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Wednesday, August 29, 2012
Maybe now the Royals can pursue high priced free agents like Jeff Francouer.
Earlier today, it was announced that ESPN had signed a new eight-year rights contract with Major League Baseball. The contract gives ESPN the same things they already had – the rights to broadcast Sunday Night Baseball, games on Mondays and Wednesdays and occasional special days – but it gives MLB a lot more of what they were already getting. ESPN will be paying MLB $700 million a year, twice what they paid ($350 million a year) in the current contract, which expires at the end of next season. Do the math, and that’s nearly $12 million per team in extra cash per year.
And that’s just for ESPN’s current contract, which doesn’t even include any playoff games (though I believe the new contract includes one of the Coin Flip Games between the two wild-card teams). The contracts for Fox and TBS are also up for negotiation, and NBC Sports is desperate to make a splash to add some actual game content to the fledgling network. Add it up, and there’s good reason to think that in 2014, every team in baseball will be earning $30 million a year above and beyond what they’re already making – just from their national TV contract. This is margin-free cash – same product, same expenses, vastly increased revenue….
Frankly, I’m being charitable by saying the Royals can afford an $80 million payroll. If they could afford a payroll between $70 and $75 million in 2009 and 2010 without losing money – and if they had lost money, trust me, we’d have heard about it – their breakeven number by 2014 has to be at least $90 million, and probably around $100 million. Remember, not only are the Royals’ share of national revenues going up by somewhere around $30 million, but their player development costs have dropped by almost $10 million. That’s not their fault – that’s a provision of the new CBA, which limited the Royals to around $9 million in amateur spending this year ($6.1 million in the draft, $2.9 million in international signings). Last year, the Royals spent close to $19 million - $14 million on four players alone (Bubba Starling, Bryan Brickhouse, Elier Hernandez, and Adalberto Mondesi).
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