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Warner Bros. Discovery Planning To Leave RSN Business

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Warner Bros. Discovery, the owner of AT&T SportsNet and a minority shareholder of Root Sports, has informed teams it’ll cease participating in the regional sports network business, according to reports from John Ourand of Sports Business Journal and Joe Flint of the Wall Street Journal. WBD has local broadcasting agreements with a handful of teams in MLB, the NBA and the NHL.

The MLB teams affected are the Rockies, Astros and Pirates. The Mariners also have a relationship with Warner Bros. Discovery; Ourand writes the Mariners own 60% of their Root Sports Seattle venture, with WBD owning the other 40%. However, Flint reports the Seattle regional sports network is not part of WBD’s ongoing proceedings.

Ourand writes that the channel has informed teams they’ll have until March 31 to reach an agreement to reclaim their broadcasting rights from the RSN’s; if no deal is agreed upon, the networks are expected to liquidate via Chapter 7 bankruptcy. Flint quotes from WBD’s letter, which told clubs “the business will not have sufficient cash to pay the upcoming rights fees” and proposed for teams to retake ownership of broadcasting rights for no purchase price beyond a relinquishing of civil claims against the networks.

Colorado, Houston and Pittsburgh join the list of nearly half the teams facing some uncertainty about the potential bankruptcy of the Diamond Sports Group that operates the Bally networks. Diamond, which is responsible for broadcasts of 14 clubs, missed an interest payment to creditors last week and is evaluating whether it’ll be able to abide by its own broadcasting deals.

The difficulties facing both conglomerates come in response to declining rates of cable ownership. Cord-cutting has increased significantly over the past few years and is expected to continue given the rise of streaming alternatives. Warner Bros. Discovery provided a generic statement to Ourand alluding to financial problems: “AT&T SportsNet is not immune to the well-known challenges that the entire RSN industry is facing. We will continue to engage in private conversations with our partners as we seek to identify reasonable and constructive solutions.”

The franchises’ next steps are unclear. Commissioner Rob Manfred told reporters last week the league would be in position to take over in-market broadcasts, if necessary, from the Diamond-operated networks. That’s presumably also true of the three clubs affected by WBD’s decision. There’s no indication fans in those markets should be concerned about forthcoming blackouts because of the RSN collapse. Ourand reports that WBD informed clubs it’d allow them to use the same production staff/equipment of the current agreement if those teams agree to reclaim their broadcast rights.

Nevertheless, events of the past few weeks have highlighted questions about the long-term viability of the regional sports network setup. WBD’s withdrawal from RSN’s affects only one-tenth of MLB teams, but the ongoing Diamond uncertainty could put many more in a difficult position over the coming weeks.

MLB Monitoring Diamond Sports Group Uncertainty

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Diamond Sports Group, the corporation which owns the Bally Sports networks responsible for local broadcasts of a number of MLB teams, forewent interest payments worth roughly $140MM to creditors last Wednesday (Associated Press link). The decision kicked off a 30-day window for Diamond to determine whether it is capable of meeting its debt obligations or is going to default on its commitments.

The missed payment came as no surprise, with various reports noting Diamond’s rough financial situation for months. Should the corporation default and potentially file for bankruptcy, it’d likely have a few options: honor its existing contractual commitments, withdraw from the deals, or attempt to renegotiate its contracts at more manageable rates. Diamond has separate broadcasting deals with all 14 MLB clubs* with which it has contracts; renegotiations, if things come to that, would be at a team-by-team level rather than in any kind of package deal.

There’s still plenty to be determined about the company’s next steps. Its precarious financial position places a great deal of uncertainty about the stability of local TV rights for the clubs that have contracts with Diamond, however. Commissioner Rob Manfred addressed the situation at last week’s owners meetings, noting that the league is exploring alternatives to make sure those teams don’t lose in-market broadcasting (link via Alden Gonzalez of ESPN).

“Obviously, our first choice would be that Diamond pay the clubs what they’re contractually obligated to pay them, but because I guess I’m a contingency planner by nature, we are prepared no matter what happens with respect to Diamond to make sure that games are available to fans in their local markets,” Manfred said. “We think it will be both linear in the traditional cable bundle and digitally on our own platforms, but that remains to be seen. … Our first hope is that Diamond figures out a way to pay the clubs and broadcast the games like they’re contractually obligated to do.”

