The current collective bargaining agreement expires on December 1 and it is widely expected that the owners will lock out the players at that time. A report today from Evan Drellich and Andrew Marchand of The Athletic provides some key details on how a lengthy lockout could impact the league’s broadcast deals.
The piece highlights that a key cutoff point will be if the lockout extends long enough to cancel at least 60 games of the 2027 season. If that comes to pass, the league would still be paid for 2027 as part of their national media deals. However, most of those deals would tack on another year for the broadcasters. The deals currently expire after 2028 but would push to 2029 if at least 60 games are missed in 2027. If the entire 2027 season is missed, the broadcasters would pay no fees at all for 2029. If a partial season is played, the networks would pay some fees. The specifics of a partial season fee aren’t mentioned but it is referred to as a “bargain rate” in the piece. The fees would presumably be relative to how much of the 2027 season is played.
With local deals, it’s more complicated, as those contracts are less consistent. Broadly, the piece points out teams would start losing money if they can’t play 125 to 145 games, depending on the specifics of those individual contracts. That means that, in some cases, teams would start losing local broadcast money if the season is shortened by even a few weeks.
On those national deals, the 60 days is a key pivot point. Even though the clubs could still be paid for the short term, giving away a full year of rights is a big deal. TV revenue is massively important for baseball economics. Per The Athletic, teams get about 26% of their revenues from the central fund, on average. That includes national broadcast deals along with other streams. Local broadcast revenue accounts for about 21% of team revenues, on average. Stadium revenue makes up about 39%, on average.
However, that local broadcast revenue figure is from 2023 and is likely lower now, as cable-cutting has led some teams to operate with no regional sports network contract. In some cases, MLB is handling local broadcasts for those clubs. Specific numbers for that model aren’t available but Travis Sawchik of MLB.com said in January that clubs generally get about 50% of what they previously made via RSNs. That only makes national revenue all the more important.
Playing the entire 2029 season with no national revenue or a diminished stream would be an unwelcome outcome. The league could try to renegotiate those deals in the future but wouldn’t be in an advantageous bargaining position. The broadcasters prepared for this scenario for a reason and won’t just let the league off the hook for nothing. The scenario also just delays the big payday the teams are hoping for. The league is planning on a big cash-in after 2028 and those revenue streams potentially wouldn’t start flowing until a year later.
For the local revenues, the pain for clubs could start even sooner. As mentioned, the contracts vary, but teams could start losing money with a relatively small number of missed games. Per the piece, some contracts would require a club to pay a rebate, with the amount depending on how many games are missed. Other deals would simply pay a team less, again depending on how many contests are missed.
During a lockout/strike, both sides will be feeling pressure from lost revenues. The players won’t be making their salaries. The teams won’t be getting any money from ticket sales, concessions, etc. These details therefore provide important context for what’s on the line in terms of broadcast revenues. The league will have some incentive to not lose 60 games and will also have incentive to at least play a partial season even if they go beyond that 60-game limit.
There has not been a labor dispute that has resulted in lost games since the 1994-95 strike. After that, there wasn’t a work stoppage until the 2021-22 lockout, which was resolved in March. The 2022 season was delayed but a full 162-game schedule was still played. As mentioned, another lockout is widely expected to begin roughly two months from now. The league is pushing for a salary cap/floor system, a model that the Players Association is opposed to. The eventual length of the lockout and the details of the next CBA will have significant ramifications down the line.
Photo credit Susan Tompor, Imagn Images
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