After months of brainstorming and negotiating, Major League Baseball and two broadcast networks reached tentative agreement Saturday on a revolutionary television contract, setting up a tradition-breaking joint venture.
Instead of paying a flat rights fee, as in past deals, NBC and ABC have agreed to be partners in a separate company in which the networks will “produce the telecasts for the marketing and sales of baseball,” said San Diego Padres owner Tom Werner, a member of baseball’s TV committee.
Among the details:
– Best-of-five divisional playoffs will be added in the two leagues, with or without realignment into three divisions.
– The networks will show 12 weeks of prime-time baseball telecasts, all on a regional basis, split evenly between ABC and NBC.
– The network telecasts won’t start until after the All-Star Game, which is part of this package.
– Both league championship series will air simultaneously at 6 p.m. Chicago time on a regional basis, with the exception of potential Games 6 and 7, which would have staggered starting times.
– Weekend World Series games will start no later than 6:20 p.m. Chicago time.
– And, most importantly to the partners, the networks and baseball will share the costs-and profits-of the deal.
“Each party is contributing equal capital to start the venture,” said NBC Sports President Dick Ebersol, with baseball receiving “the lion’s share” of the profits.
White Sox vice chairman Eddie Einhorn, another member of the TV committee, said: “This is about control of the future. You can’t really do a traditional rights deal anymore. You have to devise something different. That’s what we did.”
Werner said the deal was formulated Friday and Saturday with the networks and introduced Saturday morning to baseball ownership in a conference call. Apparently, the reaction was generally favorable.
“This exciting new arrangement,” as Werner termed it, will be introduced formally to the owners at a meeting Thursday in Chicago. According to Sox board chairman Jerry Reinsdorf, no formal vote is expected at that time, but further discussion will be held.
The new contract, which starts in 1994 and covers six years, will supplant the current one with CBS. While CBS paid $1.06 billion over the past four seasons, the network maintains it lost more than $100 million a year. With those kinds of losses, no network was willing to pay a flat rights fee.
“This joint venture hopefully will regenerate fans’ interest,” said Werner. “This package will bring passion back into the game and be part of what we felt we needed to reinvent ourselves.”
Part of the reinvention includes setting up divisional playoffs, the format to be determined. Speculation centers on realignment of the leagues into three divisions.
This would depend on how swiftly the owners’ committee studying changes in league alignment presents its recommendations. Because this committee is known not to work as swiftly as, say, the TV committee, realignment doesn’t seem likely for the ’94 season.
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Without realignment, there will be an extra week of playoffs with two wild-card teams most likely qualifying on the basis of winning percentage, so they both may come from the same division.
“You can get (to a divisional playoff) different ways,” said Cubs executive vice president Mark McGuire. “You can get to eight teams just by having the first- and second-place finishers in each division. But they’ve certainly been working on the three-division concept. That seems to be the direction we’re going, although that isn’t a done deal.”
Any additional playoff tiers rest on the approval of the Major League Players Association, which was surprised by Saturday’s announcement.
“You’d think they’d let their partners (the union) know what they’re doing,” said Donald Fehr, executive director of the union.
Werner said his committee was responding to a recent survey that showed 79 percent of those questioned wanted an extra round of playoffs. With the regional setup, Werner speculated, “This will bring the kind of excitement we’ve seen in the early rounds of the NCAA basketball tournament.”
As for the weekly prime-time telecasts, Werner compared the arrangment to the National Football League’s Sunday afternoon telecasts. “Each market will have the opportunity to see their local team play,” he said.
There will be at least four different regional telecasts, with the networks likely to use local team productions and announcers, with the exception of probably Bob Costas doing one NBC game a week and Al Michaels the same for ABC.
In markets with two teams, like Chicago, however, there will be blackout provisions if they’re playing simultaneously, said Einhorn.
Also, if both Chicago teams wind up in the playoffs, another local station would be authorized to carry the game the network affiliate wasn’t airing.
The two networks have agreed to rotate coverage of the All-Star Game, playoffs and World Series. Ebersol and ABC Sports President Dennis Swanson will flip a coin in mid-June to determine which one gets the ’94 All-Star Game and two league championship series, and which gets the divisional playoffs and World Series.
CBS, which used baseball to help it become the No. 1 network again, turned down a chance to join the deal.
“While we were interested in continuing an arrangement with Major League Baseball,” said a company statement, “the joint venture proposal for third-party sales of baseball inventory was not attractive to us.”
Another reason for apprehension on the part of the players union-whose contract with the owners expires after this season-is that without a standard rights fee, it’s difficult to determine how much the new package is worth.
When asked if the revenue is likely to decrease, Reinsdorf replied: “We don’t have the answer, but it’s a safe bet it would.”
How much it would decrease is open to question, but CBS had net sales of $151 million last year. If baseball retained 50 percent of those ad sales, that split would be $75.5 million, a far cry from the $265 million it took in under the CBS deal.
But grieve not over the loss of the Saturday “Game of the Week,” said Einhorn. “We didn’t kill it-the fans did by not watching it.”
Baseball had to move in a radical direction if it was to lift itself out of the doldrums that have found its TV ratings dipping the past seven years to a low of 3.1 this season.
And a new TV contract is just the start. While the owners discuss the ramifications of new business partners-just as the National Basketball Association is doing with its new profit-sharing deal with NBC-there still are other issues left on the table.
For instance, while the ABC-NBC venture solves the network problem, there still is a cable contract to negotiate. ESPN, which has spent $100 million the last four seasons-and, like CBS, has lost millions-reportedly has offered to keep baseball-but at a much lower price. A deal could be announced soon, according to sources.
Then there’s the issue of splitting local TV revenues, so that small-market teams such as Seattle and Kansas City can dig into some of those mega-millions being paid the New York Yankees and Cubs.
“It had become clear we couldn’t continue to operate in this changing economic environment as we had in the past,” said Bud Selig, commissioner pro tem.
And for Selig and his co-owners, the changes are just starting.