While definitely a bonus for the Rays, I’m concerned that the proposed deal is actually too long in length and will be considered too cheap well before it ends. A ten year would seem far more safe.
That’s actually an interesting point, and I hadn’t considered anything like that
If these tv executives were smart they would add provisions into the tv contracts that pretty much prevent tanking. Some language that pays higher % based on wins. More people will presumably watch on tv if the team is winning. If the rays know their tv money % gets cut somewhat then they might think twice about not trying their best to win every year.
No one tanks in baseball there is no big time advantage in drafting earlier
How can anyone say that when the two best teams in baseball today were built through lengthy tanking/rebuilding phases? Middling teams that keep trying to compete get nowhere fast (or rather, slow).
A team can benefit from the security of a longer deal too. There are relatively few threats and obstacles to the prosperity of the mlb right now. If in 5 or 8 years there’s a strike or some kind of scandal that torpedos interest in baseball nationwide, the Rays will be better off with a longer term deal.
I agree completely. The first thing that occurred to me was it was too long. It will wind up being a problem
Not much negotiating power after their fire sale
Their negotiating power hasn’t changed at all. Simply supply and demand. How many folks are offering Major League Baseball, or a reasonable facsimile, in San Diego?
Ah, appears I misread your intent. The argument is the same in Tampa. Having a monopoly is a beautiful thing, no?
Comcast is re-considering a bid for FOX’s RSN’s, to top Disney’s $52B offer for the media assets of Twenty-First Century Fox. (Which includes Rays’ RSN currently expiring 2019, YES..etc)
BTW, Regional Sports networks are going the same way as Blackberries.
There’s a reason FOX wanted out of this business. Wonder what happens when the Yankees-YES Network contract (Cash cow) deal, expires 2042? We’ll all probably be dead, right?
But here are some other assets, Disney will own, if deal goes through:
1) Fox Sports Arizona: Right to Broadcast Dbacks games through-$1.5B 20 year television contract– right to carry Dback games through 2035.
(Others.-Phoenix Suns, Arizona Coyotes, Phoenix Mercury, Arizona State Sun Devils, Look up the contract terms for each team yourself)
2) Fox Sports Midwest- (Cardinals $1B 15 year deal through 2032)
(Others-St. Louis Blues
3) Fox Sports Ohio- (Reds $1B 15 year TV deal through 2032)
(Others- Columbus Blue Jackets)
4) Sports Time Ohio: Indians ($400M 10 year deal through 2022 (Disney also gets 100% ownership)
(Others- Cleveland Browns: I felt bad looking up contract terms)
5) Fox Sports West: Angels ($3B 20 Year deal through 2031 (Others- Anaheim Ducks, Los Angeles Clippers, Los Angeles Kings)
https://www.forbes.com/sites/maurybrown/2017/12/05/how-the-reported-purchase-of-fox-assets-by-disney-could-save-espn/2/#270bc54335f4
Difficult to keep track of all the RSN’s Disney would add, and many of these terms are undisclosed. RSN networks were worth $20B+ in the $54B Fox-Disney deal alone. The link above is ONLY one I found that helped understand which teams Disney got the rights to through acquiring 22 RSN’s (The Rays one of them) Smart business extending Rays deal (expiring 2019) taking advantage of their poor 2018 outlook.
Yeah but it’s a 15 year deal. At the negotiating table they can easily argue the opposite. It’s hard to disagree that, for example, having another $86million to work with will hypothetically allow them to put a more competitive and intriguing team on the field than if they were trotting out Evan Longoria for his age 32-36 seasons.
Fire sale? The Rays have always let go or traded guys when that got close to being uncontrollable and are one of the nest organizations at developing young talent.
I hope the politicians and voters reject any public money for a new stadium.
I am legitimately interested finding out the last major sports venue that did NOT use public funds. For some reason I thought the 49ers’ Santa Clarita stadium was not publicly-funded, but I don’t have the time to look it up.
ATT&T last FULLY privately funded stadium. Most are now partial.
Thanks for the info.
If we are talking stadium financing it’s self, then your wrong. Busch stadium was fully funded by the Cardinals. State of MO paid for clearing the site and the city gave a break on ticket tax.
No Busch Stadium is privately financed too
The ongoing Wrigley renovations has not had public funding.
I am really trying to understand the the randomness of this post. It has zero to do with anything in the article.
And the article has zero to do with trade rumors, what’s your point?
Actually it has some to do with trade rumors. The Rays will potentially have more money to make trades or signings.
Next to Amazon, stadiums are small potatoes.
Rays are going to be the first team to have their games shown on Comedy Central..
Once again another who knows nothing about the Rays….Still in line to win 78/81 games or more than half of the rest of MLB……How would you like to be an Orioles fan,lock to lose 100 games, Marlins 100 games, Reds almost 100 games, A’s almost 100 games, Pirates 95, White Sox 95, Tigers 95, Do I need to go on further?
