Top

news

Stories

 

How the Dodgers' New TV Contract Exemplifies Major League Baseball's Problems

Cable subscribers are subsidizing a dying industry

"Baseball has been declining in interest for some time in terms of the young male audience," says Patrick Rishe, an economist who studies sports at Webster University in St. Louis. "I think baseball is seen as archaic. The sport moves at a slower pace. Their athleticism doesn't jump off the screen. I think they have to find a way to speed it up."

But much like the Republican Party, the game is hamstrung by its sizable purist wing, those who believe the slightest change invites heresy. Meanwhile, the economic disparities continue to mount.

Webster University economist Patrick Rishe: "I think baseball is seen as archaic. It moves at a slower pace. Their athleticism doesn't jump off the screen."
PHOTO BY TOM CARLSON
Webster University economist Patrick Rishe: "I think baseball is seen as archaic. It moves at a slower pace. Their athleticism doesn't jump off the screen."

No one knows this better than the people of Kansas City. During the 1970s and '80s, the Royals were a power on par with the Red Sox, despite playing in the country's 31st largest market.

"Stands were filled," says Joe Posnanski, the town's former dean of sportswriters at the Kansas City Star. "Everyone talked about the Royals. It was really one of the best baseball cities in America at that time."

Yet Kansas City stopped playing for titles in 1985, just as the league's crevice between rich and poor was becoming too wide to jump. The Royals sunk to little more than schedule filler, a talent farm for the rest of baseball.

Players like Carlos Beltran, Johnny Damon and Zack Greinke "were traded before their contracts expired because the Royals said they could no longer afford them," according to Posnanski. "It started to feel like a vicious circle, and it depressed many Kansas City Royals fans."

He has no doubt that "if the Royals start to win, and win big, the young fans will get excited about them."

But that winning part is a big if. Local TV will bring the Royals just $20 million this year. Even with an estimated $25 million in revenue sharing, they're still at a 4-to-1 disadvantage against the Dodgers. Toss in a potential fan base that's but a speck of L.A.'s, and the Royals become a mom-and-pop clothier parked next to Walmart.

They might win a sale or two, even have a good year. But few succeed in business or baseball when the odds are this stacked.

Television's strong-arm racket

The collapse of baseball's TV revenue won't come from die-hard fans. The sport's truest disciples likely will pay more and more until there's nothing left.

The problem is non-fans, who are picking up most of the check.

Here's how it works: Just six companies control 90 percent of America's TV programming. And they won't let your local provider simply carry the channels you actually want to watch in order to keep your bill modest.

When Disney negotiates contracts, anyone who wants ESPN usually is forced to buy a bundle that includes lesser fare such as ESPN Classic or ABC Family, whether they want them or not.

The same goes for programmers like Viacom. If you want Nickelodeon or MTV, you're also required to buy Logo and VH1 Classic, among the lowest-rated channels in television.

"It's incredible," Polka says. "If you want one popular channel, they make you take 10."

Most contracts require that all channels be included as part of a cable company's "basic" package. That's why your TV menu is loaded with shows about tow-truck drivers and women who make bras.

"It causes us to basically be forced to provide a bloated, expanded level of basic cable service," Polka says. "Our customers know that these aren't channels watched on a regular basis, but they still have to pay for the monthly subscriber fee. Because of your market power, you are essentially forcing me to carry channels I don't want."

Baseball rides comfortably in the backseat of this strong-arm game. According to research firm NPD Group, the average cable or satellite bill will reach $200 by 2020. Half of that fee will go to sports. And everyone pays, because most providers are barred by contract from moving sports to a premium package.

That's why Fox can double its payments to carry the World Series. Though only 10 percent of America will watch, the remaining 90 percent will cover the cost.

Yet consumers have clearly tired of picking up someone else's check. During a single quarter in 2012, Comcast lost 117,000 subscribers. While such figures are cyclical, cable and satellite have lost customers nine years running.

What's worse for baseball, the largest exodus involves young viewers, who increasingly turn to cheaper options such as Netflix and Hulu. They're not just turning away from the game; they don't even want access.

But neither television nor baseball seems to notice these darkening skies. Take the country's most obsessive TV market, Los Angeles, where a school of piranhas has attacked the city's cable bill.

Not long ago, L.A. hosted just two regional sports channels. Soon there will be seven. The Lakers charge $4 a month. Fox bills $5.40 for its two channels. The Dodgers are expected to add another $5. And Bevilacqua just negotiated a stunning 500 percent increase for the media rights to college football's Pac-12.

"There are no new pro or college games being created," says DirecTV's Dan York. "But what used to be delivered via two regional sports networks now seeks to be re-sliced into [multiple channels and] more costs for consumers. That's not a sustainable model."

