Outside Topic Bally's bankruptcy - Printable Version
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Bally's bankruptcy - OutsiderFan - 02-17-2023
This is a really informative article that speaks to the changing landscape of sports media rights, with a focus on MLB.
https://tcbmag.com/the-bally-sports-mess-explained/
Count me as wanting MLB to move away from the RSN model and MLB doing the negotiating for all the teams, pooling the money and have a much greater revenue distribution - that will come with a salary cap - between MLB teams. It's so bad to have a league with teams that you know as "small market" and "big market" competing at the same level.
Even the college conferences have realized how equal revenue sharing among conference members is in the best interest of all parties, big program or small. The NFL has become the biggest sports business by following an equal revenue distribution model. MLB is going to figure this out eventually.
RE: Bally's bankruptcy - Giants - 02-17-2023
(02-17-2023, 02:29 PM)OutsiderFan Wrote: This is a really informative article that speaks to the changing landscape of sports media rights, with a focus on MLB.
https://tcbmag.com/the-bally-sports-mess-explained/
Count me as wanting MLB to move away from the RSN model and MLB doing the negotiating for all the teams, pooling the money and have a much greater revenue distribution - that will come with a salary cap - between MLB teams. It's so bad to have a league with teams that you know as "small market" and "big market" competing at the same level.
Even the college conferences have realized how equal revenue sharing among conference members is in the best interest of all parties, big program or small. The NFL has become the biggest sports business by following an equal revenue distribution model. MLB is going to figure this out eventually.
Why should the Yankees and Dodgers subsidize teams that make zero effort to field a competitive team? Fisher would simply pocket his share and the A’s would still be woefully underfunded.
No to revenue sharing, no to salary caps and yes to a free market - spend whatever you want…..
RE: Bally's bankruptcy - BostonCard - 02-17-2023
There is something to that, but there is also something to a bit of competitive balance in making the sport more popular.
BC
RE: Bally's bankruptcy - Giants - 02-17-2023
(02-17-2023, 07:49 PM)BostonCard Wrote: There is something to that, but there is also something to a bit of competitive balance in making the sport more popular.
BC
8 different teams have won the World Series in the last nine years.
6 different teams have won the Super Bowl in the last nine years.
Competitive balance is not determined by how much teams are permitted to spend. Strong leadership from the front office to the on-field manager/coach that can identify talent and maximize their skills will always win regardless of the rules pertaining to spending.
RE: Bally's bankruptcy - OutsiderFan - 02-18-2023
(02-17-2023, 04:17 PM)Giants Wrote:(02-17-2023, 02:29 PM)OutsiderFan Wrote: This is a really informative article that speaks to the changing landscape of sports media rights, with a focus on MLB.
https://tcbmag.com/the-bally-sports-mess-explained/
Count me as wanting MLB to move away from the RSN model and MLB doing the negotiating for all the teams, pooling the money and have a much greater revenue distribution - that will come with a salary cap - between MLB teams. It's so bad to have a league with teams that you know as "small market" and "big market" competing at the same level.
Even the college conferences have realized how equal revenue sharing among conference members is in the best interest of all parties, big program or small. The NFL has become the biggest sports business by following an equal revenue distribution model. MLB is going to figure this out eventually.
Why should the Yankees and Dodgers subsidize teams that make zero effort to field a competitive team? Fisher would simply pocket his share and the A’s would still be woefully underfunded.
No to revenue sharing, no to salary caps and yes to a free market - spend whatever you want…..
The #1 driver of sports consumption is uncertainty of outcome. This is why the NFL is the richest league in North America by pursuing parity, and gambling is such a gigantic and growing part of the games. And based on some data I heard yesterday from a sports media and gambling executive, I actually think the reason the pitch clock was introduced in MLB has as much to do with gambling as it does anything else. It was shocking to hear the numbers of bets people are making on things like "will the next pitch be a ball, strike, or be put in play, and will it be o/u x MPH." To keep an audience engaged and betting, you need a certain pace of play like the NFL and NBA have with the play clock and shot clock.
