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What the Current MLB Labor Dispute Means for TV Sellers

Posted by Darrin Helfers on Feb 10, 2022 9:37:41 AM

What the Current MLB Labor Dispute Means for TV Sellers

It’s like Groundhog Day for Major League Baseball. Almost two years ago, I wrote about the damage a strike might cause for baseball and the industry if it didn’t get its labor situation resolved. Now, two years into a worldwide pandemic and after the most exciting postseason ever for this Braves fan, the players and owners are right back at a potential work stoppage.

The 2022 MLB Lockout

According to Fansided’s David Hill, the owners are openly discussing cutting the number of games in the season to try to persuade players to come to the negotiating table. It’s also been reported that dreaded replacement players might be used to start the season without Major League Baseball Players Association players involved.

MLB owners and players will likely need to solve their labor dispute within the next few days to weeks to accommodate a shortened free agency period and spring training, which is scheduled to begin in late February. Without that agreement, we could very quickly be looking at lost regular-season games.

What seems certain is that any delay or postponement will be another blow to baseball’s reputation—and another reason for viewers and fans to become less engaged in a sport where both the games and the season are the longest of any major sport.

Baseball avoided a catastrophic failure in 2020 by salvaging a shortened season and expanded postseason that breathed life back into an anemic sports landscape (albeit without fans in attendance that year.) Then 2021 saw a return to “normal” baseball in most places, but any momentum the sport may have picked up over the past two years could be thrown away with a prolonged stoppage.

Team payrolls and player salaries are down over the past few years, and players want a bigger cut, which is one of the bigger issues at stake in the negotiations. Meanwhile, revenue sharing by MLB teams incentivizes non-competitive teams to spend less because they still get huge payouts from bigger-spending teams. Revenue sharing also leads to wealthy teams trying to undercut player salaries to save money and contribute less to the smaller-market teams, creating a vicious circle and bigger gaps in competitive balance in the league.

How the Labor Dispute Affects TV Sellers

What does this mean to media sellers and broadcasters?

Well, it means a lot. Today, most MLB teams sell broadcast rights to RSNs (regional sports networks), which are often part of larger, bundled content packages on cable and satellite. RSNs typically don’t have the rights to stream games, so they can’t reach cord-cutters, which means they’re gradually losing their audience. The bottom line is that baseball is already in a hole financially, so every game matters more now than ever.

RSNs, cable operators and the MLB itself are all scrambling to secure streaming rights and services for games to keep eyeballs on the baseball diamond. All operators and broadcasters should be looking to have streaming included in future deals.

If baseball drops the ball in early 2022, pun fully intended, what should the industry do?

4 Alternative Selling Strategies

Here are four options to stay in the game.

  1. Focus on other sports and drive sports fans to other leagues if the MLB can’t get their product on the field. NBA and NHL telecasts are the most logical choices for advertisers and broadcasters, especially in markets that have both MLB and NBA/NHL franchises. But, as in 2020, stations may have to get creative and consider alternatives like NASCAR, tennis or golf to help lighten the load of missing inventory.

  2. Esports are another alternative. According to Insider Intelligence, there will be 29.6 million monthly esports viewers in 2022, up 11.5% from last year. The esports business is set to surpass $1 billion in revenue this year, and almost 70% of that is coming from advertising.

  3. USFL anyone? For those old enough to remember the USFL, it was a football league run from 1982 to 1985 with some pretty big players, including superstars Herschel Walker and Jim Kelly. Despite the stars, the league floundered and closed its doors in 1986. It returns this April in an attempt to create a Spring Pro Football league for fans who can’t wait for football in the fall. Fox and NBC stations could see significant dollars come their way from deals to air all 40-plus games of the “inaugural” USFL season, allowing them to put baseball on the back burner.

  4. The largest group of avid to casual baseball fans are in the 35- to 44-year-old range (60%) and 18- to 34-year-old range (54%), according to Statista. Without baseball, sellers should lean into those demos and offer addressable advertising that reaches them at scale.

Have a game plan ready to go now. Focusing on alternative selling strategies for different scenarios should be a regular practice, especially with the MLB season being so uncertain. Making plans for a short-term, midterm or long-term work stoppage now will save major headaches down the road. Marketing to alternative programming to ease fears and present advertisers with as many alternatives as possible is common sense.

MLB players may ultimately get what they want: a bigger cut of the pie, more protection for younger players with friendlier contracts and (heaven forbid!) the universal DH. But with days dwindling before games begin to be canceled, it remains to be seen who will blink first.

Sadly, as a sports fan, I believe we should prepare for no baseball to start the season, and that means focused scenario planning and well-thought-out alternatives for advertisers in case the MLB strikes out in its bid to play ball.

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