Video from the time me, my Dad, Ruben Amaro and Ed Wade all watched a game together
Jonah Keri’s Week 17 rankings on Grantland included a lengthy take on the Phillies, whom he ranked 17th in baseball (generous). He listed all the usual reasons why the Phillies should sell (totally eviscerating Ruben Amaro in the process). And he gave the main reason why the Philies shouldn’t sell: an influx of cash from a new local TV deal in 2015 will allow them to continue to spend like assholes.
But then, he gave another reason why they should keep
treading water flailing about like an injured seal… and it’s a good one:
But really, those are micro decisions that don’t matter as much as the macro factors that govern how this team is run and will be run, no matter who carries out ownership’s marching orders. What has really happening is this: The Phillies could be on the cusp of joining those three teams as a true revenue superpower of their own. But to cross the final barriers toward massive riches, they’ll need to play their cards perfectly. As Wendy Thurm of FanGraphs recently reported, the Phillies’ TV deal expires in 2015, which could set up a windfall deal. Unfortunately, ratings for Phillies games on CSN Philadelphia fell 36 percent in the first half of the season, compared to the same period last year. Moreover, as Thurm’s piece explains, there’s a debate going on in Washington that could eventually lead to increased customer choice for cable subscribers in the form of à la carte options. In a nutshell, we could see fewer people choose to pay for the regional sports networks that carry games. If that happens and RSNs notice that trend (which they surely would), the next step would be for them to lower the dollar amounts they’d bid in the future on the rights to major league games. And none of that even touches the Phillies’ attendance scare, in which 5,200 fewer fans a game are showing up compared to last year.
So from the point of view of Phillies ownership and management, you want to take every step to convince potential future carriers that you’re worth the big bucks. That could mean overpaying an aging Utley to stay put so that casual fans who’ve developed an attachment to the star second baseman don’t become disenchanted when he signs elsewhere (or gets traded elsewhere). It could mean chucking more promising prospects — especially those at lower levels of the minors — if they’ll fetch big league–ready talent in return.
And it certainly will mean spending big bucks whenever possible on any half-intriguing players on the open market. Last week, the Phillies announced they had signed 26-year-old Cuban right-hander Miguel Alfredo Gonzalez to a six-year deal worth up to $59 million. Gonzalez has been described by talent evaluators as having the upside of a mid-rotation starter, with the downside of a long man out of the bullpen. Though six years is a really long commitment for a no. 3 man, that average annual value isn’t far from Joe Blanton territory, so that could be a reasonable investment. But there is no WAR-per-anything scenario in which roughly $10 million a year would be worth it to sign a glorified Bill Sampen.
Basically, what Keri is saying is that for the Phillies to get the type of cash they’ve been banking on from a local TV deal, they might need to continue to bring in the big ratings. And that means they will need to continue winning (HAHA). Spend more to make more. Business 101.
Their ratings peaked in 2011, when they averaged a 9.1 rating on CSN— the highest in the league that season. The network is understandably a bit more shy about making viewership numbers public (the last time I got a press release touting Phillies ratings was last March… and that was for the 2011 season), but the 36% decrease from last season, when ratings fell 39% from 2011… well, that’s a lot, and it will undoubtedly hurt the Phillies when it comes time to negotiate a new deal.
Keri, of course, is just trying to explain why Amaro continues to do really dumb things (he said Amaro is “overpaid to make terrible decisions on how to run the team”). But, interestingly, one reason he gives for why the Phillies should worry about their payday – segmentation of TV content – is a topic that we’ve talked about before.
In 2012, Matt Gelb wrote an article in the Inquirer about the Phillies’ impending TV deal. At the time I commented on how the cable industry is changing and products like Apple TV and streaming services could impact negotiations. I probably got a bit ahead of myself speculating that the Phillies could essentially produce their own games as part of an a la carte service, but the sentiment was the same– the changing cable landscape could impact the Phillies’ new TV deal, and the team’s future.
I went on the WIP Morning Show to discuss my take, and Gelb’s article. Gelb chided Rhea Hughes on Twitter for having me on to (partially) discuss his work, which was understandable even though he completely misconstrued my abstract comments about the future TV. Yet here we are, a year and a half later, and that changing cable landscape is a real thing (hey there, House of Cards, Apple TV and Chromecast). We’re still a long way off from sports being streamed exclusively online, but the prospect of unbundled TV packages* means that niche networks like ESPN, CSN and others might soon no longer be guaranteed a slice of every. single. cable. bill. And, as Keri pointed out, that means smaller payouts to teams like the Phillies. Which might be why they’re trying so damn hard to eek two more years out of this group.
*As an example, one estimate says that unbundling would mean a subscription to ESPN would cost roughly $30 per month since they would no longer be getting $6 from every cable bill. Yikes.