<< Previous Page | 1 | 2 | 3 | 4 | All | Next Page >>
 
My Voice Nation Help
13 comments
billdale
billdale

I have never subscribed to cable or satellite, and never will so long as they play these games where everyone is forced to order a bloated menu and agree to pay such outrageous fees. If I can pick and choose which channels I watch, and can simply pay for those channeIs I actually watch, I may finally subscribe to cable for the first time-- until then, I'll get by on what is broadcast for free, and what I care to see at walk-in theaters, what is available online, and what's available while I'm at the gym. I refuse to give in to bullies.

I would never watch baseball or football in their present form: hours of sitting and waiting for players to execute a few spare minutes of action... that's insane. If I want to watch sports, I'll watch Kobe and company as they work out vigorously throughout an entire game... or, even better, burn some calories myself rather than be a mere spectator, getting fat on a couch with a remote in hand.

SaMo
SaMo

"Viewership for the NBA Finals — though reduced from the days of Bird, Magic and Jordan — is once again climbing skyward."

This is simply not true.  Nielsen ratings for the NBA finals have declined from 10.6 to 10.2 to 10.1 over the past three years. 

NativeAngeleno
NativeAngeleno

You assume too much, mainly that the status will remain in quo across the board.

As people revolt against cable and satellite bills, the cost will have to be downgraded. This will become the case especially after the dollar is devalued down to it actual worth, maybe a nickel.

Prices for everything will drop accordingly, after a while. People will still crave their diversions, tho, so baseball will be there and just have to adjust, along with everyone and everything else.

It could well turn out that ballplayers and owners alike will have to downgrade their years of pillaging the glory hole to a more common status of "survival, plus".  An equilibrium will be found that pays the average multi-millionaire player the then-equivalent of a few hundred thousand dollars instead, the average billionaire owner a few hundred million. Baseball's take will have shrunken to meet fans' discretionary spending. That's all. 

The economics will not kill the game. I would offer the assertion that no other game is POPULAR enough to be played, to adequate attendance, 6 days a week, ESPECIALLY in baseball's apecial season, summer, when no other game can even be played, beside soccer. And soccer especially in the US will never replace baseball. It doesn't even replace baseball in countries where there is nothing else BUT soccer!

As the years go by and the old like me (63) die off, we will be replaced by other then-oldsters, now 30 and 10.  The slower game is for those who age their way into appreciation of it. You may not have learned to appreciate this fact yet,m if ever.

Whether national contracts will disappear altogether---they won't---so long as enough local interest exists, no matter the state of the economy, the game will be played.  I have watched my oldest child, now 26, go from disdaining the game to really loving it, in part because her boyfriend does. They have their own favorite team they follow. As they age, they will appreciate their allegiance more.  Ask any fan who is now old when they started really watching, and attending spring training, and the like. It's as they age. That's how it works, that's how it stays extant. Screw the demographics, they do not tell the end of the story. And the economics always adjust to the availability of spending money. I haveno worry baseball will be around and loved way off into the future. I know too many people way younger than me who have discovered they love it. In LA in particualr, baseball is moving away from the Northeast into the new center of the baseball universe hereabouts, That switch is bolstering new allegiances atop the old which will remain, tho a little diminished. Baseball is evolving, and because of it will survive. 

DemBoyz213
DemBoyz213

Barton Block

http://www.youtube.com/watch?v=az1Q_b7EzXE

"Skywalker" mixtape Hosted by DJ Rack$ is set to drop soon, and will be available for FREE download....

Stay Connected with us

www.twitter.com/barton_block

www.youtube.com/bartontv

www.facebook.com/bartonblock


One Love LA!

Have a Blessed Day....

jkkdistrict
jkkdistrict like.author.displayName 1 Like

How is Willie Wilson batting in the bottom of the ninth in Philadelphia?

pizzmoe
pizzmoe

@jkkdistrict Good observation!  He most certainly did not bat in the bottom of the 9th, but it made the story more dramatic, right? Makes you wonder what other facts were fudged

louispfreely
louispfreely

I subscribe to MLB.tv and use a VPN to get around the blackout to watch Dodger games.  I know a bunch of other guys who do the same thing.  We ain't showing up on your stats. 

Rhoberly Gillon
Rhoberly Gillon

I do not like this at all! Unfair, I don't watch sports, and I don't care at all about them

NativeAngeleno
NativeAngeleno

@Rhoberly Gillon Why are you reading this?!

Overwhelm your congressman into passing a law that forces cable and satellite to de-bundle your costs. Until you do that, stop whining about it.

Ed Kim
Ed Kim

Greed. But maybe it will be like a house. Buy something you can barely afford and hope you financially "grown into it." I haven't been able to take a close look at the numbers so I don't know if "growing into it" is possible.

apalemick
apalemick

Most everyone I know watches online now.

 
Browse Voice Nation
  • Voice Places Los Angeles

    Voice Places

    Find everything you're looking for in your city

  • Happy Hour App

    Happy Hour App

    Find the best happy hour deals in your city

  • Daily Deals

    Daily Deals

    Get today's exclusive deals at savings of anywhere from 50-90%

  • Best Of

    Best Of...

    Check out the hottest list of places and things to do around your city