The league makes most out-of-market games available to subscribers to its MLB TV package. However, clubs’ local broadcasting deals supersede the league platform, leading to blackouts of in-market games on MLB TV. Manfred broadly indicated a desire to eventually permit MLB TV consumers to purchase various broadcasts both within and out of market (via Hannah Keyser of Yahoo! Sports), though that certainly won’t happen on a league-wide level anytime soon.

MLB has already branched out into various streaming deals. The league agreed to contracts with Apple and NBC for broadcasting arrangements on those companies’ respective streaming services last year. It certainly wouldn’t be a surprise to see MLB negotiate similar deals with other platforms over coming seasons. Those contracts — paired with various postseason TV deals, including a new broadcasting contract with ESPN tied to the creation of the Wild Card round in the most recent CBA — highlight the kind of national revenue bases the league will certainly continue to explore outside the realm of local broadcasting. Nevertheless, the uncertainty with Diamond is sure to be an area of concern within the league office over the coming months.

Diamond first purchased various regional sports networks, which had been under the Fox Sports moniker, from Disney in 2019. The company reportedly took on roughly $8 billion in debt to facilitate that transaction. As Travis Sawchik of The Score explored last month, rates of cable ownership have dropped precipitously over the past couple years, contributing to Diamond’s revenues falling short of its expectations. Declining cable rates are generally expected to continue in the future given the ongoing rise of various streaming platforms.

Concerns about a potential default have raised questions about the player payrolls for the teams that rely on local broadcasting fees from Diamond. It’s still too early in the process for clubs to have a firm idea if/how Diamond’s situation will affect player spending, though it’s something those organizations are surely monitoring.

Cardinals’ chairman Bill DeWitt Jr. addressed the situation shortly before Diamond failed to make its February 15 interest payment, for instance. “It’s a concern and a fluid situation, there’s no question about it,” he said last week (link via Derrick Goold of the St. Louis Post-Dispatch). “Something is going to happen sooner rather than later. It’s a big part of our revenue stream. We have nice rights fees. The (RSN) model is at risk. We’re operating like, no, it’s going to stay, but the reality is there’s going to be change.”

The situation has led to concerns about the possibility of a lowered salary cap in both the NHL and NBA. Those leagues, which have player spending fixed to league revenues as part of their respective collective bargaining agreements, each have a number of clubs with broadcasting agreements with Diamond. MLB, of course, has no salary cap. The MLB Players Association has steadfastly resisted any hard limitations on team spending throughout past CBA negotiations.

Questions about a potential league push for a cap arose again over the weekend. MLB created an Economic Reform Committee, which the commissioner indicated was in response to both this ongoing local TV uncertainty and more longstanding concern about revenue disparities between franchises. There’s little chance of the MLBPA entertaining a cap during the next round of collective bargaining negotiations in 2026, however. That would’ve been true regardless of the status of local RSN contracts but seems apparent as ever in light of the questions facing those cap leagues.

* The Angels, Braves, Brewers, Cardinals, Diamondbacks, Guardians, Marlins, Padres, Rangers, Rays, Reds, Royals, Tigers, and Twins are all broadcast by Bally.

MLB, NBC Sports Have Discussed Potential Broadcasting Partnership

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Major League Baseball and NBC Sports have had discussions about a possible broadcasting agreement for the 2022 season, reports Andrew Marchand of the New York Post. No deal has been finalized. If an agreement were to get across the finish line, Marchand writes that most of the games would be streamed. NBC would handle a few network broadcasts — its first in more than two decades — but the majority of the coverage would run through Peacock, NBC’s streaming service.

It marks the second possible broadcasting agreement in as many months for MLB, which come on the heels of a reduction in the number of weeknight broadcasts on ESPN. Marchand reported in mid-January the league was also in discussions with Apple that would see some games broadcast on that company’s streaming service, Apple TV+.

The Apple contract has yet to be finalized, Marchand hears, although he writes that ultimately “the expectation is that Apple and NBC would both be involved this year.” The league is targeting a combined sum in the $100MM — $150MM range between those two potential arrangements, with Apple expected to foot the majority of that bill.

