Why MLB’s proposal on television revenue would be a big win for the Royals
AI-generated summary reviewed by our newsroom.
- MLB proposed pooling all local and national TV revenue and splitting it equally.
- Teams currently share 48% of local revenues, and individual TV deals vary widely.
- The Royals lost guaranteed Bally payments and now earn less from subscriptions and ads.
Fans who fear Major League Baseball is headed toward a work stoppage because the collective-bargaining agreement ends later this year could not have liked the events of the past week.
Both the league and the players’ union made their first proposals, and the sides are far apart.
But both sides offered plans to reduce the gulf in money generated by teams in local television deals.
As things stand now, teams share 48% of local revenues, which includes TV money. But teams have vastly different deals.
For instance, the Dodgers’ local television contract pays them an average of $334 million per year, but the Los Angeles Times said the “deal started at a lower value and increases every year. By the time the deal ends in 2038, the Dodgers will be getting more than $500 million per year.”
That story also breaks down how the Dodgers keep a larger share of their revenue than other teams following a bankruptcy arrangement 15 years ago. They’re paying less than the 48% paid by other teams, including the Royals.
The Phillies are in roughly the middle of a 25-year television deal that pays them a total of $5 billion, according to Forbes. A Cubs blog noted the Yankees made $132 million in their TV deal in 2022.
It’s a much different story for the Royals. The Business Journal said the team received $45 million from Bally Sports Kansas City in 2023 — but team officials said that number dropped to roughly $30 million a year ago.
As Bally Sports KC’s parent company continued to have financial difficulties, the Royals turned to MLB for production of their games this season. But the team lost that guaranteed money from Bally Sports. It now makes money on the number of subscriptions it sells and broadcast advertising.
The Royals are likely to make significantly less on broadcast revenue than the $30 million from Bally Sports Kansas City a year ago.
The TV proposals
The proposal made by Major League Baseball would be a boon for the Royals. Baseball’s owners want to pool all the money teams make from television deals, locally and nationally, and divide it evenly among the 30 clubs, according to ESPN.
In addition to sharing revenue, the league is hoping its plan can help more people watch games. Since the teams would share the TV revenue, there would be fewer restrictions on viewers.
“(B)y sharing media revenue equally as part of our proposal, we can address another top fan concern of local TV blackouts,” MLB spokesman Glen Caplin said on the league’s website.
The players union also addressed local TV revenues, and that, too, would be good for the Royals.
“The MLBPA proposal would change that significantly. In their framework, the first $50 million from each team’s local TV contract, and two-thirds of the amount above $50 million, would be pooled centrally, along with all national TV revenue,” Ben Clemens wrote on FanGraphs.
That also would be better for the Royals, but not as good as the MLB proposal.
