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Eric Chase Blog

Financial Game Is Afoot.

 
Posted May 19th, 2014 @ 3:10pm

In December of 2011, the Los Angeles Angels of Anaheim signed a 20 year, $3 billion dollar TV with Fox Sports. That agreement ignited a multi-year spending spree that included Albert Pujols, Josh Hamilton and CJ Wilson. Savviest of the debit card damage was likely the 6 year, nearly $150 million dollar extension the Angels signed Mike Trout on the dawn of 2014's Opening Day. Those deals amount to nearly $600 million dollars, and almost every cent of it is guaranteed. 

It's not quite this guy, but it's alot.

Prior to that, the Rangers inked a $1.7 billion dollar TV deal. 

The Dodgers contract looks like the size of an interstellar mission planned by NASA; 25 years, between $6 and 7 billion dollars. 

More recently, the Phillies worked an agreement with Comcast that lasts 25 years, at the cost of $2.5 billion dollars to the Godzilla of cable. (Godzilla is both good and bad like Comcast. Great content, high prices.)

From national TV deals, MLB teams that show up on Opening Day instantly receive at least an extra $25 million dollars, and as much as $50 million that wasn't available to them just a few years ago. 

To be as laconic as possible, TV deals are the still expanding financial bubble for Major League Baseball. 

Not to be so sour and cynical, but bubbles burst. 

I'm couldn't even be qualified as an amateur economist, so take my proceeding postulations as little more than inquisitive common sense. 

Over the last eighteen months, every time a extraordinarily massive contract has been agreed to by MLB player and team, I just think to myself 'HOW will this bubble burst?'

Baseball is an expanding financial industry having cleared the $8 billion dollar level. 

Just what is it that could derail baseball's ballooning finances?

Since TV is where the majority of baseball's financial influx is coming from we'll remain in that area when wondering when/if a bubble bursting grim reaper will come along. 

My first thought is cord cutters. Or what this article has dubbed, Hipster Cable. You may already be one of them for one reason - cost being the main culprit - or another, but if you're unfamiliar with Hipster Cable, it's those who've ditched their cable television. Now, I'm guessing those that have cut the cord have kept their Internet accessibility, unless they truly are so bold as to go with nothing but 3 or 4G on their mobile device connecting them to the rest of humanity. 

To be candid, if I didn't watch sports for roughly 75% of my TV viewing, I'd have cut the cord too. Even more bluntly, if you didn't watch sports, I'd ask you why you haven't cut the cord, yet graciously thank you for helping to subsidize my cable bill. 

As more cord cutting continues, I expect my cable bill to rise. It could easily cross the $200 dollars-a-month threshold within 18 months. At that point, or perhaps even sooner, as a sports fan I've got to start doing some serious calculations.

MLB.tv + NBA gametime + whatever way I can access the NFL + college football and basketball = what $$$$. Plus, whatever the price Netflix is going to charge me to access normal 'TV.' Of course I need the Internet to watch everything, so I'd need to keep that, but remember, the bundling of TV, cable and phone is what keeps the prices down on each. If I extracted cable TV from the bundle I have now, my bill would likely still come in between $60 and 80 dollars. 

That'll be just under $1000 per year, plus whatever I need to pay to see. As a sports viewer I see myself having to tussle with this economic equation sooner rather than later. 

Every time I hear from another cord cutter, I feel like my savings are chipped away at. 

Perhaps sports fans will be priced out of seeing the teams they love so dearly, and that will burst the financial bubble of sports. Particularly baseball. 

What if cable bills, or the ability to access MLB games, rises but within reason, but the game ceases to grow, OR fans begin to stop watching the games by way of a choice that has nothing to do with economics, but because of how the game is played today.

SI's Tom Verducci wrote a brilliant column about MLB's offense and injury problem, and slowly but surely both are becoming prominent topics in the mainstream. 

Maybe it's just a fluky season with a record number of elbow surgeries, and other maladies that have felled every from Andy Dirks to Jose Abreu. 

It's disappointing, and I swear it's no lie when I say instead of checking box scores during games at night, and the following morning, I'm looking to see who got hurt. 

It's gotten that bad this year. 

Players of all talent levels succumbing to injuries and offense nearing historically low levels. *I'll freely admit that the concern about batting averages, home runs, etc...could become hyperbole in hindsight if/when warm weather arrives.*

Money has massive, if not total, influence on a boggling number of decisions made in our lives on a daily basis. 

To make that a more relative statement, when pay good money for a meal - as I did on Saturday night at an Asian tapas place - I want the food to match the price. It didn't so I won't be returning to that restaurant.

If I'm a Fox Sports, Comcast, ESPN, or an executive at whatever network that handed millions and billions - probably the latter - over to a team for the rights to broadcast their games, well, I want my money's worth. My money's worth isn't Danny Worth. 

Baseball, on its own volition, may tweak its rules to trigger more potent offenses, such as lowering the mound like Verducci suggests without any prodding. But if there's some wonky wobbles in TV ratings at the end of this season, network execs should (again, if it were my money) push baseball's envelope when it comes to recalibrating its list of banned substances. 

I'm not saying there needs to be PED Era Part Deux with 6'1 180 pound guys slamming 32 homers a year, but allow players to legally use substances that can help with energy and recovery. 

*From Wikipedia, a partial list of banned substances.*

I don't think the rule adjustments mentioned here are remarkable or even of my own distinction, however, to keep the bubble building instead of threatening to burst before too long, I do think it is rather unique to suggest that for baseball to become a bit more watchable, especially amid a search for the next Commissioner, networks might have to force the issue so that they can make the most of their seismic investments. 

And even then...if money keeps getting blown into the balloon, it's going to burst. 

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