The Extended Paradox of Major League Baseball

If we learned anything about Major League Baseball from 2001-2005, it was that the league was in great demand. Then-commissioner Bud Selig and the owners highlighted the folly of “contracting” the league to 28 teams by shutting down the Montreal Expos and possibly the Minnesota Twins. It would have been a more lucrative option, but suddenly markets across the United States soared and announced they were hiring the team.

In 2005, the Expos moved to Washington, D.C., where they were renamed the Washington Nationals.The rest, as they say, is history.

Since then, with Rob Manfred taking over as commissioner, MLB has settled into a stable ditch – albeit with potentially repeated labor contracts with players. Earnings continued to climb. One of the things he has grown is the number of clubs in the league.

We interviewed Manfred in October 2015 when the topic of expansion surfaced. From 2001 he had considerable interest in MLB’s potential move and expansion dating back to the 2005 period.

Manfred has repeatedly said he sees MLB as a growth industry. The idea that he has 32 clubs in the league is a recurring one.whether or not athletica recent series on markets that expressed interest, or back in 2012 my baseball prospectusor 2019 baseball americathe MLB expansion has quite a bit of information as fodder for those looking to lure fans and clubs into their home market.

Remove favorites. Remove which market is “best”. Looking across the United States, Canada and Mexico, several markets are likely to support clubs that provide enough market size to fill 81 ballpark dates per year. They all have varying levels of corporate bodies for local and regional sponsorships. look at us! ” Campaigns of varying maturity.

Baseball is healthy. The market can support extended teams. So why is MLB stuck in a paradox and expansion ideas are the most difficult at this point?

First, unlike a transfer, if the club already has an owner approved by the league, whether it is former Nashville MLB pitcher and player agent Dave Stewart, former Nike,NKE
The biggest wild cards for baseball boosters looking to lure expansion teams, like Portland executive Craig Cheek, or Montreal’s William Jeger and Stephen Bronfman, will end up being minority or larger owners. I don’t know. Construction of his latest MLB ballpark with a retractable roof could cost nearly $2 billion. And with the model of an MLB owner building a battery-like “ballpark village” around his Truist Park for the Braves becoming commonplace, the cost jumps to more than double that of him. . From $2 billion he puts in $2.5 billion in expansion costs and putting together the capital stack to make the project a success is very difficult.

Still, money problems can be overcome. The return on investment for clubs in major sports leagues is staggering. forbes Valuations show up year after year with earnings growing and seemingly impervious to recession factors. The problem is putting everything together — investment money, public money, support from local, regional, and state politicians — on the basis that “it might happen.”

Baseball backers and political leaders, for that matter, Rob Manfred and 30 baseball owners, do not know when the trigger for expansion will be pulled at this point. And even if Manfred and the league formally decide to open the market to explore, no one is picked during the process before the ballpark site and facilities are funded. , is what each market learns, so the league always encourages the market. or what each booster group places, To do help. What the league doesn’t want to say is, “You are the one. If things go on like this, the selection process is wired for you to win the day.”

This is not to say MLB is shy. In fact, he has 30 owners. So there are 30 different points of view. The question is whether 75% of them will approve the market (remember we need two of him to balance the league).

There is always a market in the US that can support clubs, but the reality is that all the big markets are being swallowed up. That means the extended club could become part of the revenue sharing. Even if it wasn’t, he who takes the centralized revenue pie consumed by 30 owners and eats it adds two extra mouths.

But perhaps the biggest problem is these days.

The Diamond Sports Group, owned by Sinclair, named Bally Sports Regional Sports Network, is on the brink of bankruptcy. The league hopes the deal will be fully executed, but the Chapter 11 restructuring could result in negotiations for a lower rights fee. However, even if the club acquired all or part of their shares. Alternatively, if a direct-to-consumer model were introduced, the revenues of the regional sports networks would continue to benefit traditional consumers as well as Bally Sports. Given the decline in linear TV subscribers, this is likely due to other RSN contract renewals scheduled. Go to Streaming Options.

The expanding market of the United States requires every part of the country to carve out media deals already claimed by one or more MLB franchises. At this volatile time in the media landscape, the idea of ​​cannibalizing the media rights of existing franchises is bound to keep many owners away from the idea of ​​expansion at this point.

So MLB has a paradox. It’s a multi-billion dollar industry and is considered very healthy at a corporate level. On the surface, extending is easy. But on closer inspection, the challenges of media rights and the prohibitive cost of expansion seem too far to bridge at this point. At some point it will happen. now…? Almost certainly. 10 years later… maybe.