But back to the point, MLB teams are facing a big challenge with the migration to streaming of games and the future of the RSNs that MLB teams have relied on for so much of their revenue is bleak at best. Only MLB has the leverage to control the assets in packages to drive up their cost. If 32 teams cut their own deals, the overall amount paid for them will be lower than if MLB does one sale for all of them. Ultimately, if the clubs decide to pool their rights like schools do in college conferences, all but a handful of teams will earn more money on a per team average basis.
It sure seems we are going to be watching more games on YouTube, Apple, Amazon, and ESPN+ than cable in the not too distant future. In that streaming world, it's not going to matter what individual markets the teams are playing in when the price for MLB rights is determined. It's not like the SEC schools are in major markets and look at the money they command. I can stream a game from the middle of Montana where there is no MLB team for hundreds of miles without need for a cable subscription to an RSN in a given market to watch. And I won't need a cable or satellite subscription to get MLB Extra Innings to see it either. I'll be paying someone else for the streaming service on top of my ISP, and that someone else will have spent a fortune for the opportunity to stream the games.
But the bigger deal is gambling. Individual teams can't really cut deals with gambling services and mass market them like the leagues can, and gambling services need leagues to promote gambling through their own media assets because the customer acquisition cost right now is apparently $900 per (a lot of this is the money gambling services give people to start out with in their account). Any money gambling services can save by having league partners use their own assets to promote them, is super valuable.
There are so many variables at stake right now that really have nothing to do with traditional valuation metrics like market size, that it's hard for me to believe there aren't going to be some significant evolutions in how particularly MLB teams generate, and more importantly, share revenue. And I do think MLB owners want a salary cap and will eventually get one. All they need to do is convince enough union members that a cap will make more members more money than they are making now and it will happen.
RE: Bally's bankruptcy - cardcrimson - 02-18-2023
(02-18-2023, 07:57 AM)OutsiderFan Wrote: The #1 driver of sports consumption is uncertainty of outcome. This is why the NFL is the richest league in North America by pursuing parity, and gambling is such a gigantic and growing part of the games. And based on some data I heard yesterday from a sports media and gambling executive, I actually think the reason the pitch clock was introduced in MLB has as much to do with gambling as it does anything else. It was shocking to hear the numbers of bets people are making on things like "will the next pitch be a ball, strike, or be put in play, and will it be o/u x MPH." To keep an audience engaged and betting, you need a certain pace of play like the NFL and NBA have with the play clock and shot clock.
I always thought it was locality that drove people to sports. People who live in and around Philly, watch the Phillies and the Eagles, and become attached to them. Same with other areas around the country. People in Alabama watch Alabama or Auburn, whether they attended those schools or not (attending does add to it). Little did I know it's been uncertainty of outcome all along.
As for gambling, one would think that added time between pitches would allow gamblers to get those prop bets in, guess not. Anyway, I thought that shortening the game was to make it more watchable, especially for the younger generations. Guess it's to entice and enable more gambling.
Always great to be enlightened. . . .
RE: Bally's bankruptcy - Giants - 02-18-2023
(02-18-2023, 09:04 AM)cardcrimson Wrote:(02-18-2023, 07:57 AM)OutsiderFan Wrote: The #1 driver of sports consumption is uncertainty of outcome. This is why the NFL is the richest league in North America by pursuing parity, and gambling is such a gigantic and growing part of the games. And based on some data I heard yesterday from a sports media and gambling executive, I actually think the reason the pitch clock was introduced in MLB has as much to do with gambling as it does anything else. It was shocking to hear the numbers of bets people are making on things like "will the next pitch be a ball, strike, or be put in play, and will it be o/u x MPH." To keep an audience engaged and betting, you need a certain pace of play like the NFL and NBA have with the play clock and shot clock.
I always thought it was locality that drove people to sports. People who live in and around Philly, watch the Phillies and the Eagles, and become attached to them. Same with other areas around the country. People in Alabama watch Alabama or Auburn, whether they attended those schools or not (attending does add to it). Little did I know it's been uncertainty of outcome all along.
As for gambling, one would think that added time between pitches would allow gamblers to get those prop bets it, guess not. Anyway, I thought that shortening the game was to make it more watchable, especially for the youngest generations. Guess it's to entice and enable more gambling.
