Is the Phillies’ TV Deal with CSN Bigger Than Expected? Smaller? What is it?

It’s a 25-year investment in the Comcast Megaconglomerate. It’s the gift that keeps on giving.

From Matt Gelb, writing on Philly.com, where the paywalls have no names:

The two sides, according to two sources, agreed to a massive 25-year contract Thursday worth more than $2.5 billion that will provide Comcast SportsNet with invaluable live summer programming and the Phillies with another substantial revenue source.

The Phillies will acquire an equity stake in Comcast SportsNet, one of the nation’s most successful regional sports networks, Montgomery said. The advertising revenue, which was split favorably for the Phillies, will be adjusted in exchange for a higher rights-fee payment. The major financial components of the new deal will activate in 2016, Montgomery said.

The average annual rights fee over the duration of the contract is $100 million, but the annual fee will begin at a smaller number and grow each year, according to a source.

Several takeaways here:

1) The 25-year deal sounds like it will kick in after the 2015 season, taking the Phils through 2040 with Comcast.

2) $2.5 billion is a lot of money, but it’s nowhere near previous estimates. In October, The Good Phight wrote what I thought was the definitive Phillies TV deal estimations piece of late-2013 (a truly crowded competition), when they cited other local TV deals around Major League Baseball and guessed at what the Phillies might receive once their current deal with CSN, which is reported to have paid them around $35 million (plus an advertising revenue share) each year. TGP estimated that a new deal would be somewhere between $180 million-$275 million per season. That $180 million figure would’ve meant $4.5 billion over 25 years. 2.5 is a lot… less. It’s $100 million per season, and:

3) It starts even lower than that.

There is, of course, an equity stake in Comcast SportsNet – which is surely worth quite a bit – so it’s hard to judge just how good or bad the deal is for the Phillies.

But I have a theory as to why the Phils got a smaller-than-expected rights fee and instead had to settle for having some “skin in the game.”

As we’ve written, the TV landscape in changing. In Houston, cable providers are pushing back on carriage fees (the hidden per-subscriber cost for channels like CSN and ESPN), meaning that 60% of the city can’t watch Astros games (ratings have dipped from 12 people to, well, none) and hinting at a very uncertain future for a business model that is dependent on bundled cable packages. And when you factor in the growth and adoption of streaming services, and eventually (presumably) a la carte TV programming, regionals sports networks, like CSN, might not generate as much low-hanging revenue in the near future, or will have to charge substantially more to those choosing to subscribe. Therefore, CSN and its NBC overlords were probably more hesitant to write a $200 million-per year check without the Phillies shouldering some of the risk. In other words: If carriage fees go away and regional sports networks no longer automatically, somewhat insidiously, make money from every subscriber, then the Phillies will take some of that hit.

To me, the Phillies’ contract with CSN was up two years too late. In, say, 2011 or 2012, when concerns about the changing cable and TV space were less clear (if you’re judging by other sports TV deals), the Phillies probably would’ve gotten more guaranteed money up front (and that’s not even factoring in their rapid decline in ratings and attendance over the past two years, which couldn’t have helped things).

$2.5 billion plus an equity stake in a regional sports network is still a very good thing for any team. But I think it’s less than expected. Although it’s probably not surprising.

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on email
Email

19 Responses

  1. Directv customers are gonna get the jelly of the month for the next 25 years, oh well, utley will be in his 60s, jimmy will actually run to first faster than he does now, and howard will be their hitting coach.

    1. That was part of the deal. The phILLs will retain the over the hill gang of Utley, Rollins and Howard for the full 25 years. The fans want the beloved three to always be Phillies and jersey sales will drive the deal. Ryan will be the hitting coach from year 20 to 25, but will pinch hit occasionally. The Phils offered the same deal to Halladay, but he had too much class and chose to retire.

  2. It’s a great deal for the Buck Family and their co-owners, a bad deal for anyone who thought there might be extra cash for payroll purposes. The Bucks don’t have taxable current income from cash, and get capital gains treatment on the profit when they cash out of CSN – and you can bet they can force a cash-out at any time. As always, the Bucks run the Phillies for the Bucks, not the fans.

  3. I saw one of the first giveaways at citizens bank was ball hair sandwiches for all fans. Think its during the on deck series…fuck me

  4. I don’t have cable because I can’t be trusted with that kind power. I always enjoyed the Tues night and occasional Friday night games that would get the OTA broadcast.

    1. This is going to eliminate almost all Sunday, Tuesday and Friday games except for a token few that NBC10 will show. I actually don’t even know how NBC10 could do any because by airing them you are bumping off network broadcasting. Even during the Summer when they air reruns viewers will complain. WPHL 17 is done effective in 2014 even though the contract kicks in 2016. When you are paying the Phillies that kind of money you want to force people to subscribe to Comcast.

  5. Can they at least take some of that money and buy out Chris Wheeler’s contract? That gasbag with a ferret on his head sucks wind.

  6. Marcus Hayes said the Phillies were more likely to make the playoffs than the Flyers on WIP (i believe with ricky ricardo (sp?))….even tho the Flyers record was good enough that they would be in the playoffs when he made the statement.

    Who is paying this guy? The Mets could challenge the Phillies, i’d rather face Utley-Howard-Brown than Wright-Granderson-Davis (except the 3 weeks Dom Brown decides to show up). People aren’t going to be too excited about the Phillies pitching staff when Kyle Kendrick is our #3 and Doug Fister is the Nationals #4, and the Braves still have a sick lineup. Miami has gotten better too.

    – we suck.

  7. Is there ONE person in the Philly area that gives a shit what Marcus Hayes says? He lost all credibility about 10 years ago.

  8. I’d break my piggy bank for some of that non-bundled service. If only the racist David Montgomery would live through this. Get it?

  9. Nice work by you with the continuing “Christmas Vacation” theme. Keep it going!

    You need to find a way to work in the scene where Clark puts the lights all over the outside of the house. (Maybe if/when the Eagles win tonight?)

  10. Hey Andy, that movie sucks. Beat it!! I’m about to crack into a Cream Soda and watch Training Day… A real movie.

  11. Looks like Amaro is running the business side too! Deal is a year late and 40 mil less per year. Way to go Ruben.

  12. No matter what enjoi that 08 ws it will be the last the phillies are now officially small market purgatory

Leave a Reply

Your email address will not be published. Required fields are marked *