The reports last week were just too vague for me to be able to write anything up, with lines like "Sources would not provide details of the agreement, such as specific financial terms or even the length of the contract." Really, that's just too speculative for my palate. The new information seems more solid: while it is still not precise with regard to value or length, the basic elements appear to be:
- The deal is for 20 years.
- The price "guarantees the club north of $1.5 billion"
- Also included: a stake in Fox Sports Arizona.
Breaking it down, this would appear to lead to the club getting around $80 million per year for the rights to their games, which would be 2.5 times the current rate, of $31 million per season. There seems little doubt that the additional $50 million in income will be available in payroll, team president Derrick Hall saying that any increase in revenues, "Will go directly toward our (organization). It will help the franchise. It will help the product on the field." That probably won't be of much assistance this year, since the new stream won't come on tap until next season, but should mean the team will be able to make a run at two or more major free-agents next winter.
For the team, it make sense to cash in, because live sports is one of the few products more or less DVR-proof: it's certainly the only thing we watch "live," without fast-forwarding through the commercials. For the cable companies, it makes sense too, despite increasing concern about how long the bubble of increasing TV rights deals can last. We already saw most of Los Angeles unable to watch Dodgers' regular-season games last year, because carriers balked at the sharply increased cost. Industry analyst Maury Brown reckons the current system "will just collapse under its own weight, whether it’s due to the fact that Congress steps in or the carriers finally stop allowing for it."
Will the present model still be around in 2035 when the new deal runs out? If you look back at how different the media landscape 20 years ago, when Intenet access was basically limited to dial-up and mobile phones were roughly the size of a brick, with about the same computing power, that would seem a questionable assumption. Companies like Fox Sports Arizona are going to have adapt to a changing landscape - and the value of the team's stake in the media organization will depend on how well they do that. But for now, how does the Diamondbacks new deal compare to the rest of the National League West?
Colorado. The Rockies are the poor men in the division, and that won't change any time soon. They have a ten-year, $200 million deal with ROOT Sports, but it doesn't expire for another six seasons, until the end of 2020. While there is some suggestion the team will get more money towards the back end of the contract, this may be more hope than anything, and it appears the franchise will remain relatively cash-strapped as they try to make the playoffs for the first time since 2009.
- Los Angeles. The deal heard 'round the world was the one signed by the Dodgers with Time Warner Cable in February 2013, covering 25 years and worth up to eight billion dollars. But there was immediate blowback, because the cost had to come from consumers, and a number of local carriers balked at the price, leaving 70% of homes unable to watch the Dodgers win the NL West in 2014. The picture remains murky for this coming season, with reports last month saying "there is no sign that a resolution will come any time soon."
- San Diego. They have already gone in to the broadcast business, being a 20% partner in Fox Sports San Diego, with Fox Cable Networks owning the other 80%, after a deal agreed in early 2012. This pays the Padres an escalating amount, which began at $28 million, and could be as high as $75 million by the time it ends in 2031. Interestingly, Time Warner Cable were the last local holdouts, refusing to carry the channel for the first two seasons, until the beginning of last year's campaign.
- San Francisco. It's going to be a long, long time before the Giants will be able to negotiate a new deal, having signed a 25-year contract with Comcast and Fox Sports, which came into effect before the 2008 season. That means there will be no new deal until 2032. However, the team is reported to get a percentage (about one-third) of the revenue received by Comcast. So as existing deals to their carriers expire and are re-negotiated at a higher level, so will the amount received by the team.
Presuming the final deal is at or close to the numbers expected above, that would seem to put the D-backs in a better situation that the Rockies and Padres, in terms of immediate income per season. It's hard to gauge where the stand in comparison to the Giants, and of course, they're still a long way behind the Dodgers - but at least, we'll be able to watch the 2015 Diamondbacks in action. One can only imagine what the scene at Chase Field was like as negotiations progressed towards this deal...