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Will the television bubble burst before the Pirates get in the game? And does the trade deadline even matter?

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MIAMI – Perhaps the Pirates’ biggest long-term concern has nothing to do with their struggling offense, what they do or do not do at the trade deadline , or whether Jameson Taillon, Gerrit Cole and Gregory Polanco fulfill their promise. No, it has everything thing to do with local television rights.

 

Really.

 

You’re probably aware that at present Pirates are at a severe disadvantage when it comes to local television rights, which is the greatest separator between the Haves and the Have Nots in the game. The Pirates are in the fourth year of a 10-year deal with ROOT that pays the team 18 million per year, tied with the Marlins for the lowest level of television revenue in baseball.

Since the Pirates signed their deal the television landscape has changed significantly in the game.

 

Local television rights deals and regional television rights deals have exploded in value in all major sports. In baseball, the Rangers, Angles, and most recently the Dodgers have signed multi-billion dollar local television deals. The Dodgers deal will net the club $340 million per year in local television rights.

 

I have no doubt the Pirates could easily double the value of their deal if they were to open of negotiations tomorrow, though they’d still be in the bottom third of the rights values. The Cleveland Indians and Detroit Tigers, each take in $40 million per year, and are similar markets. Chris Bevilacqua told our own Bob Cohn last year that the Pirates’ deal was undervalued.

 

So if all variables remained constant leading into when the Pirates negotiate their next deal I have no doubts the Pirates would increase the value of their deal substantially.

 

TV contracts have soared in value – see the college football TV contracts, the NFL’s television contracts – as advertisers target programming that can still draw large live audiences in an era of DVR and thousands of cable channel. So if all things remain constant, values should continue to increase.

 

But I think the concern is what does the cable television landscape look like in six years? An article over at Fangraphs this week questioned whether the cable television bubble is about to burst, in large part tied to speculation that Congress would remove barriers that currently prevent a la carte programming by cable.

 

Sports on Earth estimated that individual cable consumers spend at least $100 a year on sports programming they don’t want “pumping billions into games enjoyed by others, enriching networks, leagues, teams and athletes all the while.”  Bloomberg Businessweek reported 80 percent of cable customers would decline to pay for sports if given the opportunity.

 

In short, if a la carte programming went into effect, it’s quite possible billions of sports television dollars would go away. That’s good news for the consumer. That would be bad news for MLB clubs that haven’t yet signed lucrative deals.

 

The good news for the Pirates is, as I understand it, we are a long way from a la carte programming, and any legal fight would take years to solve and maybe the cable landscape doesn’t change much at all over the next decade.

 

Whatever happens, the Pirates are going to play in the small-market revenue pool, it’s just a matter of to what degree. So it will continue to be important to develop cost-controlled young stars. That will always be the formula for success here.

 

DOES THE TRADE DEADLINE EVEN MATTER?

 

I find the trade deadline to be an interesting live drama, but I wonder does it even matter much?

 

Are division races ever really significantly altered by the deadline?

 

Consider this stat from ESPN Radio’s David Todd: “of the last 40 deadline trades just 11 players contributed even a single win of value to new teams past 2 trade deadlines & just 2 managed 2 WAR.”

 

That’s little impact. And it’s something for the Pirates to perhaps consider when mulling over whether to pickup a modest upgrade.

 

Is it worth the cost?

 

There’s no doubt the Pirates need a bat. But there are few impact bats on the market and it’s a dangerous game to pay for slight upgrades.  Of course if the Pirates can pull off what the Yankees did in giving up a marginal prospect for Alfonso Soriano and having the Cubs pick up most of the contract, then by all means.

 

But just remember, unless there’s a star with multiple years of team control remaining, there’s probably little impact to be had a the deadline, particularly with this summer’s barren market.

 

-TS

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Comments

  1. Bob Green says:

    For the last 10 years, the Pirate games have been televised in the Columbus Ohio area. Finally, the Pirates are playing well. However the games are blacked out in our area.

