I’m always somewhat hesitant to introduce discussions on the various economic issues surrounding MLB and the disbursement of the revenues to the individual markets and the owners. The reason being that the details are always missing thus the debate is always based on assumption and innuendo.
As was the case with the various national television deals, the dollar amount we see is the total value of the contract and then the assumption is that the teams get that amount divided by thirty. I don’t believe it to be that simple.
I had run an article from the Denver Post at the time of the TV signings which broke down what the Rockies share of that contract would be after various repayment to the league office and minus whatever was being allocated to the MLB central fund. As I recall the Rockies received roughly $13M out of the $25M or so assumed to be going to the local markets.
This article, regarding the additonal Disney investment in MLB Advanced Media, does basically the same thing. The calculations of the author has Bob Nutting and his brethren getting an additional $52M per club.
I don’t know who gets what but I do know the game is awash with cash. Take this info and form your own opinions. The only thing I’m certain of is the discussion will be smart and civil. Thanks for that.
Disney to give MLB another $1.58 billion for BAMTech. The players will see none of it.
Last year The Walt Disney Company bought a $1 billion stake in BAMTech, which is the streaming media unit created by Major League Baseball, originally used to power MLB.tv but since spun off into its own company and now used by multiple content providers both inside and outside of sports. That deal gave Disney a 33% share in BAM and put around $33 million into the pocket of every owner in baseball, give or take.
Yesterday Disney upped the ante, announcing that it has agreed to purchase a majority stake in BAMTech, putting its ownership share at 75%. The price for the new shares: $1.58 billion, so there’s another $52 million per owner, again, give or take. Major League Baseball and its owners will retain about 15% of BAMTech, with other minority shareholders making up the rest. Disney, as is its wont, will monetize the living hell out of BAM. It announced yesterday that it is launching its own streaming service, for sports with ESPN-branding on top of the BAMTech platform, and for Disney content, setting them up as a rival for Netflix and Amazon.
That’s big, big news. For our purposes, however, it’s worth noting just how much Major League Baseball and its owners have made off of its technology venture.
In 1995, baseball’s total revenues were about $1.4 billion. That was for everything: gate, merchandise, broadcasting, beer, hot dogs, you name it. In the past 12 months baseball has raked in nearly double that from selling off shares of a side business that didn’t even exist until a few years ago. Remember that the next time a team owner cries poverty, claiming that he can’t pay for his own ballpark or ballpark renovations or that he can’t keep that star outfielder you like so much when he hits free agency.
It’s also worth noting that the players aren’t seeing any of this money. Which on one level makes some amount of sense in that BAMTech is technically its own entity, legally no different than, say, a car dealership or a real estate firm in which a team owner has a controlling business. Reggie Jackson wasn’t given certified financial statements from George Steinbrenner’s ship building operation and when Ted Turner sold bison burgers and colorized copies of “Casablanca” it’s not like Jeff Blauser got a cut.
But that’s not a perfect analogy because BAMTech would not be a roughly $3.2 billion company if it had not had a wildly successful proof-of-concept phase via its successful streaming of Major League Baseball games. Baseball’s windfall is a function of it moving first and showing that its platform could handle live sports in heavy volume and that it could get people to pay to watch it, none of which was a given at the time. As such, it’s not unreasonable to say that, if it weren’t for the baseball games and the men who played them, they owners would not be raking in these Disney Billions now.
Which makes me wonder what, if anything, Tony Clark and the MLBPA intend to do about all of this.
The union and its players are watching the owners rake in megabucks, in part, because of player labor. While the union may not have standing to explicitly demand a cut of this, it’s been pretty clear for a good while that the owners were making a lot of money off of digital media and would be making more in the future (the last CBA was negotiated after the first Disney buy in, with the second one predicted even then). How have they pressed the owners to get any of this money to trickle down, directly or indirectly?
Overall player share of baseball revenue has been more or less steady for a good while (many argue it has decreased, but let’s leave that aside for now) but, thanks to smaller deals for post-free agency players and a greater reliance on younger, cheaper players, major leaguers are actually getting less of it. The ratio has largely been propped up by big spending on international players and amateur bonuses. With the new CBA imposing restrictive caps on those bonuses, it’s not hard to imagine that the share will now, in fact, go down. And, as we learn more about the new CBA, we see that the owners are coming out on top in more ways than just revenue share. The owners have been cleaning the players’ clocks at the bargaining table pretty consistently of late.
And now we get front page news about the biggest media company on the planet funneling billions to 30 guys who sign the players’ paychecks. Billions that would not be possible if it were not for thousands of streamed baseball games and the revenue therefrom showing Disney’s money men that buying BamTech would solve a lot of their problems. I imagine a lot of players are reading that front page news and are wondering if they are going to see any of that money, one way or another. I wonder what Tony Clark will tell them when they ask.
(Thanks to reader and commenter Bob S. for passing along this article)
The less said about the Pirates game the better. As Clint Hurdle says, “Wash off the stink and come back tomorrow.”