The exponential growth of rights fees isn’t what it used to be. As the media industry transitions from linear to digital and tries to figure out new sources fo revenue, networks are being more selective and keeping a tighter grip on their purse strings when it comes to shelling out billion dollar rights deals. Of course, there is still a whole lot of money to be made, but it might not match what was envisioned years ago – a truth that Major League Baseball may find out the hard way.
MLB is currently in a deal with ESPN that lasts through the 2028 season at $540 million per year. It was actually a decrease in what ESPN was paying before, however the network also let go of a midweek package of games, downsizing its MLB inventory. MLB is also locked into deals with Fox and TNT Sports (WBD) as each network has a slice of the MLB Postseason with another Friday night package on Apple TV+.
However, last fall it was reported by Andrew Marchand at the New York Post that ESPN could choose to opt out of its MLB contract after the 2025 season as both sides had an opportunity to end the deal early.
Now, John Ourand reports at Puck that it is “likely” that ESPN will indeed exercise that right to end its MLB contract. However, he pegs it as a possibility at the end of this season, not 2025.
While that news could send alarm bells ringing at MLB headquarters in Rob Manfred’s office, Ourand states that ESPN doesn’t want to get out of the baseball business entirely. However, he does note that ESPN “wants to be able to get more for its $550 million annual deal” and this could include local rights. Ourand also reports that MLB has yet to come to an agreement with NBC for its early afternoon Sunday games that aired on Peacock.
Of all the major sports leagues wrapped up in the Diamond Sports bankruptcy saga, MLB has played hardball the most and taken over local rights to several teams. With ESPN also offering links to RSNs now, it could be an opportunity for ESPN to get more inventory while also allowing MLB a place to offer local broadcasts for the rights they possess.
It’s another example of both the league and the network trying to build the plane while flying it and piecing together broken pieces of the revenue puzzle. Who needs who more in this scenario with both in flux? If ESPN Is the one opting out, one would think they hold the leverage here. It would be almost unthinkable to not see a Sunday Night Baseball package that’s been an institution for decades or baseball on ESPN in general. But the reality is ESPN has slowly been de-emphasizing the sport over the years as it moves more focus to the NFL and NBA. And if ESPN wants more from America’s pastime, MLB might have to give a little bit more to keep the relationship going.
[Puck]