    Not only are the games blacked out on channel 659(Directv), but they are blacked out on MLB. Tuesday’s game with the Cardinals (channel 213) will be blacked out.

    Even if I signed up for the MLB Innings through Directv, I would be blacked out. My brother gets the games in Daytona Beach. My nephew’s son lives in Seoul Korea, and gets the games. This does not make any sense.

    I have called Root Sports, Directv, the Reds, the Indians etc. Can’t get a straight answer. I called Stan Savran’s show. Who makes this decision. Why would the games be blacked out in an area where there are a lot of Pirate fans?

    HELP

  2. RobertoForever says:

    Travis,

    Appreciate the live coverage from Miami. Love the tweeting during the game. Provides great perspective.

    With respect to the TV deal, has anyone ever commented on whether it was a good deal when it was signed? Doesnt matter a hill of beans, now, but situations like these are always hindsight. I dont remember anyone panning the deal at the time. However, it sure seems like the Bucs signed a deal to have car phones, right before everyone got a cell phone. Sometimes you just cant foresee market-altering events.

    And its interesting about the trade deadline. Last year, it seemed like everyone was clammoring for a trade for a big piece. Now it seems like everyone wants to avoid a big trade, and just get an upgrade in RF. Interesting what is in ‘chic’

  3. NorthPirateFan says:

    Seems like an assumption is being made as part of this that may not turn out to be valid.

    Suggesting that teams which don’t have a lucrative deal currently in place will be left out side looking in should a long over due ala carte option become available is based on the premise that those clubs with them will be able to continue to collect those revenues in the new environment, which seems like a highly dubious prospect at best.

    Those contracts were entered into base on the legislative and economic realities of the moment, if Congress acts to change that environment it would be highly unlikely to ignore the existing situation and not give the broadcasters a legal out in the same legislation. Even if they didn’t it would be hard to imagine those contracts hold up in court should ala carte become reality as basic contract law requires an ability of the parties who entered into them to the best of their abilities … example is the current pension situation in Detroit as the bankruptcy of the city makes them unable to comply with the contract they entered into there for the contract is essentially worthless.

    Even if the contracts were somehow found to be valid, it would be virtually suicidal for the clubs to try to force the companies to honor them having lost the much of their revenue and all they likely accomplish is forcing them into bankruptcy an losing out that way.

    The most likely out come is should ala carte finally become a reality is that all the clubs are going to have to start from square one renegotiate new contracts based on the size of their markets AND their ability to sell individual subscriptions.

  4. Yokesoverez says:

    I live in Dubuque, Iowa and bought MLB TV last year. Mistake! Dubuque is considered by MLB to be in the home territory for the Brewers, Cubs, Cardinals, Twins, White Sox, and Royals. The NL Central blackouts mean that I could not any Pirates games against those 3 division teams, about 33% of the season – and the games I wanted to watch the most. It makes no sense.

  5. Vox Humana says:

    To Bob: It comes down to one thing and one thing only, in our case (I am a Pirates fan in Columbus also). Root Sports (formerly Fox Sports – Pittsburgh) wants to be carried by our local cable systems (AT&T, WOW & Time Warner) as well as DirecTV. These companies recently balked at the amount of money Root wanted for these systems to be able to carry their network. Now, Columbus is considered the Pirate’s “region”. They know our cable companies will already carry Reds & Indians networks so they designate Columbus as a Pirates region and, because of this, they can blackout every Pirate game that Root carries. Even if it’s a nationally televised game on ESPN or Fox, if Root is broadcasting it also, it gets blacked out in Columbus. The only way we’ll get Pirates baseball back is if one of those cable companies works out a deal to carry Root. Since they’ve all collectively told them to f*ck off, all Central Ohio Pirates fans are SOL.The only time you’ll see the Pirates on your own TV will be when they are playing Cincinnati. Hopefully, one of the cable companies will work out a deal in order to be more attractive to Pirates & Penguins fans in Central Ohio. You would think someone at Roots would recognize they all rejected their first offers, come down on the price and get the subscribers plus more viewers to watch their advertising.

 
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