MLB Commissioner Rob Manfred has said a new committee on economic reform met to discuss revenue disparity and the financial uncertainty around Bally Sports.
The Athletic reported that Mark Walter of the Dodgers is chairing the economic reform committee, joined by Chris Ilitch of the Tigers, John Henry of the Red Sox and Dick Monfort of the Rockies.
Bankruptcy of Bally Sports
According to ESPN, nearly $1 billion of Major League Baseball’s revenue is at risk if Diamond Sports Group goes bankrupt, the Sinclair Broadcast Group subsidiary operating the networks under the name Bally Sports.
And according to Sports Illustrated, as of September 30, 2022, Diamond, had debt of $8.674 billion.
Blackouts are a vestige of the old media model that were used to protect local TV partners or even encourage local ticket sales. But as we’ve moved towards streaming services those old rules still prohibit subscribers of MLB.tv from viewing their local market games.
It’s an urgent issue for teams like the Milwaukee Brewers, a small market team, where every dollar counts. And while the organization would still have revenue from ticket sales, corporate sponsorships, revenue sharing, and MLB’s television deals it does create some uncertainty as the club desperately needs to decide if they’ll invest in stars like Corbin Burnes, Brandon Woodruff, and Willy Adames.
Manfred said “that people see it as an opportunity to rethink the revenue side of the house a little bit, which has been hard in our sport. People entrenched in their local (media dynamics).”
It’ll be interesting to see if the committee makes meaningful recommendations that can nationalize the product on the field and increase media revenue for teams like the Brewers.
In the meantime, MLB seems willing to step in and broadcast games for teams affected by bankruptcy – including the Arizona Diamondbacks, Atlanta Braves, Cincinnati Reds, Cleveland Guardians, Detroit Tigers, Kansas City Royals, Los Angeles Angels, Miami Marlins, Milwaukee Brewers, Minnesota Twins, St. Louis Cardinals, San Diego Padres, Tampa Bay Rays and Texas Rangers.
The committee certainly needs to deal with the revenue disparities caused by local market deals, but the real concern is the ridiculous spending by New York Mets owner Steve Cohen.
The team enters 2023 with a projected payroll of nearly $370 million. It would be an MLB record – well above the $250 million from the New York Yankees in 2022 and the all-time high of ~$300 million from the 2015 Los Angeles Dodgers.
It’s hard for teams like the Brewers to compete with such disparities. While fans groan about the lack of spending from principal owner Mark Attanasio, it’s projected that his net worth is only ~$700 million. It’s unrealistic to expect he or the Brewers to invest $20-30 million a year for each of Burnes, Woodruff, and Adames.
At this point, you have to assume there will be some conversation about a salary cap. MLB can’t continue to watch as the gap between the have and have nots continues to grow.
The earliest we may see that change is when the CBA expires in 2026. And with the requirement of 23 teams to ratify an agreement, you have to assume some combination of the Brewers, Royals, Reds, Pirates, Rays, Athletics, Orioles, Tigers, Rockies, Twins, Diamondbacks, and Guardians could block a CBA without some version of a salary cap.
While teams are taking to the field to see who is the best, this could be a rewind to 1994 when there was much more animosity between owners and players about a cap.
The Brewers don’t need a more aggressive owner with deeper pockets. We need a more reasonable structure for player salaries and that begins with some sort of cap.
The one great equalizer is a 162-game season where injuries and uncertainty can take a toll on even the most pricey payroll. But it doesn’t guarantee a more equitable playing field for all clubs.