I am not sure on any of the numbers you threw out. I could see all the team’s you listed, except the Marlins, winning more games than the Rays. I try to be subjective. I am Yankees Fan and had them losing 85 to 90 last year. I understand being a diehard fan but I prefer to be realistic.
As a Yankee fan I can see the Rays finishing 3rd in the east. They have good young pitching even with Honeywell’s injury
How much does each team receive from the national tv contract?
With between 50mm and 82mm annually plus the revenue sharing they get from other teams, they better have saved up a good sum for the new stadium in Ybor. They sure aren’t spending it on players.
This actually serves up as great news for the Marlins. If Tampa can get a deal with AAV of $82MM, that will be great leverage for Bowers/Marlins.
Move the team to Montreal as they would draw a lot more fans. Florida does not seem to support their baseball teams.
Growth market in central west FL is the key. Near the top in population growth in N America. It’s about these TV contracts where revenue is driven at a faster rate than actually going to the game
The issue is both Florida teams are poorly managed and poorly located. The rays aren’t even located in an actual city. They’re on the edge of a little beach island about 40 minutes away from Tampa. They might as well be located in Hawaii.
The Green Bay Packers are located in a city of 100,000 roughly 90 minutes from Milwaukee, so what is your point?
8 games once a week to every other week vs 81 games multiple times a week. What was your point?
Yep, the 5th most populated city in the state of Florida, just a little nowhere beach town.
https://en.wikipedia.org/wiki/St._Petersburg,_Florida
Between Hillsborough and Pinellas counties, there are over 2.2 million people. The Rays stadium is a pit that is an impossible to get to area for the majority of fans, Ybor City is a much better location. Especially after the inevitable redevelopment around the new ballpark,
Uhh that’s terrible. Fifth most populated city? Think about that for second. That means there four places that would be more profitable in that state alone. Why would you expect success in the fifth worst market?
Reflect, I’m afraid you are mixing up the CITY of St Petersburg (granted, located on a very large peninsula), with the city of St Pete Beach (a small barrier island community located just to the west of mainland Saint Petersburg.
I’m not saying that Tropicana Field’s downtown St Peterburg location is good, but your geographical description was inaccurate. Trust me. I live here.
Tomato tomato. I live by there also. You’re right that it’s technically a peninsula. Feels like an island though. Water everywhere, only accessible via bridges etc. etc.
Move the stadium to a place logistically not a nightmare to travel to and from, and build a stadium that isn’t a disaster and watch attendance jump 25-30% you go to a 7pm game better leave you me house in Tampa at 3/4 and plan on getting home at 2/3 in the morning
Admittedly, I’m no expert on the market, but…these long term deals on a platform that the public has been navigating away from in recent years, seem to bank on optimism.
It’s no secrets that many TV networks have been slow to jump aboard the streaming freight train – it’s incredibly difficult to change the attitudes of archaic network executives who remember when cable boomed all those years ago.
It’s difficult to predict the state of consumerism a few years ahead, let alone into the 2030’s.
I agree there is some cautious optimism for Rays fans when looking long term. Potential new stadium, potential new tv deal (though more tricky to know if this will help with streaming becoming so popular), and a strong farm system. Rays will be underdogs the next few years, but I don’t think it’s too crazy to believe they will be a good team again in the 2020’s
Generally a good article, but the last paragraph is rather misleading when it states that “one complicating factor is 21st Century Fox’s sale of its regional sports network group to Disney — a transaction believed to be valued at a whopping $52.4 billion.”
The $52.4 billion announced (but not closed) transaction is for large package of Fox assets, of which the regional sports networks are only one part. Specifically, the other assets in the deal include the Fox film and TV studios, some other cable networks (FX, FXX), partial ownership in National Geographic Partners and Hulu, and extensive international assets (a stake in Sky satellite TV, Star TV India). To imply that just the Fox regional sports networks are being sold for about $50 billion is not at all correct.
If the deal is approved, Disney will own 80% of YES Network and have the rights to carry Yankee games through 2042. YES is but 1 RSN. There’ are 22 RSN networks worth $20B+ in the $52.4B Fox-Disney deal.
It’s easier to say Disney paid $52.4 Billion for every asset Fox owned other than:
1) Fox News
2) Fox Sports 1 & 2
3) Fox Business
4) Big 10 Network
5) Fox Broadcast Channel
While $52.4B is accurately reported, Disney assumed $13.7B of Fox’s net debt, so the deal’s worth $66.1B.
It’s less of a bonanza than most think. All the revenue the Rays generate locally (i.e. TV money) just gets deducted (in a round about way) from their Revenue Sharing income. So the net gain, and money available for payroll;, is next to negligible…….