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.
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.