clock menu more-arrow no yes mobile

Filed under:

Rays television contract limits financial flexibility

Rays owner bombshell reveals the television contract will not be re-negotiated after 2016

Kim Klement-USA TODAY Sports

"I could just use a lot less discouragement."

Those are the words of Rays principal owner Stu Sternberg, who called last year's $72m payroll, the third lowest in baseball, "beyond uncomfortable."

Making the rounds with the press at the Winter Meetings, the face of the Rays ownership group claims the team is no longer able to stay competitive in the baseball financial landscape.

"We're getting left on an island," Sternberg said. "A smaller and smaller island... We're not going to be on a level playing field. I'd like to at least be in the outfield, but it's like we're out in the parking lot, looking in."

In the same breath, Sternberg claims to be an optimist, saying he believes in the Rays roster and the ability of his front office to create a winning team. But perhaps that is the long view, as he's become incredibly pessimistic about the short-term odds:

"I don't mind a fight with a hand tied behind my back. I don't mind a fight going in if I don't have enough sleep. But it's tough when the other guy is driving a tank and I'm sitting there on a three-speed bicycle. It really is hard. And that's where we are. And there's just more tanks coming. And that's what it feel like now."

Every credit in the world to Marc Topkin for capturing the above quotes, and sincere thanks.

These aren't 'temper your expectations' quotes from the owner, they are 'we are so screwed, and it's making me mad as hell' quotes. When so few things are ever said from ownership or the front office, these moments of context are heightened in their importance. We know the Rays have an up hill battle, but it's far better when the frustration is shared.

How are the Rays supposed to remain competitive, when even the Royals are forced to carry a payroll well over $100m? The answer will be a complicated and drawn out process if MLB has interest in leveling the playing field among all franchises, but the bandaid solution is simple: television money.

The Rays have an old television deal, one that pays a mere $20m per season to the franchise despite consistent television ratings in the upper half of baseball. Previous reports indicated a new deal would be on the horizon, but that's where Topkin's bombshell gets dropped, a mere footnote in his article:

A presumably rich new TV deal "a few years from now" — not after 2016 as has been reported — should also provide a welcome revenue boost.

This is massive news! Noah Pranksy of CBS was able to verify the news is true, but couldn't dig up an actual contract date for renewal:

A Rays spokesperson tells me the team isn't free to disclose its contractual terms and they can't comment on when the deal is up any further than what Sternberg has already said.

Tampa Bay currently has between the 13th and 15th highest ratings in baseball, depending on whether you consider the numbers self-reported by the Blue Jays to be accurate. Because these are projections, the Rays are on par with their expansion siblings, the Arizona Diamondbacks.

Having recently renegotiated their television contract with Fox Sports, the Diamondbacks not only now own some percentage of their network, but are paid four times the amount of the Rays at $80m. That added flexibility recently translated into Zack Greinke's contract, and changed the shape of an entire division in baseball.

By comparison, the Rays are trying to trade James Loney's $8m salary because he's too expensive. The following table has each franchise's average household ratings as reported by Forbes, with the exception of Toronto.

Team RSN 2015 HH Viewership (000s) Avg. Annual Rights Fee Equity Stake Expiration Year
Toronto Blue Jays Rogers Sportsnet 684? $36 million ?
New York Yankees YES 206 $90 million 20% 2042
New York Mets SNY 180 $65 million 65% 2030
Boston Red Sox NESN 146 $60 million 80% ?
Detroit Tigers FS Detroit 141 $40 million 2017
St. Louis Cardinals FS Midwest 125 $55 million 2033
San Francisco Giants CSN Bay Area 120 $30 million 35% 2032
Kansas City Royals FS Kansas City 118 $20 million 2019
Seattle Mariners Root Northwest 114 $115 million 51+% 2030
Chicago Cubs* CSN Chicago 111 $50 million 20% 2019
Pittsburgh Pirates Root Pittsburgh 90 $18 million 2019
Philadelphia Phillies CSN Philadelphia 85 $100 million 2040
Los Angeles Angels FS West 84 $150 million 25% 2032
Tampa Bay Rays SunSports 78 $20 million 2016
Arizona Diamonbacks FS Arizona 78 $80 million ? 2035
Minnesota Twins FS North 74 $29 million ?
Texas Rangers FS Southwest 73 $150 million 10% 2034
Washington Nationals MASN 67 $41 million 16% ?
Cleveland Indians FS Ohio 63 $40 million 2022
Baltimore Orioles MASN 62 $41 million 84% ?
Atlanta Braves FS Sports South 54 $25 million 2031
San Diego Padres FS San Diego 51 $60 million 20% 2031
Cincinnati Reds FS Ohio 46 $30 million 2016
Los Angeles Dodgers SportsNet LA 45 $340 million 2038
Houston Astros CSN Houston 42 $80 million 45% 2032
Milwaukee Brewers FS Wisconsin 40 $20 million 2019
Colorado Rockies Root Rocky Mountain 39 $20 million 2020
Miami Marlins FS Florida 33 $18 million ?
Oakland A’s CSN California 29 $45 million 2023
Chicago White Sox CSN Chicago 28 $45.5 million 40% ?

*Cubs figures do not include contract with WGN to broadcast a certain number of games.
Figures in italics denote numbers set to increase with time.

Boiling the list of franchises down to teams who recently negotiated new contracts, there are some who have clearly done well for themselves. The Angels, one place ahead of the Rays in the ratings (avg 84k households), receive 7.5x the payout as Tampa Bay at $150m, as do the Rangers who averaged a mere 73k households.

Both seem to be the exception to the rule, but by mapping the average annual television contract revenue of the teams who recently negotiated new contracts against where the Rays stand, we can find just how disadvantaged and under paid the Rays might be. Our dividing line will be any television contract negotiated since April 2012.

We cannot pretend that baseball is not in a better place now than it was even a year ago. Thanks to some renegotiated national contracts, every team in baseball receives $25m more in 2016, so that will help pay the AC in Tropicana Field, but that money is shared equitably. The Rays still face equal difficulties with far less resources.

The Rays are still at a disadvantage, and that unfortunately applies across several facets of the game.

For example: Is it fair that the Rays suffer the same penalty for signing a shortstop in the Dominican for $3M as the Red Sox face for signing a Cuban phenom for $68m? Both teams are basically blocked from signing international prospects for two full years, just as Cuban relations are opening up.

What does that have to do with TV money? The Red Sox will continue to benefit from owning their own sports network NESN, a $500m enterprise in which the Red Sox hold an 80 percent share. The ability to sell stakes in these networks comes at a significant payout, as we've already seen with the Yankees just last year.

The Rays are an outlier in many regards, perhaps in all but the number of viewers they have in central Florida. Unfortunately, until their television contract is renegotiated, their strong suit will not be a strength.