Wait 'Til Next Year: H... (02/26)
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February 26, 2009 Solving the Digital Blackout BluesLiberation!
"This is all a very, very complicated matter. Who really has these [digital] rights, and how do we best bring them to the marketplace? That's the big question. And though we're in sort of a holding pattern right now, it's no doubt the single biggest economic issue our industry is facing." That anonymous club official was interviewed before the financial world collapsed in September, so you can forgive him for seeming to have a weird set of priorities. But if you've been reading this space, you know how valuable the digital rights to local MLB game broadcasts could be in the long term. As complicated as the issue may be, you would think that when everybody is losing-and I mean everybody-there would be some serious incentive to figure it out, but so far, no luck. If you live in Montana, you still can't see Mariners games on MLB.tv (or MLB Extra Innings, for that matter). Or, perhaps even worse, if you live in New York, you can only watch the Yankees or Mets if you're also willing to buy FitTv, about seventeen Discovery channels, and a couple hundred other cable stations that you'll never watch. Maury Brown has been front and center advocating for the fans on this issue, but the teams aren't exactly thrilled with the situation either. Along with MLB Advanced Media, regional sports networks (RSNs), and cable operators like Comcast, they are leaving money on the table every time a major league game is played without being streamed locally over the internet. Needless to say, there's a market for online Yankees telecasts in New York, or Red Sox games in Boston. But with so many entities looking to get their own piece of the pie, everyone has been left flatfooted. So here's one proposal that could work. It's not all that complicated, because it really doesn't need to be. The most important thing is to get this product to market sooner rather than later, so that the customers don't have to send any more angry letters, and everyone involved can finally begin making some money off of it:
There might be a real-world model for this type of plan coming soon. The NBA is reportedly going to de-centralize its local digital rights, though there are still a few details to be worked out. MLB has been a bit more stubborn about giving up any digital rights, but they'll certainly be keeping an eye on the NBA's progress, and it wouldn't be a surprise if they came to this same conclusion a year from now. The cable companies would still be roadblocks, of course. Both the networks and the operators have a vested interest in keeping games on television only, or at least in receiving a significant piece of the ensuing revenues. But with each team acting autonomously, they would likely have a much easier time cutting deals. Take this real-life scenario from Sports Business Journal last fall: Major League Baseball hopes to launch local online streaming of live games next season after it failed to come to an agreement with Comcast on a potential test of Chicago Cubs and White Sox games earlier this year, marking the latest entry in what has long been a growing and divisive issue within baseball. There's an easy solution to this: make the games accessible on both sites, split the ad revenue, and give CSN Chicago a referral fee for any subscribers that sign up through its site (or, in another variation, give CSN Chicago all of the ad revenue, and keep all subscriber fees). This isn't some wild idea; this is how most deals are made within the internet's open business culture. Unfortunately, both Comcast and MLB are so closed by nature, and so worried about setting the wrong precedent, that they chose to do nothing, leaving an obvious moneymaker on the shelf. With our new plan, there are no wide-ranging precedents to be set; deals are made on a case-by-case basis, with thirty different teams making thirty different agreements. Most importantly, there would actually be some indirect competition between teams, creating real incentives to get the best deal possible (if the Yankees are making lots of money off of it, the Red Sox will want to as well). The results would be very positive in the short term. The teams would have a brand-new local revenue source, which, for some, could prove extremely lucrative, but it's in the long-term that MLB would really win. As I wrote last week, if broadcast and cable television cease to exist in 10-20 years (what I call a Murdochian Dystopia, after the man who likely made the last multi-billion dollar bet in history on a newspaper), all baseball games will be served over the internet. This obviously shifts the sport's entire model; MLB could distribute the games without a broadcast partner, and keep all of the revenue for itself. Given all of that, it's MLB that will eventually hold the cards. This plan would give them a solid head start. The arcane territorial rights (which were drawn up decades ago) would still need to be fixed, but this would make it possible for Cubs fans in Iowa, or Dodgers fans in Las Vegas, to actually watch their teams play. And that would be a major step in the right direction. ---
Shawn Hoffman writes about business and baseball at
Shawn Hoffman is an author of Baseball Prospectus.
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Team Health Reports: Kansas City Royals
I have to say, I think that individualizing TV revenues would be an absolute disaster. The whole reason the NFL has managed to maintain economic balance among teams isn't the cap, it's the large, lucrative TV deal shared equally among teams. If anything, I think baseball needs a more centralized TV deal that would create a more even financial distribution among teams and take away much of the disadvantage that a Kansas City has against a New York.
Exactly. You're exacerbating the problem baseball already has with wild disparities in local revenues. One of the big fixes we had to look forward to was the equal distribtion of ever-growing MLBAM revenues. It's plausible that those revenues would overshadow the NESNs and the YES Networks in 10-20 years, and make for a much more level financial playing field.
This article seems to be implying that the fact that some teams have access to media markets orders of magnitude larger than others is a feature, not a bug.
Add me as another fan who is disturbed by this plan which would exacerbate an already unhealthy advantage for the teams from the largest markets
It does add to the disparity between top and bottom, but the other way to look it as that selling the rights collectively will be almost impossible (as they've found already). By splitting up the rights, there will actually be cash coming in, immediately. That money is subject to revenue sharing, so all teams do benefit. And I'd say on a proportional basis, this would probably actually favor small market teams.
How does it favor the small-market teams to allow the Yankees to sell their own video rights, keep most of the money if revenue sharing applied and all of the money if the profits were buried in YES, and give a pittance, at best, to the small-market teams? How does it improve competitive balance in MLB?
If you check his linked blog, Shawn Hoffman attacked John Henry's support of an MLB salary cap as anti-Yankees on February 18th and defended A-Rod with respect to stats and years of admitted PED use on February 9th. Hoffman lives in New York (per Twitter), his posts occasionally (at least) support the Yankees, and this article seems to be an attempt to convince BP readers that giving more to the rich and less to the poor is somehow good for the game.
I notice that the bulk of the BP readers taking the time to post have already pointed out that Hoffman's ideas would favor big-market teams. I agree. I infer, though it is only a perception, that Hoffman's views may be influenced by his support for the New York Yankees.
I'm happy that BP is making space for articles regarding the challenges of the absurd blackout rules; I'm upset that this article is chosen as a viable solution to bizarre rules blacking out games of a half-dozen or more "home teams" at any given site. I'd offer a simpler solution: alter blackout rules to ensure that every viewer can somehow watch every game with their chosen premium subscription, be it an MLB.tv subscription or an Extra Innings subscription. Restrict the feed to the "home market" RSN if necessary or desired, but don't create a situation where fans can't watch their team because of blackouts.
And keep the revenues in the MLBAM pot, not in the pockets of the rich.