Those potential broadcasting agreements are obviously set against a backdrop of broad uncertainty about the 2022 season itself. The parties are amidst their eighth straight day of collective bargaining negotiations as the lockout drags on. Latest reports cast a glimmer of hope as the sides have made some progress on key issues, but there remains plenty of ground to cover for a deal to be reached. The league has maintained that a CBA must be in place by tonight to avoid cancelation of regular season games. It remains to be seen whether late-night progress would mollify MLB’s stance, but the league expressed a willingness to lose a month’s worth of regular season contests during talks this afternoon.

MLB, Apple Reportedly Discussing Broadcasting Rights

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According to a report from the New York Post’s Andrew Marchand, Major League Baseball has recently engaged in “serious” and “substantial” talks with Apple with regard to weeknight broadcasting rights, specifically to the Monday- and Wednesday-night package previously aired by ESPN. Should a deal be reached, Apple would presumably broadcast the games on Apple TV+, the company’s subscription streaming service that competes with Netflix, Hulu, Disney+, and Amazon Prime Video, among others. Apple, the world’s most valuable publicly traded company, recently attained a $3 trillion market valuation.

Though the move wouldn’t exactly represent something wholly new for MLB — regular-season games have been carried on YouTube, Facebook, and Twitter in recent seasons, and speculation that MLB might seek to sell the games ESPN had dropped has been rampant since the network’s new deal was announced — it would reflect a shifting sports media landscape. Amazon, a direct competitor with Apple in several arenas, recently reached a deal with the NFL to poach Thursday Night Football from Fox to the tune of $1 billion per season, and NBC has made many Premier League soccer matches available exclusively on Peacock, its own streaming service. MLB also operates its own highly successful streaming service, MLB.tv, which logged a record 10 billion minutes of viewership in 2021, per an October press release. Neither Apple nor MLB have yet commented on the reported talks.

Though the size and scope of a potential deal are presently unclear, it’s unlikely the package would approach the $1 billion mark that Amazon agreed to pay the NFL. While the approximately 60 MLB games ESPN has relinquished dwarf the 18 NFL games Amazon will receive, national viewing habits (and consequent broadcast values) differ greatly between the sports. For reference, per Tom Bassam of SportsPro Media, ESPN paid MLB $700MM annually for the right to a 90-game package and from 2022 will pay an annual fee of $550MM to retain Sunday Night Baseball (roughly 30 games) as well as the Little League Classic, the opening night game, the Home Run Derby, and either all Wild Card series games (should the new CBA include a playoff format similar to 2020’s) or one of two Wild Card games and eight additional regular-season games (should the existing playoff format remain in place).

Still, should a deal be reached, it would almost certainly represent a substantial cash infusion for a league presently at a standstill in CBA negotiations that center largely on the share of revenue retained by owners and that paid to players. In any event, should such a deal come to fruition, it’s very unlikely to be the last of its kind.

Gold Glove Nominees Announced

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The 2020 Rawlings Glove Glove Award finalists have been released, with the Cubs netting the most nominations with seven. The Mets, Nationals, Phillies, Brewers, Rays, and Red Sox were shut out.

The awards for defensive prowess will be handed out based on defensive metrics alone this year, since managers and coaches weren’t able to see players outside their regional bubble. Moving to a metrics-based system, even for a year, certainly make for interesting television, especially since these awards can make an impact on arbitration cases. Considering the uncertainty of a 60-game season, awards could carry greater weight than usual in those proceedings, thought that’s just speculation. Without further ado, here are this year’s nominees:

AL Pitcher

NL Pitcher

AL Catcher

NL Catcher

AL First Base

NL First Base

AL Second Base

NL Second Base

AL Third Base

NL Third Base

AL Shortstop

NL Shortstop

AL Left Field

NL Left Field

AL Centerfield

NL Centerfield

AL Right Field

NL Right Field

Nicky Lopez of the Royals was originally left off the list, but he is in fact a nominee at second base, one of four nominations at the keystone in the American League. It’s the only position with four nominations.

There are a few other interesting things of note. Perennial candidates like Andrelton Simmons and Matt Chapman did not make the list this year due to shortened seasons, nor did last season’s Outs Above Average leader Victor Robles. Both Gurriel brothers earned nominations this year, with the younger Lourdes (LF) joining perennial candidate Yuli (1B).