Always great to be enlightened. . . .
You nailed it CC. Creating more action throughout a shorter game is all about developing a product that fits the attention span of the next generation. Of course, some of us will miss the languid pace of the game. C’est la vie….
RE: Bally's bankruptcy - OutsiderFan - 02-18-2023
Since when does "as much" mean "more than"?
There is no doubt gambling plays a very large role in how the sports leagues are operating themselves because it's the greatest driver of revenue growth the leagues have. So "appealing to a younger audience" also means "appealing to a younger audience more interested in gambling."
As for uncertainty of outcome, way back when I was in my first weeks of Sports Management graduate school I read a study of European soccer matches that concluded uncertainty of outcome is the primary factor in whether the marginal fan consumes a contest.
While it is of course true that fans root for local teams, that is not the same as what is driving interest in consumption of the product. Here's a study on the topic by someone I know, who is a sports economist, if you want to learn more.
https://repository.usfca.edu/cgi/viewcontent.cgi?article=1002&context=ess
RE: Bally's bankruptcy - cardcrimson - 02-18-2023
(02-18-2023, 12:35 PM)OutsiderFan Wrote: Since when does "as much" mean "more than"?
There is no doubt gambling plays a very large role in how the sports leagues are operating themselves because it's the greatest driver of revenue growth the leagues have. So "appealing to a younger audience" also means "appealing to a younger audience more interested in gambling."
As for uncertainty of outcome, way back when I was in my first weeks of Sports Management graduate school I read a study of European soccer matches that concluded uncertainty of outcome is the primary factor in whether the marginal fan consumes a contest.
While it is of course true that fans root for local teams, that is not the same as what is driving interest in consumption of the product. Here's a study on the topic by someone I know, who is a sports economist, if you want to learn more.
https://repository.usfca.edu/cgi/viewcontent.cgi?article=1002&context=ess
"The #1 driver of sports consumption is uncertainty of outcome." from your earlier statement. Now it's: "uncertainty of outcome is the primary factor in whether the marginal fan consumes a contest". Nice qualifier added.
As for the study, brilliant work; love the title: "Do Fans Want Close Contests? A Test of the Outcome Hypothesis Uncertainty in the National Basketball."
Amazing conclusion, too: "However, in order to increase fan enjoyment and maximize league revenue, each team should win more often at home. Therefore, it is optimal for leagues to attempt to maintain competitive balance throughout the season and concurrently have home teams win more often."
Stunning.
RE: Bally's bankruptcy - Chupacabra - 02-21-2023
You're way off the point, OF. The reason the NFL is able to do what it does is that it's a one game a week schedule. MLB, NBA, NHL all have more than one game a week, which makes it a much more regional thing than the NFL. You're never going to get the eyeballs on the games that the NFL does. Also remember that the issue with Diamond isn't just an MLB thing, it's those other two leagues as well.
I think I have a much closer relationship to this product than anyone else on this board and it's safe to say there are other elements at play as well. First, the NFL owns the broadcast rights to games, where in other leagues the teams do. In addition, the regional nature of the other sports means that the production needs to be local/regional instead of national. That's why you have Tony Romo traveling to the best game and Bob Fitzgerald traveling with the team. The broadcasters are actually team employees.
The thing to realize here is that the problem isn't with the product. It's that Diamond spent too much to acquire the rights from Fox/Disney. It was a bad business decision by the company and they're struggling with the payments on the purchase rather than a lack of revenue.
You look at the other RSNs and they're doing fine. But the teams that are doing best are the ones who have their own networks. Of course, this is more feasible in large markets like New York where you have YES and MSN. A smaller market like Memphis (why would that be my example?) would struggle with this model because there just isn't the content to fill a full network.
Looking forward, there's a real crossroads we're coming to in this world. Live sports have practically kept the TV cable industry afloat as more and more people transition to streaming but that isn't going to last forever. The big questions in live sports on TV surround how the model will translate to the streaming environment. Do I have an answer for that? No, I'd be making a lot more if I did.
But that's another reason that something like MSN is such a great deal for Dolan and the Knicks. Because they control the rights to their product (instead of having licensed to a RSN), they can be more nimble on streaming platforms. They haven't locked themselves in to a contract where the provider is at risk of going bankrupt.
