Rays New Broadcast Deal Leaves Marlins Without Any Leverage in Rights Negotiations

JohnWallStreet

The Miami Marlins television deal with Fox Sports Florida expires at the end of the 2020 season and despite talk of "ongoing, serious negotiations" it is feasible - if not increasingly likely - that the existing pact could reach its term without an extension in place. Prior to the sale of the franchise in 2017, the club’s former leadership team presented Bruce Sherman and Derek Jeter with a proposal for an extension that “called for a rights fee beginning north of $50 million, with some up-front payments in 2019 and 2020.” Believing they could negotiate a better deal, the new ownership group rejected the offer. But the Jeter-lead front office hasn’t been able to convince the RSN its broadcast rights are worth more money and Sinclair - comfortable with the Rays under contract - seem unlikely to significantly increase their offer now. Former Marlins executive Mark Geddis says that it’s no longer a question of how much more the team can command, but “where and when they’re going to settle [for less].”

Howie Long-Short: The deal that the Sherman-Jeter group passed up before closing on the franchise “is one they would sign today without even reading the contract [terms].” Geddis said that “with cord cutting having accelerated [over the last 2-3 years], it has become increasingly difficult [for networks] to value [local broadcast rights and to justify paying out huge contracts to teams].” Remember, the RSNs are being squeezed on the other end by the cable and satellite providers. Sinclair’s well-documented struggles over the last 6 months would also lead one to believe that the purse strings may have been tightened a bit since the $50+ million/year offer was made.

The Marlins have been playing hardball (pun intended) with Fox Sports Florida, but the team lacks a viable alternative to the RSN. Gettis said, “to some degree, [the NL East club] is a hostage.” The only other regional sports network within the state is Fox Sports Sun (another Sinclair owned property) and no one pretends to believe a Marlins-centric television channel would be viable in today’s cable environment.

The only real leverage the Marlins held in negotiations seemingly dissipated when the Rays agreed to their new broadcast deal with Fox Sports Sun in 2018. That’s because Sinclair only ‘needed’ to lock down the rights to one Florida based baseball team for their two RSNs in the state (the second is considered a bonus). The Rays ended up signing a lucrative deal worth $65 million to $70 million in base value with another 20% to 25% in carried interest (estimated to be worth +/- $25 million/year). Of course, the Rays draw significantly better ratings than the Marlins do.

There’s little reason for Fox Sports Florida to increase their offer for the rights at this point. As the current deal gets closer to its expiration date, it’s the Marlins that “are seemingly losing leverage.” Gettis explained “there are a lot of older people in [the South Florida market], so it’s not as if a significant number of cable subscribers are going to cut the cord because they’re no longer getting Marlins baseball.” The team also desperately needs the exposure (perhaps more than most franchises). “The broadcasts are a chance to promote home games, the team, the players and their promotions. It’s important to have that three-hour commercial every night.” One senior media rights advisor suggested the team would have to get creative in negotiating a deal (think: increased equity stake, retaining all ad revenues) to find the upside they seek.

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