MLB’s labor pitch to end blackouts may disappoint fans

Major League Baseball is likely to use ongoing labor negotiations to look to eliminate local blackouts. But the league’s plan might not be as wide-reaching as you might think, especially for national games.

It has long been known that Major League Baseball owners have offered players a centralized local media revenue system that would, for the first time, share this revenue equally among teams in exchange for a salary cap.

However, we are learning, for the first time, about the potential ramifications of this proposal. According to a new report by Evan Drellich at The Athletic, this is an attempt by Major League Baseball to eliminate the territorial rules that have created local blackouts.

First, it’s important to understand the purpose of blackouts. A widely held misunderstanding is that blackouts exist to encourage fans to attend games in person. This results in confusion among fans when blackouts are enacted for people who are hours away from home ballparks.

While those kinds of blackouts do exist — they were last widely used by the NFL in 2014 — modern blackouts are about raising the value of television rights through exclusivity. Importantly, there are two common types of blackouts that fans run into: local and national.

Major League Baseball teams have important local contracts that explicitly define which areas are considered local and which are not. In each team’s local market, its television home is the exclusive local broadcast partner. These local markets can stretch for hundreds of miles and are generally based on the availability of the local broadcast home and the limits of where local fans live. Having exclusivity greatly raises the value of these local broadcast contracts. It even affects national agreements. To keep viewers tuned in locally, national games on TBS and MLB Network are blacked out in local markets, though TBS is allowed one co-exclusive game per team.

National blackouts are slightly different but operate on the same principles as local contracts. National rightsholders have paid millions for these games, and national exclusivity raises the value of those contracts. For Apple TV, Netflix, NBC, Peacock, and ESPN, the blackout applies not only to in-market fans but also to fans attempting to watch anywhere other than the designated national broadcaster. That mostly affects MLB.TV subscribers. This works essentially the same way for national Fox games, though when Fox airs multiple regional games at the same time, the game not carried by your local Fox affiliate is usually available through MLB.TV. All national games except those on TBS and MLB Network are also not allowed to feature a separate local broadcast.

FS1 is the weird national exception. Outside the playoffs, its games are never exclusive or blacked out.

But even if the players accept this proposal in exchange for a salary cap, which is no sure thing given their long opposition to one, the elimination of these blackouts will not happen as quickly, or be as far-reaching, as you might like.

For one, according to Drellich, accepting this proposal would not immediately eliminate these blackouts for all teams. Because of how current TV contracts are structured, the process would be gradual and depend on each contract. This would likely mean immediate blackout relief for teams already in-house with MLB Local Media, but it might be a while before changes reach teams with lucrative long-term contracts like the Dodgers.

The other thing to note is that centralizing local TV revenue will not end national blackouts. While local media revenue may be drying up for MLB, national TV revenue is not. In fact, to make up for declining local revenue, MLB may decide to move even more games from local to national television. Exclusivity still matters for national TV contracts, so, in theory, even more games could face national blackouts in the future.

Fans have long begged Major League Baseball to end blackouts, and this proposal certainly looks like a start. But I don’t think fans will be very happy if blackouts become an important part of negotiations during a long lockout and still fail to produce immediate changes for many big-market teams.