Some readers in the comments thread of the last post brought up some very intelligent points about where the future of this whole regional sports network (RSN) cash giveaway could be leading.
One of them stated that if all teams cash in on new deals, that will simply lead to inflation and keep the status quo with players merely earning higher salaries.
Yes, that would be true if all teams operated in a vacuum. But Major League Baseball doesn’t work that way. Has never worked that way. It has always been a game of changing business evolution where the sharpest owners are on the lookout for the next big thing and aware of the pratfalls that lie ahead.
For one thing, these TV deals are going to be staggered. Some teams are re-setting theirs as we speak. Others have several years to wait.
And the quality of the deals to come — not just the obvious raise teams will get — is going to have a big impact on the future of what franchises will be able to do on the field. This is why, when I discuss the Mariners, I never assume the current ownership is going to be the one leading the team into this brave new version of an old baseball world.
It’s going to take plenty of foresight and some commitment by any Mariners ownership group to maximize the coming TV deal and set itself up for years to come. Nothing is guaranteed.
For example, Angels owner Arte Moreno positioned himself to max out on his TV deal and capitalize on the competitive nature of the Los Angeles market by investing heavily in his team throughout the past decade. While some people were scoffing at Moreno for bloated payrolls that enabled the Angels to remain competitive — while not necessarily getting the best bang for their buck — he was building a long-term brand. When the RSN market exploded, Moreno’s brand was best-positioned to capitalize.
In Texas, the Rangers were able to negotiate an up-front payment on their TV deal, even though it doesn’t begin until 2015. Implicit in that deal, no doubt, was that the team would use the money to better the on-field product and sustain a winner so that the TV product would be good for years to come. Also, the Rangers were the first to capitalize big on the fact that — unlike the rest of TV — live sports programming has become the last refuge for advertisers afraid that their viewers will fast-forward through commercials.
So, it’s possible the Rangers simply got their deal because they were lucky enough to be first in line for renewal.
The Mariners won’t have that advantage. But there are things they can do to better any cash windfall they get from TV.
Photo Credit: AP
One of the biggest might be in how they define their own market. Are the Mariners prepared to accept their status outside the top-third of all TV markets in baseball and the money associated with that?
Or, will they embark on a more ambitious plan and define themselves as a major regional player nationwide. If the Mariners actually did try to market themselves as a multi-state, multi-nation franchise as opposed to just a product for Seattle, Tacoma and Bellevue residents, what would that make their TV viewership base? Top-10? Top-5? There are no hard and fast rules.
As the USA Today story we referenced earlier on states, it’s up to the teams themselves to best maximize their TV deals. Some will try to expand their market. Others will try to secure more ownership points in networks, or even form their own network to maximize revenues. The Detroit Tigers aren’t exactly in a major U.S. market. But if they start winning AL championships and even a World Series behind a marquee player like Prince Fielder, they will be positioned to score a much bigger TV deal than if they merely sit back and finish second or third behind a bunch of no-names.
There are no guarantees with anything in baseball.
And yes, as some readers noted, what teams like the Tigers and Angels have also done with their Fielder and Pujols contracts is hedge their bets against inflation and where they see salaries going for superstars. Fielder’s agent, Scott Boras, relies on this reality to keep generating eye-popping contracts for his clients.
Because if indeed these TV mega deals are going to impact salaries down the road, both the Tigers and Angels may have what will be viewed as cost-effective contracts for their stars in five or seven years’ time. Remember, everybody laughed at the $252-million deal Alex Rodriguez signed with Texas back in 2000.
They laughed at the Yankees for taking on that deal starting in 2004 and then for adding the hefty Mark Teixeira and C.C. Sabathia contracts later on. But look at the yearly revenues for the YES Network, run by Yankee ownership and taking in over $400 million per year. Who got the last laugh? You think the YES Network would be doing that well if the team spent the past decade finishing third behind a bunch of cost-effective no-names?
Time to wake up.
There is making money in baseball, which every team pretty much does. And there is making big money and sustaining a quality product for years.
No, this TV stuff is not a guarantee of everlasting success. Nothing ever is.
Look at the Toronto Blue Jays, who built one of the best multi-purpose stadiums the world had ever seen back in 1989 when they opened the SkyDome. They thought they had figured it all out and for a few years, they had, with attendance soaring to record highs.
But in only a couple of years, the venue was outdated. It was eclipsed by Camden Yards and the new vision of what baseball stadiums would be for the next 20 years.
For a closer look at how things can go “Poof!” let’s check out the Mariners and their own TV deal with ROOT Sports. Back in 2007, the 10-year, $450-million deal they signed was supposed to be an industry trend-setter.
Within two years — two years before the new deal even kicked in — the team was cutting payroll, it’s owners reeling from stock market woes, and the deal was about to become outdated.
That’s baseball. Major League Baseball, the professional, business-oriented kind.
It is constantly changing, requiring even the shrewdest of owners to re-evaluate and recalibrate in order to best set themselves up for years down the road.
Not all of the 30 teams are going to be able to capitalize on TV revenues like the Rangers and Angels have. Some might do better. And some might do worse. Most importantly, they all won’t be doing it at the same time.
If you ask me what the constant is, it’s that teams that position themselves as a strong business brand are best able to survive the down points and capitalize on the high ones. Remember, the Yankees and Red Sox were among the last teams in baseball to not have converted their ballparks to the newfangled, luxury-suite-oriented venues that swept through the game the past 20 years.
And yet, they kept surviving and thriving. How? Shrewd owner investment in other areas and consistent on-field winning.
Teams like the Yankees, who finally opened their new ballpark three years ago, used it to further pad the value of a strong brand they already had. They didn’t use it as a crutch to sustain their operations.
Nor are the Angels using their new TV deal as a crutch. They already built their brand over the past decade, even when people didn’t always think their expenditures were cost-effective. And now, they are reaping the rewards.
For the Mariners, their new TV deal will be just part of the answer. If they use it as a crutch to survive the next 10 years, there is a risk they will never really get any better than they’ve been the past decade.
Which is why, in my book, it’s never a good idea to write off entire seasons at a time from a competitive standpoint. The good teams are always building their brands, not purposely allowing them to erode.
Whatever happens down the road for this team will require committed ownership willing to invest in their brand over the long term. It starts with getting the best TV deal possible, assuming it won’t be among the best forever. And then, it will take added commitment beyond that to put the best possible team on the field.
We’ll soon see whether the current owners are up to the challenge.