The Phillies’ TV Deal Came Two Years Too Late

DAMMIT, JESSIE!
DAMMIT, JESSIE!

Excellent article by Wendy Thurm on FanGraphs today which does a nice job summarizing what I’ve been saying all week– that the Phillies and Comcast agreed to a deal that is sane, but also in Comcast’s favor (when compared to other recent deals in baseball).

Here’s the gist of her piece: The Phillies’ deal with CSN (25 years, $2.5 billion, 25% stake, advertising revenue share) is likely smaller than, but most similar to, the Angels’ recent deal with FOX Sports West (20 years, $3 billion, 25% stake). On one hand, you can say that the Phillies, who play in the fourth largest market, got a comparable deal to a team in the second largest market. That’s what Dave Warner argued on our podcast this week. But I disagree. And so does Thurm. Yes, the LA market is twice as big as Philly (~3 million compared to ~6 million), but it also has two teams – the other is more recognizable and has billions to mess around with – and the Angels get terrible ratings:

But the Angels have logged some of the lowest TV ratings in Major League Baseball in the past five seasons. In 2009, the Angels pulled a 1.2 rating for their games, the equivalent of 66,000 households. The figure remained unchanged in the 2010 season and dropped to 1.14 in 2011. In 2012, the first season under the new deal with Fox Sports West — and the first with Albert Pujols in the lineup — the ratings dropped further, to 1.12. The Phillies, on the other hand, were television gold — at least until last season. In 2011, the Phillies captured a 9.0 TV rating, an average of 276,000 households per game, second only the New York Yankees. But the Phillies’ struggles on the field in 2013 brought those ratings back to earth. The team’s TV ratings plummeted 39% from the 2012 season average. Other big market teams like the Yankees, Mets, Cubs and White Sox also saw their local TV ratings drop significantly.

Even after the last two seasons, the Phillies still get more viewers than the Angels. They play in a more sports-crazed city. And, over time, it should be expected that they’ll continue to get better ratings than the Angels. Yet, they got a smaller TV deal. The popular sentiment over these past couple of years, however, has been that the Angels’ deal set the market and that the Phillies would get substantially more.

[UPDATE: On Twitter, Warner points out that FOX Sports West has over 6 million subscribers, which is more important than ratings when it comes to carriage fees. That makes sense. But in the longterm, as networks become more dependent on sports fans to pay those fees, Philly is still a better market, with more fans and presumably people willing to pay for sports, than LA.]

So what happened?

This is what I’ve been saying– the Phillies deal came two years too late. In the past couple of years, we’ve seen a shift in TV viewing habits (cord-cutting, the popularity of streaming services) and other regional networks – in Houston and San Diego – struggle to get cable providers and viewers to pay for their channels by way of hidden carriage fees. [Warner’s site helps you figure out what you’re paying and to whom.] That’s left regional sports networks like CSN somewhat scared, and the result appears to be a safer, perhaps more sustainable deal with the Phillies, who will now shoulder some of the burden in, you know, making money. Thurm’s conclusion explains it nicely:

The Phillies now have a local TV contract on par with other MLB teams in big-city markets like the Angels, Rangers and Giants, as you can see from this chart I compiled last July. But those deals were negotiated several years ago, when the sports TV market appeared to have no ceiling. Now, RSNs must be concerned with recouping these long-term investments in an environment where cable and satellite operators are balking at paying the rates the RSNs want to charge to carry their network. In this post from last July, I explained the economic forces at work in creating the sports TV bubble and the factors that may result in a burst.

Indeed, there are reports that the new Dodgers-Time Warner Cable network is having trouble signing up cable and satellite operators. The new network, called SportsNetLA, is set to launch for the 2014 season. The deal reportedly is worth $8 billion over 25 years but you have to wonder whether the deal will last if TWC is left holding the bill for the carriage fees the pay-TV providers don’t want to pay.

The Phillies and Comcast may not have set a new standard for local sports TV deals, but they appear to have entered into a deal prepared to succeed in the changing economic landscape.

There are a lot of factors at play, and, yes, the Phillies will benefit somewhat in their new deal by the fact that their income from advertising revenue and their equity stake won’t have to be shared with the league, but the end result is still a deal that is better for Comcast than it is for the Phils. Which means they won’t have a bottomless pit of money to spend on free agents the way we thought they would.

David Murphy tried to estimate what the Phillies will earn from their equity stake and advertising revenue. There are a lot of ifs and assumptions in his piece, and his first set of estimates is likely wrong, but in the absence of hard numbers, he does a good job of explaining why the take-home won’t be that much.

Recommended readingThurm’s piece today. And this post from July on the TV bubble.

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18 Responses

      1. Like you would be awesome in a thong(if you can look pass all the fat and cellulite).

  1. With the UFC Fight pass and WWE network this is the beginning of the end for cable. We are going to an al a cart model with subscriptions to the content you want over bloated packaged cable deals. Remember this years Consumer Electronics Show (CES 2014) it was the first nail in the death of cable coffin. Playstation Now’s annoucement too also lends light on the streaming of OnDemand and Live content directly to smart tv’s without the need of a cable box. I cut my cord on cable in July and I will never go back. I just VPN out of the Philly IP and I get local sporting events streamed to my home in South Jersey.

    1. Chromecast isn’t bad either. I agree though, major network television is going to get phased out. It’ll take a while though…probably something like 5-10 years. This is the beginning of the end.

      1. got chromecast, but was pretty disappointed when i found out you can’t stream local media. only $35 bucks tho

    1. Virtual Private Network. It allows you to connect to a network in a different location.

      Google it.

      1. Face, can you put your face in my crotch?
        Seriously, stop writing about this cable deal! Who gives a fuck? The Phillies are going to blow for a long time. Pick a new team. Show RA he’s not wanted.

        1. You must be that negative whiny bitchy angry Larry guy who calls into WIP often to the Anthony Gargano show.

          Dude lighten up,just because you are a miserable SOB and is down on all Philly sports teams,doesn’t mean everybody else is(including myself).

          #gophillies

        2. Pick a new team? Look, I hope they fire RAJ as much as the next Phillies fan. I think he’s the worst GM in any sport not named Paul Holmgren, but you never abandon your team.

  2. Kyle, please send me a free t-shirt.
    31 W Main St
    Lansdale, PA 19446

    Love,
    Larry Stein

  3. Does this deal mean that PHL17 won’t have anymore games? I hope so because that will mean that Mikey “cock gobbler” Misannelli will be out of another TV gig. He has a great talent of finding loser sports shows to be on, that look like they were produced by middle schoolers, only to then be cancelled. So far it’s GSD (version 1), Sports Final, GSD (version 2 which if possible was even worse then the first), and now hopefully the PHL postgame show. I guess the TV industry has figured out what the radio industry has yet to catch on to. That he is an annoying douche and nobody wants to stare at his dumb helmet and bowling ball eyes, and that nobody cares what that fag says. Gee I’m so surprised he is divorced. What’s more surprising though is that someone would’ve married that man bitch in the first place

  4. Yep the Phillies are off of free TV. If I was the owner of Channel 17, I would import games from some other team …..say the Mets. Just so the old hard-core baseball fans who can NOT afford a million dollars a month for Comcast can still watch baseball games.

  5. Una persona essenzialmente dare una mano sensibilmente articoli potrei Stato. Questo è il prima volta che ho frequentato il suo pagina del sito e fin ? I sorpreso con di ricerca analisi che hai fatto per creare rendere questo reale inoltrare straordinario. meraviglioso processo !

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