Does the Demise of Bally Sports Explain the Padres’ Shrinking Payroll?
The San Diego Padres, like most teams, reveal little about their corporate finances. They would prefer fans focus on their on-field product.
Occasionally, however, a team’s financial picture is impossible to ignore. Owner Peter Seidler steered the Padres’ payroll from the bottom-10 to the top-5 in baseball, pushing the boundaries of MLB’s debt-service rule.
When Seidler died in November, questions swirled around how much latitude the front office would have to spend on players in the future.
Unfortunately, other forces beyond the Padres’ control could be suppressing the organization’s ability to spend too.
Diamond Sports Group, the parent company of Bally Sports, the Padres’ former regional network, filed for bankruptcy in March. Diamond’s 20-year, $1.2 billion contract with the team ended prematurely in the middle of the 2023 season, making San Diego the first club to fall victim to the broadcasting titan’s downfall — a casualty of the broader cord-cutting trend in the U.S.
When Bally failed to honor its contract in May, Major League Baseball immediately took over broadcasts of the remainder of the Padres' schedule on MLB.tv. Games aired on a separate channel for cable subscribers.
How much will the transition to a new broadcast partner — and, more specifically, the resulting hit to the team's revenues — impact the Padres’ spending habits? An exact answer is difficult if not impossible to pin down.
As ESPN’s Alden Gonzalez reports, a broader trend around MLB suggests fans are already seeing the effect of Bally’s demise on the Padres’ off-season plan:
Already this offseason, the Padres, the first team to fall out of its Bally Sports contract, traded Juan Soto in an effort to bring their payroll back down to what it considers a more manageable level. The Twins are shedding payroll in the wake of winning their first playoff round in 21 years. The Rangers, who could fall out of a Bally Sports contract that was scheduled to pay them about $110 million next season, haven't followed their World Series championship with the same aggression that carried them through the last two offseasons. The Guardians, meanwhile, are dangling star pitchers Shane Bieber and Emmanuel Clase in an effort to add offense without increasing payroll.
Their financial situations are vastly different — and none of them will open their books — but all of the aforementioned teams have publicly or privately pointed to uncertainty with their TV revenue as at least part of the reason for reductions in spending.
While most of their NL West rivals have been active in free agency, the Padres did not agree to terms with a major league free agent until this week. Japanese reliever Yuki Matsui will reportedly receive $21 million over the next four years.
The MLB Players’ Association typically pushes back against any perceived excuse for teams that run low payrolls. Executive director Tony Clark and his union allies are loathe to acknowledge the existence of “forces beyond (insert team here)’s control” when it comes to a slow in free-agent spending.
Indeed, Gonzalez goes on to report:
Sources within the MLB Players' Association and in the agency realm … (view) the uncertainty over regional sports networks as a convenient excuse for teams aiming to cut payroll as a way to maximize profits. Those sources brought up recent increases in both central revenue and the revenue-sharing pool to highlight continued profitability and are quick to point to two notable exceptions: The RSN-less D-backs and the Royals, a Bally Sports team that faces its own uncertainties, have been among the most aggressive spenders this offseason.
Monday, the Wall Street Journal reported Amazon is in talks to invest in streaming rights for the former Bally Sports teams, including the Padres. According to the report, if an agreement is reached, Amazon’s Prime Video platform would eventually become the streaming home for Diamond’s games.
Broadcast contracts are complicated. The timetable for Amazon to take over could be long and drawn out. The moment from signing a contract to broadcasting a game will not be instantaneous.
However, if the Amazon deal comes through, the savior of the Padres’ payroll woes might not be a new owner but a broadcast partner led by one of the world’s richest men.