NEWSLETTER
It was a question I had a few days ago: with the lockout careening toward the loss of regular season games, at what point do MLB’s broadcast partners – primarily the Regional Sports Networks that carry most of their games – start beefing? Those partners offer up coin that represents the majority of most teams’ revenue intake nowadays, and most are not co-owned with the team, in whole or in part. So when does the lockout become a problem for them? And, in turn, for the owners?
It wasn’t a hypothetical question, since we know from the pandemic season that it has a real answer. There is a point at which MLB teams are contractually obligated to rebate RSNs for games that weren’t played. I knew it happened in 2020, with 102 games lost for each team, but what I didn’t know is how MANY games would have to be lost this year for those rebates to be issued for the second time in three years – a prospect that cannot be palatable to even the smallest of small market owners. My gut said it was around a month, which is part of why I was so frequently mentioning a group of owners being happy to chop off about a month of the season – they save player expenses, they don’t lose a ton of gate revenue (because April attendance is often soft), and they might still be able to pocket that guaranteed RSN broadcast rights money.
I was in the ballpark, and now that we know the rough answer, I wanted to share, since it’s a potentially significant pain point for owners, and a possible spot where you might see the leverage start shifting back to the players (and we *might* actually see real movement toward getting a deal done).
Per Ken Rosenthal and Jeff Passan, although it’s not exactly the same in all RSN contracts, the number of games lost before rebates are required is right around 15 to 25 games. So, if you were thinking ahead to how many games MLB might consider dumping before the owners feel some TV pressure, it could be that range. For context, the Cubs had 27 scheduled games from March 31 through the end of April.*
So, the pressure point probably starts to arrive, at the earliest, around mid-April, which would mean another 10 or so games cancelled, and at least another 10 days before you would even start thinking about MLB trying for another negotiating “deadline.” Within a couple weeks, this topic is going to be getting a LOT more attention, and the bargaining position might flip for at least a few owners. Maybe enough to matter.
Again, all this varies deal to deal, and it’s only the start of those rebates. It’s possible some owners are content to issue at least some rebates, and the national broadcast money comes far more from the playoff deals.
On the flip side, it’s possible that MLB comes to its senses even sooner, and actually tries to make a reasonable offer this weekend, before having to cancel any more games at all. I wouldn’t bet on it, but it’s at least possible on the order of, like, a 10% shot.
*(Note that, in the Cubs’ case, Marquee is half-owned by the Ricketts Family, but the other half is owned by Sinclair. So, issuing rebates is a consideration, though a lesser one than for many other organizations, particularly those in smaller markets. It’s been my guess that, because of the disproportionate value of games to the Cubs and the need to keep standing up Marquee, the Ricketts are not among the owners pushing the hardest for cancellations.)
