Last week, USA Today reported that the Rangers and Fox Sports Southwest agreed to a 20-year extension that could be worth $3 billion.
The Houston Chronicle says that the value of the deal is closer to $1.6 billion. Depending on which number you choose to believe, the Rangers will take in an average of $80-150 million annually in television revenue alone.
Big numbers to be sure, but let’s put them into some context.
Last month, when Deadspin published the leaked Major League Baseball financial documents, those indicated that the Rangers took in $62.6 million in television and radio revenue in 2008 and $68.8 million in 2009. That means the new deal is either a ~20% or ~130% increase over the previous deal.
Even if we only accept the lower figure, that is still a nice haul. Especially for a team that only ranks 16th among the American teams in average number of households watching their games on television. Compare that to a team like the Tampa Bay Rays, who despite their struggles in attendance, rank in the top 10 in local television ratings. One source close to the Rays told me that the eight-year deal the team inked with Fox Sports prior to the 2009 season likely averages only $20 million per year.
On a broader scale, this deal could mean we have seen the end of teams starting their own Regional Sports Networks (RSN). In recent years, several teams have started their own RSNs including the Yankees (YES Network), Red Sox (NESN) and Orioles (MASN). And at least two teams tried but failed (Royals, Twins).
There was a lot of speculation that if Mark Cuban had bought the Rangers, he would have started his own RSN to broadcast Rangers and Mavericks games. Even with Cuban losing out to Nolan Ryan’s group, the size of this new TV deal may be Fox Sports’ effort to keep the new ownership group from going down that road. At the very least, we now know that Fox Sports is willing to open their pocketbooks to make sure they stay in the baseball business.
And with Fox Sports already owning the local broadcasting rights to half of the teams in MLB, many of those teams may already be scrapping plans to start their own RSN as they eye large paydays in their next TV deal.
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