Regional Sports Network Revenues Hang Over Slow MLB Winter Meetings

They call it the Hot Stove – Major League Baseball’s offseason of trades and free agent signings. At the 2023 Baseball Winter Meetings in Nashville, it’s been more of an “Ice Cold Stove.”

Those paying attention to the action at the Gaylord Opryland Hotel, on social media, or in the news would note that transactions have been few and far between. No Shohei Ohtani signing. No Cody Bellinger signing. Maybe the biggest deal happened on the eve of the Winter Meetings when the Seattle Mariners traded Jarred Kelenic, Marco Gonzalez, and Evan White to the Atlanta Braves for right-hand pitchers Jackson Kowar and Cole Phillips; not exactly a blockbuster.

Beyond the fact that transactions occur before and after the Winter Meetings, maybe the best thing to look at is why the offseason has been so cold. Last year, it seemed a non-stop parade of major signings whether that was Xander Bogaert’s 11-year, $280 million deal with the Padres, Aaron Judge’s nine-year, $360 million contract with the Yankees, or Trea Turner’s 11-year, $300 million deal with the Phillies, there was plenty of action.

For 2023, two things are making the Winter Meetings slow: a shallow pool of free agents, and anxiety around the future of regional sports network (RSN) revenues.

Nearly every general manager I have talked to here in Nashville has said the RSN bubble is either affecting them or potential trade partners in some way shape or form. During the 2023 season, Diamond Sports Group, who controls the majority of MLB RSNs and brands the networks as Bally Sports, released the media rights for the San Diego Padres and Arizona Diamondbacks mid-season. Mired in bankruptcy, In both cases, DSG announced that they would not make their schedule rights payments to the clubs, and gave MLB less than 24 hours notice before the next games were to be played. The league spun up TV distribution and direct-to-consumer streaming options by the next day, but questions about how revenues would come out of MLB carrying the clubs would hang over the remainder of the season. The league “backstopped” both clubs to ensure that what DSG was supposed to pay would be met regardless of what the DTC streaming and new carriage deals MLB inked brought in.

All this has setup questions about the future of the other clubs on the Bally Sports family of networks. To add, Discovery/Time Warner
TWX
is getting out of the RSN business with the AT&T
T
branded regional sports networks that they control.

If there’s one thing sports owners like, it’s cost certainty. The ability for them to set a budget is based on knowing as much about locked in revenues as possible. Media rights deals have historically been locked in, so knowing how one of – if not the – largest revenue stream the clubs have to access to will ultimately pay out this season or in the coming seasons is going to move some clubs into a risk neutral or risk adverse state. That means that clubs that may have rolled the dice on a major free agent signing or trade for a player that has a multi-year contract has been blunted.

The 2023-24 MLB offseason is far from over. Ohtani will be the biggest news out it when the 2024 season rolls up. But don’t be surprised if the Hot Stove is anything but. Blame the media landscape for some of it.