Business, Economics, and Taxes: Capitalism. Yay? >=(

[French Rage]

There is also useful information on how loans work which some folks here could use.

Are you referring to when you said removing $X from your loan doesn't actually remove $X from your loan?

 

[Jimjamesak]

U-Tree with a good video on the RSN situation.

tl;dw A lot of revenue is going to disappear, prepare for some long lockouts when the MLB, NBA, and NHL CBAs all expire.

 

[Handyman]

U-Tree with a good video on the RSN situation.

tl;dw A lot of revenue is going to disappear, prepare for some long lockouts when the MLB, NBA, and NHL CBAs all expire.

Yeah it's going to get ugly. Smart leagues would be looking to maximize national games and helping teams start their own networks...

Genius leagues would just take it over themselves. The upfront cost will be huge but the revenue for the league and teams could be monstrous. Basically take the various packages you have and expand them.

 

[Jimjamesak]

Yeah it's going to get ugly. Smart leagues would be looking to maximize national games and helping teams start their own networks...

Likely what the NBA is going to do.

Genius leagues would just take it over themselves. The upfront cost will be huge but the revenue for the league and teams could be monstrous. Basically take the various packages you have and expand them.

This is what MLS is doing right now.

The NHL will be interesting. They’re a bit insulated with the seven Canadian teams but the US teams are in for a world of hurt, and with the prominent teams like the Rangers, Bruins and Capitals all married to RSNs they can’t escape easily. Plus it’s not like the NHL has ever been the best run league.

MLB is f’d big time. They’re joined at the hip with the RSNs.

 

[Kepler]

U-Tree with a good video on the RSN situation.

tl;dw A lot of revenue is going to disappear, prepare for some long lockouts when the MLB, NBA, and NHL CBAs all expire.

That is an excellent piece, thanks.

 

[Kepler]

MLB is f’d big time. They’re joined at the hip with the RSNs.

OTOH, when the RSNs lose the business there will be a glut of expert producers and crew and talent and a ton of suddenly useless equipment which the teams can absorb. Why not make the production team just another slot in the club media org chart? It pulls the business in house and increases the owners' holdings. Yeah, it's expensive, but it was also expensive to pay the RSNs to do it and a PITA to negotiate with them. Now, MLB pays itself to produce the games and charges customers directly to watch them and pockets the profit without having to split it with the RSN. The owners can also use the production costs to lie about being in debt during the CBA negotiations. Hell, the owners can claim they have to pay the league for their own rights, write the whole cost off, and cry poverty. It's a perfect tax dodge!

 

[Drew S.]

OTOH, when the RSNs lose the business there will be a glut of expert producers and crew and talent and a ton of suddenly useless equipment which the teams can absorb. Why not make the production team just another slot in the club media org chart? It pulls the business in house and increases the owners' holdings. Yeah, it's expensive, but it was also expensive to pay the RSNs to do it and a PITA to negotiate with them. Now, MLB pays itself to produce the games and charges customers directly to watch them and pockets the profit without having to split it with the RSN. The owners can also use the production costs to lie about being in debt during the CBA negotiations. Hell, the owners can claim they have to pay the league for their own rights, write the whole cost off, and cry poverty. It's a perfect tax dodge!

Sports dirty secret is a lot of the tv money comes from non fans. In your scenario that disappears.

 

[Jimjamesak]

OTOH, when the RSNs lose the business there will be a glut of expert producers and crew and talent and a ton of suddenly useless equipment which the teams can absorb. Why not make the production team just another slot in the club media org chart? It pulls the business in house and increases the owners' holdings. Yeah, it's expensive, but it was also expensive to pay the RSNs to do it and a PITA to negotiate with them. Now, MLB pays itself to produce the games and charges customers directly to watch them and pockets the profit without having to split it with the RSN. The owners can also use the production costs to lie about being in debt during the CBA negotiations. Hell, the owners can claim they have to pay the league for their own rights, write the whole cost off, and cry poverty. It's a perfect tax dodge!

Because there’s no way for the teams to make up the lost revenue.

The Pirates alone were getting around $40 million a year.

 

[ScoobyDoo]

Just expect lots of strikes and no sports and lots of cuts. Everything was way overinflated anyway. The only sports TV contract that is ironclad is American Football. The rest of these clowns have always been on shaky ground.

 

[Jimjamesak]

Just expect lots of strikes and no sports and lots of cuts. Everything was way overinflated anyway. The only sports TV contract that is ironclad is American Football. The rest of these clowns have always been on shaky ground.

MLS is in pretty good shape. $250 million a year from Apple, World Cup coming up in 2026, still have plenty of interest in expansion.

 

[Spartanforlife4]

Yeah it's going to get ugly. Smart leagues would be looking to maximize national games and helping teams start their own networks...

Genius leagues would just take it over themselves. The upfront cost will be huge but the revenue for the league and teams could be monstrous. Basically take the various packages you have and expand them.

What does it mean to have your own network as a team, though? The Yankees have that and it's functionally just another RSN.

