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April 16, 2013 at 12:17 PM

Mariners confirm they have assumed controlling stake in new local TV partnership

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ADDITIONAL NOTE: If you missed last night’s edition of The Geoff Baker Show on Sports Radio KJR, you can hear it by clicking the box above.

Well, this is certainly a game-changer on the TV front that we’re seeing today, with the Mariners now confirming our earlier post that they have indeeed assumed a controlling stake in a new regional sports network (RSN) partnership with DirecTV — the company that owns and operates ROOT Sports — that will run through the 2030 baseball season.

The RSN will continue to operate under the ROOT Sports brand, only DirecTV will now be the minority partner in this Northwest branch of its operations. The other RSNs owned by DirecTV in other parts of the country remain unchanged.

“This is great news for the Mariners and for sports fans in the Northwest,” Mariners executive VP (business operations) Bob Aylward said in a release. We are excited to continue our partnership with DIRECTV Sports Networks in this new way. We are investing to own a majority share of the new venture, and committing our rights well into the future, confident that this will maximize the value of our television rights and, more importantly, provide the resources to remain competitive on the field for many years to come.”

What that means is, the Mariners will now not only own and control their television rights, but all the on-air content and distribution of their games and will be able to reap the same benefits as other teams that have gone down this same path. In their own division, they’ve seen the Angels and Rangers already score 20-year, $3-billion deals by leveraging the value of their rights to the highest TV bidder. The Mariners just went down a different path, leveraging the power of a 2015 opt-out clause in their current deal with ROOT to re-arrange the terms of their partnership and become the big boss.

Essentially, they have cut out the middleman. Not completely, mind you, since DirecTV will still supply all the TV infrasructure and distribution networks and make money off their smaller stake in the partnership. But the Mariners, as majority owners, will now get to keep more of the incoming money than they ever did before.

Why would DirecTV do this? As I said before, the Mariners could have left them high and dry in two years and gone into business with another network. Better to have a smaller piece of some action if you’re DirecTV than a large piece of zero action.

“This is an opportunity to strengthen and extend our relationship with the Mariners for decades while continuing to leverage DIRECTV Sports Networks’ overall resources and expertise for the benefit of our new partnership with the Mariners in the Northwest region,” said Patrick Crumb, president of DirecTV Sports Northwest. “This new structure will truly align our interests and allow us to work together to maximize the potential for the network and our coverage of Northwest sports.”

This move also gives the Mariners a huge pre-emptive strike in terms of the changing Seattle sports landscape should Chris Hansen and his group manage to secure NBA and NHL franchises.

An RSN and the money to be made from live sports programming is a key part of Hansen’s overall financial plan. Had the Mariners not made this move, it’s possible Hansen would have formed his own RSN and been the one calling the shots locally.

That’s still possible, mind you. It just remains to be seen how many local sports networks a city that is the 12th largest market in the country can support. But right now, the Mariners know they own a network and will have their games carried for the next two decades with the same partners they have teamed with for years.

Hansen could still team with another network and form his own RSN. Or, he could sell rights to his teams’ — assuming they come here — games to the new ROOT Sports network now owned and run by the Mariners.

The other thing this does is it leaves the Mariners in a position to benefit financially from any new teams on the Seattle landscape. Under the old system, there was nothing stopping Hansen from going to ROOT Sports and getting his new teams put on their TV rotation. Under that setup, the Mariners would have been a mere third major sports tenant while the new teams potentially took away some of their shine.

With this format, if the new NBA and NHL teams were to go under the ROOT Sports umbrella, the Mariners, as majority owners, would reap financial benefit from any success those squads have. Big difference right there.

Is there a coincidence to the timing of this announcement? Well, it is a bit odd that the Mariners are making it just a day or two before we hear a decision about the sale of the Sacramento Kings and whether they might come here. That’s real close for it to be purely by accident.

Regardless, though, this decision represents a major shift by the Mariners away from their old model of doing things. Again, just last October, CEO Howard Lincoln gave an interview saying the Mariners will not be forming their own RSN and that the ballclub was in a gate-driven business.

The team’s vice-president, Bart Waldman, said in the same interview that the Mariners did not want to be playing in an empty stadium while fans at home watched on TV.

But those comments, if indeed they were serious, ignored the changing landscape of pro sports where TV revenue is now exceeding gate revenue as the main source of income for teams. All Lincoln has to do these days is look out the window of his owners’ suite at Safeco Field and see all the empty seats to realize another major revenue source is desperately needed.

Maybe he did that and saw the light? Maybe other owners did it for him?

We’ll figure that part out in the weeks and months ahead. For now, the Mariners are indeed in the TV business. Knee-deep in it.

Comments | More in attendance | Topics: ROOT Sports; Mariners; Chris Hansen, RSN


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