As for the leagues taking control of the product, I don't know that's in the best interest of the viewers. It's possible, and I'm definitely biased. But what that will means is that there are fewer cameras at every game, which means more shared cameras between broadcasts, which means a viewing experience less tailored to the local viewer, who is the target for the broadcast. Sure the NBA has TNT, TBS, and ESPN broadcasting national games and that's great. But those are premiere games Warriors/Lakers, Ja/Zion, or Celtics/76ers. But in the Bay are you going to watch a Rockets/Magic game? Not a chance. How about Blazers/Bucks? That's a game with star power but the answer is still no. Hornets/Wizards? Please get me a drink...
But that doesn't mean those local markets don't want to see those games. The NBA has a plan to take over production for the rest of the season but that's just a temporary thing. There's just too much involved for them to run/manage all that goes into 162 or 82 games a year. Plus, what do you do with the Yankees or Knicks, who literally built their own cable channels? Do you just say, "Good idea but sorry?"
I understand what you're saying about why it seems like it might make sense for the league to step in but it really isn't feasible.
The positive aspect to it is that live sports aren't going anywhere and there will be a transition to streaming. Diamond's potential (pending) bankruptcy may actually help push that forward. It's just going to take some adjustment and learning new technology on the part of viewers to get there.
(02-18-2023, 10:30 AM)Giants Wrote: You nailed it CC. Creating more action throughout a shorter game is all about developing a product that fits the attention span of the next generation. Of course, some of us will miss the languid pace of the game. C’est la vie….
Count me as one who strongly disagrees with this. I think the biggest issue with baseball's issues has nothing to do with the product on the field and everything to do with how they market the game. Sports are about characters–stars–and MLB is consistently terrible at figuring out an effective, coherent way to market its stars.
If you look at MLB since Selig took over, it has consistently shot itself in the foot by taking the bag of cash in front of them instead of positioning the sport for continued growth down the line. I don't want to get into all the specifics because there are too many, but the best example is that they actively remove highlights from fan posts on social media or within web articles in deference to the RSNs broadcast rights. Does the RSN broadcasting license technically apply here? Yes. Is it crazy to minimize fan engagement by taking down the best avenue to get as many possible eyeballs on the most exciting moments in the sport? Absolutely.
The NBA has the same broadcast license rules but recognizes this is free advertising for the product and a vehicle to keep fans engaged in an organic way that can't help but benefit.
This is just one example and there are many more (I'm particularly interested in MLB's approach to labor in the minors). I strongly, STRONGLY believe that it isn't a sport issue but a business issue that Manfred is ignoring and trying to patch with sport fixes. It's like putting a bandaid on a fever.
RE: Bally's bankruptcy - BostonCard - 02-21-2023
(02-18-2023, 01:36 PM)cardcrimson Wrote:(02-18-2023, 12:35 PM)OutsiderFan Wrote: Since when does "as much" mean "more than"?
There is no doubt gambling plays a very large role in how the sports leagues are operating themselves because it's the greatest driver of revenue growth the leagues have. So "appealing to a younger audience" also means "appealing to a younger audience more interested in gambling."
As for uncertainty of outcome, way back when I was in my first weeks of Sports Management graduate school I read a study of European soccer matches that concluded uncertainty of outcome is the primary factor in whether the marginal fan consumes a contest.
While it is of course true that fans root for local teams, that is not the same as what is driving interest in consumption of the product. Here's a study on the topic by someone I know, who is a sports economist, if you want to learn more.
https://repository.usfca.edu/cgi/viewcontent.cgi?article=1002&context=ess
"The #1 driver of sports consumption is uncertainty of outcome." from your earlier statement. Now it's: "uncertainty of outcome is the primary factor in whether the marginal fan consumes a contest". Nice qualifier added.
As for the study, brilliant work; love the title: "Do Fans Want Close Contests? A Test of the Outcome Hypothesis Uncertainty in the National Basketball."
Amazing conclusion, too: "However, in order to increase fan enjoyment and maximize league revenue, each team should win more often at home. Therefore, it is optimal for leagues to attempt to maintain competitive balance throughout the season and concurrently have home teams win more often."
