TV Contracts — The Next Frontier of Revenue

Over on the main site, I did an article in December about what the potential value of Pittsburgh’s local TV contract could be, since it is undisclosed.  I came to the conclusion by using other known TV contracts that the Pirates’ deal could be worth $16.5M to $23.5M per season to them.

Joel Sherman of the NY Post had an article a few days ago discussing how TV contracts are escalating at a geometric rate and causing new “superpowers” to develop on the baseball landscape.  With their new deals, the Los Angeles Angels and Texas Rangers are now considered to be on par with the Yankees and Red Sox.  Once the Dodgers’ ownership is solidified, it is expected that their new TV deal will be gargantuan as well, vaulting them into the same stratosphere.

All of that was fine and dandy with my reckoning.  And then came word yesterday that the San Diego Padres are on the verge of signing a new deal.  Their old deal was worth approximately $15M/year, but now that the Padres have a 20% ownership stake in the network the deal could be worth nearly $40M/year starting in 2012.  There is also a 4% escalator clause in each successive year, as well.

In the article I did in December, I compared metro populations to find the linearity between the TV contracts.  It seemed as if most current deals (pre-2011/2012) were clustered around $10/person in the metro area, but new deals forged by TEX and LAA were pushing that number closer to $12/person.  San Diego’s 2010 metro population is 3,095,313, which would mean this deal is worth $12.92/person.  That will continue to raise the bar for future contracts.

I have no idea if an opt-out clause exists in the 20 year deal that the Pirates signed with ROOT last year, but it seems as if the Pirates may be getting left in the dust by these recent deals.  It will be interesting to see if the recently-cash-starved Padres start to rapidly increase their payroll throughout the course of 2012’s season and beyond.

  • Not good if true.  We need to get as much money as we can. 

    BTW I hate ROOT. I hope this year the cameras focus on the game instead of what’s going on in the stands. 

    • Not to deflate your hopes pre-season, but expect more of the same coverage from ROOT.  They want to highlight the ‘fan’.  But I think they got the message about the yinzer accents on the promos.

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