There are also a couple of largely part-time players that made the cut, like Hoerner of the Cubs and Mendick for the White Sox. Neither was the everyday second baseman, but they did reach the inning minimum of 265 total defensive innings. They qualified at second because that’s where they played the most innings. Mendick, for example, registered just 226 innings at second, but with 27 innings at third and 15 at shortstop, he ended the year with 268 total defensive innings played.

Catchers required a minimum of 29 games, which is how we got a pair of White Sox catchers making the top-3. Pitchers had to throw a minimum of 50 innings.

The winners will be selected using the SABR Defensive Index and announced on November 3rd, per sabr.org.

The Obstacles Of Televising MLB Games Without Fans

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As other major sports leagues consider the possibility of televising games played in front of empty stadiums, Major League Baseball would love to do the same. The reality of the situation is that even quarantining teams in Arizona or Florida don’t solve all the issues. Too many obstacles remain to make such an arrangement safe under the current conditions, per The Athletic’s Ken Rosenthal. With the amount of asymptomatic carriers unclear, there’s no way to guarantee the health and safety of those involved. There are simply too many moving pieces. Even the most bare bones operation for a single game would involve 52 players, plus coaches, umpires, television crews, hotel accommodations, food service workers, drivers, etc.

There would be financial hurdles as well, mostly in terms of allocating the television money. The fact is, a huge proportion of game day revenue comes from fans in the stadium. Without fan revenue, there would have to be a conversation between the league and players about the players taking reduced pay. Teams would not be able to pay players at their normal rates, and while the league and the players’ union have worked diligently at forming peaceful accords throughout this trying time, the amity alone does not smooth all the edges.

Besides, the revenue from TV contracts would not be able to cover the costs, per Kevin Acee of the San Diego Union Tribune. Acee notes that those teams with their own television networks might be able to make enough for the games to be worthwhile, but for those negotiating with local networks, there would likely be a further reduction in revenue. With the terms of original television contracts altered under the circumstances, the contracts themselves would likely require a renegotiation as well. There have been a few games without fans (or with few fans) aired over the years, and the end product is always a little bit eerie. It might be better than nothing under the circumstances, but where revenue is concerned, every adjustment has trickle down effects that must be negotiated throughout the invested parties.

And of course, there’s the final, most important obstacle, which I’ll relay directly from Rosenthal: “Diverting resources from health care would be another concern. Baseball would need to conduct wide-ranging testing for the virus, isolate anyone who gets sick and provide proper medical attention. Such an effort would require outside assistance, the kind of resources the league could not justify drawing away from the general population in the middle of a public health crisis.”

Quick Hits: Angels, Ohtani, Rojas, Revenue, Lefties

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A few brief words of update on the Angels. Billy Eppler said during a press conference call that the team is considering various options for Shohei Ohtani this season, including “delaying him a little bit”, relays Jeff Fletcher of The Orange County Register (link). We’ve already heard that the club plans to keep him on an NPB-esque pitching schedule this season as he continues to work back from Tommy John surgery, but it’s uncertain if “delay” in this case means he’ll be held out of action late into Spring Training, or further.

Meanwhile, Maria Torres of the LA Times reports, from that same call, that Eppler acknowledged that the team “can add” to its already “strong” group of pitchers (link). That’s not a definitive statement, and the club’s opportunities to add might be dwindling now that one more arm is off the open market as of Saturday evening. Torres also reports that 26-year-old prospect Jose Rojas will receive an invite to big league camp this spring after a Triple-A season in which he hit .293/.362/.577 with 31 home runs.

More from around the game…

  • Declining attendance be damned—MLB’s revenue streams are flowing fine. According to a Saturday piece from Forbes, gross revenues for the league were a record $10.7 billion for 2019, up from $10.3 billion last year, according to industry sources who spoke on the condition of anonymity. And the upward slant should continue in future years; as noted by Forbes, the league’s deal with Fox television kicks in during the 2022 season and that deal alone has a reported value of $5.1 billion. For those wondering, MLB player payroll and benefits came in at $4.7 billion last year—leaving plenty of pie to go around for administrators, front-office types and ownership figures. The league has seen adjusted revenue growth of 386% since 1992.
  • ESPN’s Sam Miller took a closer look at the forthcoming thee-batter rule, including its real-life implications for several veteran LOOGYs. Miller coins the term “Ollies” (in honor of Indians journeyman Oliver Perez) to represent any appearance that is set to be outlawed under the new rules–which require that pitchers face three batters or get the final out of an inning before being replaced. Perez led the league with 22 such “Ollies” in 2019, while Andrew Chafin, Alex Claudio and Adam Kolarek all logged 15 or more such appearances. Of course, the forthcoming change didn’t stop the Brewers from re-signing Claudio earlier this offseason, so we can all rest assured that left-handed specialists aren’t going anywhere for the time being.

