April 16, 2013 at 9:33 AM
Mariners to assume a controlling interest in ROOT Sports
Well, this counts as ownership news, but not anything that involves a change at the top of the Mariners. Instead, a major piece of the future revenue stream of the ballclub is about to be completed and announced and it involves the team assuming a controlling interest in ROOT Sports.
A hat-tip to colleague Jayson Jenks for first getting wind of the coming news.
This might not interest anyone as much as local ownership taking over the team, but it is still pretty important if you’re a fan. The Mariners, as noted this morning in the earlier blog post, are soon to have an opt-out clause in their regional sports network (RSN) contract with ROOT. By the end of 2015, the team can renegotiate its current deal that began in 2011.
Given the state of TV contracts across the nation — exploding in value — the timing could not be better.
Well, the Mariners have apparently gotten a jump on the whole process, as would be expected given how much time these things take.
The idea of teams owning their own RSNs has caught on in popularity around the sports world. In baseball, it’s particularly popular because when you own the network, it enables you to shield money from MLB’s revenue-sharing pile.
The Yankees have been doing it for years. As owner of the network, the team charges itself a nominal sum for the right to broadcast games. That sum gets reported to MLB by the team as the revenue taken in for the rights to those games.
In some cases, the revenue might actually be two, three or even four times higher. But that gets run through the TV network’s books and is not associated with MLB revenue sharing. It’s a neat little trick and it’s done all the time.
Now, the Mariners will be able to take advantage like other teams have. In other words, they will have the revenues coming in to compete with payrolls much larger than they are now deploying against AL West behemoths like the Rangers and Angels. The Astros also have an owership stake in their own RSN and while they aren’t spending money on payroll right now, they will have the ability to in future seasons.
Controlling your own network also enables a team to dictate the programming content. Usually, a team partners with an existing network in order to buy up its infrastructure and on-air talent so it does not have to start from scratch.
And in the case of the Mariners, it gives them a head start in this market over what Chris Hansen and his partners might do should the NBA, and possibly the NHL, come to this city. Part of Hansen’s proposals involves the TV RSN money both of those new franchises would bring in. Hansen would have the opportunity to start his own RSN using both franchises as prime content.
Now, the Mariners will own and operate their own RSN. Who knows? Maybe they one day team up with Hansen to bring new teams into their on-air fold? That’s another discussion for another day. But right now, if that were to happen, the Mariners would be the ones running the network.
It’s funny because when Mariners CEO Howard Lincoln was asked back in October whether the team was considering operating its own RSN, he gave an emphatic “No”. Well, so much for that. Hey, everyone’s entitled to change their minds.
The sports landscape in Seattle is about to get very interesting.