ESPN, MLB Agree on a Ridiculous $5.6B TV Deal

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The general consensus over the past five years has been that baseball is in a perpetual state of decline. That, for a variety of reasons, the sport is on the verge of falling well below both football and basketball in terms of relevance and revenue potential.

After today, we might need to go back and re-examine that theory.

According to Sports Business Daily, ESPN has agreed to a massive $5.6 billion, eight-year deal that ensures they’ll have MLB TV rights for the better part of the next decade. As noted by SBD, that $5.6 billion figure breaks down to around $700M a year – more than twice the $306M that ESPN currently pays for their MLB package.

Now, to be fair, this new agreement also figures in “digital, international and radio” as well as one Wild Card playoff game, but, even with all that in mind, it’s still a pretty hefty increase over the previous total.

The obvious question here is: Why would ESPN spend so much on a sport that, by all accounts, is dwindling in popularity? Jason McIntyre over at The Big Lead came up with an answer that makes a whole lot of sense.

NBC is attempting to build a rival to ESPN, but is sorely lacking in one department: Content. NBC has Notre Dame football, the NFL, and is coming off an impressive (financially) Olympic games. But that isn’t nearly enough to build a network around. They need games.

He’s right, of course. That’s likely the biggest motivation behind paying out this much for, essentially, nothing more than the right air baseball's four or five most noteworthy teams around on a regular basis. It’s not so much that ESPN needs this particular sort of content, it’s that they want to keep it away from their competitors.

The natural inclination whenever you want to watch a sporting event is to turn on ESPN; by continuously swallowing up as many live sporting events as possible, the WWL gives viewers all the fewer reasons to check out any other outlets.  

Obviously it’s too early to issue a definitive opinion on this deal but, based on what we know right now and how well ESPN is doing financially (which in turn allows them to comfortably overpay just to kill the competition), it’s hard to really find fault with it.

(Kudos The Big Lead, Sports Business Daily)

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