The Impact of Baseball's New Television Contracts

By Staudohar, Paul D.; Dworkin, James B. | Nine, Spring 2002 | Go to article overview

The Impact of Baseball's New Television Contracts


Staudohar, Paul D., Dworkin, James B., Nine


Major League Baseball (MLB) was first televised on August 26, 1939, in a game between the Brooklyn Dodgers and the Cincinnati Reds. By 1949, the World Series was on television, and two years later the first coast-to-coast live broadcast appeared. In the 1950s, television grew to dominate the airwaves. Team owners, collectively and individually, took advantage of this growth by negotiating agreements for the sale of television rights to broadcast companies. Over the years, television revenues have provided generous financial rewards to MLB. Sales of national television rights since 1950 are shown in Table 1.

Although annual revenues to MLB teams have increased significantly, the highest team revenues from national sports agreements are in the National Football League (NFL). The NFL'S seven-year agreement from 1998--2005 is for a total of $17.6 billion, or about $73 million annually per team. Unlike football, baseball also receives television revenues from local agreements. There is a considerable variation in local television monies, with teams like the New York Yankees far eclipsing teams in small markets like Minnesota. This puts certain small-market teams at a severe competitive disadvantage, a point examined later in this paper.

As shown in Table 1, the 1990--93 agreements nearly doubled revenues to baseball. The deal, however, turned out badly for the networks, as CBS lost about $500 million and ESPN about $150 million. These were the largest amounts ever lost by networks on sports contracts, and they resulted in new contracts in 1994--95 that reduced national television revenues by about half. In these new contracts, MLB formed a joint venture with NBC and ABC, called the Baseball Network, which required MLB to sell commercial slots to sponsors. Not only was MLB ill-equipped to carry out this function, but cancellation of games due to the 1994-95 strike added to the shortfall.

The 1996--2000 national television agreements put baseball back in the pink with a sizable increase in rights fees. Underpinning much of this rise was the entry of the Fox network into the bidding. Owned by News Corp.'s Rupert Murdoch, who later bought the Los Angeles Dodgers, Fox has helped revitalize baseball's returns from television.

FOX AGREEMENT

NBC and Fox were the two major networks involved in the 1996-2000 agreement. As incumbents, they were given an exclusive opportunity to bid for an extension. Major League Baseball's chief operating officer, Paul Beeston, and spokesperson Rich Levin initially proposed that fees be tripled. Because this was too inflated to be acceptable, the bidding was opened up to other networks, with CBS expressing some interest. Walt Disney's ABC was already involved through its 80 percent ownership of ESPN, which had cable rights that had yet to expire. Both CBS and NBC were concerned over disruption to their regular fall prime-time programming that would result from presentation of the playoffs and World Series. Also, CBS had a golf-heavy summer lineup, and NBC had several NASCAR auto races scheduled.

This left Fox as a leading candidate to get a large share of any deal. Through its Fox Sports Net and FX cable affiliates, the network was well-positioned to take advantage of the shift toward local and regional broadcasting and the showing of more games on cable. It has been a part of Fox's strategy since 1994 to use sports as a battering ram to establish its identity and credibility as a major network. (1)

In September 2000, MLB accepted Fox's offer of a $2.5 billion package over six years. The deal gives Fox exclusive rights to the playoffs and the World Series, plus eighteen Saturday afternoon telecasts each year, during which it can air four different games regionally at the same time. At approximately $419 million per year, the contract provides for about a 45 percent increase from the previous payment for the same package. (2)

The contract is not without risk for Fox. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

The Impact of Baseball's New Television Contracts
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.