NL Notes: Bumgarner, WGN, Cubs, Phillies

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Madison Bumgarner has made his last pitch of the 2019 season – and perhaps his career as a San Francisco Giant. The free-agent-to-be would have been in line to start Sunday’s season finale, but manager Bruce Bochy says they’ll watch the game together from the bench, per Kerry Crowley of the Mercury News. Sunday will be the last game of Bochy’s prodigious career as well, and it will be appropriate to take in the game alongside Bumgarner, with whom he won three world championships. If Bumgarner does move on this offseason, he will finish his career in San Francisco with a 119-92 record and 3.13 ERA/3.32 FIP across 1,846 innings – 8th on the Giants all-time bWAR leaderboard. Still just 30-years-old, Bumgarner wraps up 2019 with a 3.90 ERA/3.91 FIP while eclipsing 200 innings for the seventh time in his career. As the penultimate day of the 2019 season gets under way, let’s check in on a couple other teams from the senior circuit…

  • The Cubs say goodbye to WGN this week, the beloved television network known as the home of Cubs content for the last 72 years. The long-awaited Marquee Sports Network launches next year, but the revenue streams won’t provide real kickback for a couple of years, per Paul Sullivan of the Chicago Tribune. The long-promised “wheelbarrow full of money” won’t be arriving at Theo Epstein’s baseball operations department from day one, but neither does Epstein see the new television deal affecting baseball decisions. Said Epstein, “We want to win the World Series. But it’s not because of the TV network. That’s the goal. It’s unrelated. There’s a wall between baseball decisions and anything related to the TV network.”
  • Trust is a process, and first-year Phillies pitching coach Chris Young understands that process takes a little longer with suboptimal results, per The Athletic’s Matt Gelb and Meghan Montemurro (subscription required). Young’s job was made all the more difficult when players bristled at the dismissal of his predecessor Rick Kranitz. Young’s analytics-driven philosophy was in lockstep with manager Gabe Kapler, but Philly pitchers are taking longer to buy-in, in part from its perception as an inflexible top-down approach. It was a frustrating season on the whole for Philadelphia’s pitching staff as the team regressed to 2017 levels after taking a big step forward in 2018.

Odds & Ends: Isringhausen, Sturtze, Molina

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Some Sunday morning Odds & Ends:

  • So, whatever happened to Tanyon Sturtze? Sturtze never caught on with the Dodgers and was granted his release on May Day last week. Nick Cafardo of the Boston Globe says he is now considering retirement to spend time with his kids.
  • In the same piece, Cafardo reports Giants catching prospect Buster Posey has busted five homeruns and notched 22 RBI already in Single A San Jose, putting him on "a fast track to the big leagues." With Bengie Molina entering free agency, the Giants will not feel forced to re-sign him. According to Cafardo, the team would love to retain Molina to act as a mentor for Posey but for the fact that "Molina isn't ready for the mentoring role." Molina told reporters he'll seek a starting job. Finding one should be no trouble whatsoever.
  • Also in that same piece, former player Troy O'Leary is developing a baseball reality TV show…
  • According to Marc Lancaster, Jason Isringhausen is healthy. His rehab assignment is up May 19 but the Rays seem hesitant to call him up until then. With 10 days to determine what to do with him, it's expected Izzy will slot into the bullpen for Triple-A Durham until the Rays have to make a decision.
  • Anthony Castrovince of MLB.com says Luis Vizcaino will join the Indians bullpen this week rather than go through a minor league stint in Triple-A Columbus. Vizcaino hasn't pitched in a game since April 21, right before the Cubs designated him for assignment and released him. Who gets sent down instead? Jensen Lewis or Tony Sipp both have options. Masa Kobayashi is a candidate to be released altogether, says Castrovince.

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