Stunning.
Ha, that's an interesting study, and makes intuitive sense. I'd rather have my team win than lose, and probably don't care (and might even prefer) a blowout win over a close win (raise your hand if you, like me, have fond memories of the "Maples Massacre" against UCLA: https://www.latimes.com/archives/la-xpm-1997-01-10-sp-17286-story.html or the "What's Your Deal" game against USC, and judging by the women's basketball threads, nobody is enjoying those close wins). On the other hand, if I'm a rando with no particular allegiance for either team, Super Bowl LVII was an enjoyable game to watch, given that it was close and ended with a comeback).
That being said, as a fan, you do want to at least feel like your team has a chance. Fans can stomach losing, but most can't stomach loss of hope.
BC
RE: Bally's bankruptcy - cardcrimson - 02-21-2023
Marketing the game is clearly an issue (the same could be said for marketing the Pac-12, but somehow Larry is apparently not to blame). That said, there is something about the game that's changed since my youth. Here's some interesting data from an odd source.
https://www.yummymath.com/wp-content/uploads/Are-baseball-games-getting-longer.pdf
Games in 1975 averaged two hours and 25 minutes. Now they're over three.
Average number of pitchers was about 2.4 per team per game. Now it's nearly 4.4.
Never thought of the foul ball stat they referenced, but apparently there are more foul balls now than balls put in play. . . .
RE: Bally's bankruptcy - OutsiderFan - 02-25-2023
Saw David Cone on the YES Network talking about MLB business issues. He said MLB is moving toward pooled media rights. Apparently, MLB owners are now having these conversations, knowing this is the way to grow the game and franchise values. He specifically called out a shift from basing team revenue on media market size and the RSN model to a collective MLB rights model as streaming services become the rule not the exception.
It seems rather than an RSN, if you want to watch an MLB game, you will go to the streaming service partner, or possibly MLB's own online channel.
If the owners do in fact do this, it will be quite surprising if it doesn't come with a salary cap and floor. The question will be if it is a hard cap like the NFL and NHL, or a soft cap like the NBA. I'd guess the big market teams will accept the pooled rights for a soft cap that allows them to spend over the cap with big financial penalties and inability to add free agents when capped.
I do know this, if a cap and floor is coming that does away with luxury tax payments to teams that refuse to spend (cough, the Oakland A's), franchise values will explode because cost certainty will drive up their value. If this happens, John Fisher may in fact finally sell the A's and someone will keep them in Oakland. Right now, the A's aren't seen as a valuable growth asset, but change the financial dynamics and give them similar money to spend as the Angels and Mariners, and the franchise value will greatly increase. This is what the owners want - franchise values to increase, so it seems it is inevitable these changes will happen.
RE: Bally's bankruptcy - gocard14 - 02-25-2023
(02-25-2023, 07:18 AM)OutsiderFan Wrote: Saw David Cone on the YES Network talking about MLB business issues. He said MLB is moving toward pooled media rights. Apparently, MLB owners are now having these conversations, knowing this is the way to grow the game and franchise values. He specifically called out a shift from basing team revenue on media market size and the RSN model to a collective MLB rights model as streaming services become the rule not the exception.
It seems rather than an RSN, if you want to watch an MLB game, you will go to the streaming service partner, or possibly MLB's own online channel.
If the owners do in fact do this, it will be quite surprising if it doesn't come with a salary cap and floor. The question will be if it is a hard cap like the NFL and NHL, or a soft cap like the NBA. I'd guess the big market teams will accept the pooled rights for a soft cap that allows them to spend over the cap with big financial penalties and inability to add free agents when capped.
I do know this, if a cap and floor is coming that does away with luxury tax payments to teams that refuse to spend (cough, the Oakland A's), franchise values will explode because cost certainty will drive up their value. If this happens, John Fisher may in fact finally sell the A's and someone will keep them in Oakland. Right now, the A's aren't seen as a valuable growth asset, but change the financial dynamics and give them similar money to spend as the Angels and Mariners, and the franchise value will greatly increase. This is what the owners want - franchise values to increase, so it seems it is inevitable these changes will happen.
Baseball needs a salary floor far more then it needs a salary cap. The luxury tax acts as a soft cap to a degree
RE: Bally's bankruptcy - Giants - 02-25-2023
The players will never agree to a hard salary cap. That has been a clear line in the sand since the Marvin Miller era.
On this issue, I am in complete agreement with the players. I hate the idea of restricting spending by clubs. The luxury tax is bad enough.
Update: Tony Clark, MLBPA Executive Director reaffirmed the players position regarding a hard salary cap today. Anyone who thinks the players will yield on this issue does not fully understand MLB’s collective bargaining history.
RE: Bally's bankruptcy - BostonCard - 02-25-2023
In other news, Warner brothers discovery is looking to dump its regional networks.
https://www.wsj.com/articles/warner-bros-discovery-looks-to-get-out-of-regional-sports-tv-business-e487434f?mod=djem10point
Quote: The three regional sports networks were inherited by Warner Bros. Discovery Inc. when it acquired control of the WarnerMedia assets from AT&T Inc. T -0.57%decrease; red down pointing triangle The channels—which are still branded as AT&T SportsNet—serve teams in Pittsburgh, Houston, Colorado and Utah—and carry baseball, basketball and hockey.
In a letter sent Friday from the unit’s president Patrick Crumb—a copy of which was reviewed by The Wall Street Journal—teams were warned that “the business will not have sufficient cash to pay the upcoming rights fees,” people familiar with the letter said. The teams were also told that Warner Bros. Discovery “will not fund our shortfalls,” they said.
BC
RE: Bally's bankruptcy - OutsiderFan - 02-26-2023
Tony Clark's proclamation that MLBPA will never agree to a "hard cap" sets up the owners' compromise position which will be a soft cap and spending floor. The players will absolutely want the floor, the bigger payroll teams will absolutely want the ability to spend over a cap, the lesser revenue teams will want more revenue sharing, and the fans will like more competition over the 162 game MLB season.
MLB, with the rule changes to increase the pace of play, pooled media rights, and a spending structure that includes some kind of spending cap and floor, may be about to experience a renaissance.
On a related note, MLB did extensive fan surveys and found a high demand for more doubles, triples, and stolen bases, in addition to faster games. Nice to see a sports league respond to please its fans. Theo Epstein ended the World Series droughts of both the Red Sox and Cubs, then went on to institute changes to save MLB. Put him in the hall of fame.
RE: Bally's bankruptcy - 82lsju - 02-26-2023
(02-25-2023, 07:13 PM)BostonCard Wrote: In other news, Warner brothers discovery is looking to dump its regional networks.
https://www.wsj.com/articles/warner-bros-discovery-looks-to-get-out-of-regional-sports-tv-business-e487434f?mod=djem10point
Quote: The three regional sports networks were inherited by Warner Bros. Discovery Inc. when it acquired control of the WarnerMedia assets from AT&T Inc. T -0.57%decrease; red down pointing triangle The channels—which are still branded as AT&T SportsNet—serve teams in Pittsburgh, Houston, Colorado and Utah—and carry baseball, basketball and hockey.
In a letter sent Friday from the unit’s president Patrick Crumb—a copy of which was reviewed by The Wall Street Journal—teams were warned that “the business will not have sufficient cash to pay the upcoming rights fees,” people familiar with the letter said. The teams were also told that Warner Bros. Discovery “will not fund our shortfalls,” they said.
BC
probably similar info but not behind a paywall
https://www.sportsbusinessjournal.com/Daily/Closing-Bell/2023/02/24/rsn-breaking-news.aspx
RE: Bally's bankruptcy - OutsiderFan - 02-26-2023
That SBJ article begs so many questions it's impossible for me to understand all the variables without feeling overwhelmed.
RE: Bally's bankruptcy - Giants - 02-26-2023
We already have a soft cap. It is called a luxury tax. The MLBPA fought hard to put the tax at its current level. MLB wanted lower levels. The next bargaining session will, of course, focus on the tax levels but a hard cap? Nope. Arbitration needs to be fixed first.
The Pirates can cry all they want but just like the Yankees they know they can’t cause the loss of games. They will capitulate as usual….