 

[Jimjamesak]

To put in perspective the amount of revenue MLB is generating and what they would need to do to replace it:

I’ll lowball and say teams are averaging $60 million a year (and that’s nowhere near what teams like Yankees, Mets, or Red Sox are bringing in). That’s $1.8 billion a season for all 30 teams.

Now, best case scenario MLB gets 10 million subscribers (they’d have the 23rd largest streaming service in the world), they’d need $15 a month per subscription. 5 million subscribers it’s $30 a month.

Realistically it’s probably closer to $2.5 to $3 billion from 3-4 million subscribers factoring all the production costs and a realistic subscriber count. That’s $70+ a month per subscriber.

 

[Kepler]

Because there’s no way for the teams to make up the lost revenue.

The Pirates alone were getting around $40 million a year.

But that revenue is going away anyway. It was based on RSNs getting onto local basic cable and charging the entire population for it whether they watched or not. The Fox News business model. They were parasites who could only survive because there was no competition for consumers to choose between local cable packages, it was a monopoly.

But now everybody under the age of 60 is cutting the cord, so those networks can't free ride anymore. The theft is over. They'll have to survive on their own merits.

 

[Jimjamesak]

But that revenue is going away anyway. It was based on RSNs getting onto local basic cable and charging the entire population for it whether they watched or not. The Fox News business model. They were parasites who could only survive because there was no competition for consumers to choose between local cable packages, it was a monopoly.

But now everybody under the age of 60 is cutting the cord, so those networks can't free ride anymore. The theft is over. They'll have to survive on their own merits.

Oh I’m not complaining about it, it’s hilarious to me watching all this. I knew it was coming, I just didn’t think it would happen this soon. I figured it’d be 4-5 years down the line.

There’s about to be a monumental change in the sports world. MLB is about to be toast. They’re about to lose a huge chunk of revenue they can’t replace and the only way to fix things likely involves losing an entire season. And that’s if the owners can all get on the same page, which isn’t likely.

The NHL is heading for a similar, if not worse scenario.

 

[Handyman]

What does it mean to have your own network as a team, though? The Yankees have that and it's functionally just another RSN.

As a network nothing. But the TV model is dying and it would give you streaming rights which could be helpful if you know what to do with them. The money lost is going to be a problem though.

Personally I dont think the MLS system is sustainable in the long run (I doubt Apple will stick with it unless its popularity really jumps) but it is a smart move for both. Soccer has a rabid following and potential but sooner or later that won't be enough. I dont think that will work for any other sport though because I dont see major corps making that kind of an investment in a sport. Considering how badly E$PN is dragging down Di$ney (there is a reason the studios and Disney+ have a blank check but E$PN gets cut almost quarterly) it has been obvious for a while the money just isn't going to be worth it and they have contracts for some very popular sports. Does anyone think spending billions for exclusive rights to MLB is going to look good on your P&L perspectives? Baseball and Hockey are way too big for say Amazon to purchase the exclusive contracts for rights. Neither on their own would bring in enough value to really make the price worth it even if they were handed most of the infrastructure. The ad revenue is just not worth it for them in most of the markets.

There is no perfect solution. College probably did it the best having conferences start networks but even half of those suck. (Pac12 and Big 12 are pretty weak) The problem is the leagues all expanded way too much and everyone got used to the fact that games would always be on. Teams stopped tailoring games to the fans in attendance and tailored it more for TV and now fans don't care to attend and only watch the games that interest them. That is a massive recipe for disaster.

I think if something isn't figured out in the next few years lockouts will be the least of their worries. Contraction in all leagues will happen. Salaries are going to crash. (especially MLB where its a friggin joke...just look at the Padres) PPV will become a thing only it will be streaming based and not TV based and the quality is going to full on suck because there will be no money to upgrade. The shedding of fans many teams already have will be kicked into overdrive.

There is only one sport that is truly safe, the NFL. And sooner or later that will hit its nadir too. It wont be hastened though because nothing will replace it. The disturbing trend of youths getting away from the sport though is going to catch up with it sooner or later.

 

[dxmnkd316]

Sports dirty secret is a lot of the tv money comes from non fans. In your scenario that disappears.

This is exactly right. I don't know what fraction, but it's not insignificant.

 

[Handyman]

Oh I’m not complaining about it, it’s hilarious to me watching all this. I knew it was coming, I just didn’t think it would happen this soon. I figured it’d be 4-5 years down the line.

There’s about to be a monumental change in the sports world. MLB is about to be toast. They’re about to lose a huge chunk of revenue they can’t replace and the only way to fix things likely involves losing an entire season. And that’s if the owners can all get on the same page, which isn’t likely.

The NHL is heading for a similar, if not worse scenario.

Same. Its partly why I barely watch sports anymore outside my teams. (and even that is only if I dont have something better to do) All the leagues have completely watered down everything and made it unremarkable to watch your team play in an effort to be the NFL. (who also did that but in a more successful way)

Think about how things were even 30 years ago. NHL teams rarely had all their games (or even most of them) broadcast live let alone nationally unless it was the playoffs. (and even then that might go to PPV) The NBA prior to Magic and Bird was teetering on the brink of bankruptcy and the ratings were trash. Baseball was always was most consistent and half the games often were only on the radio. College sports was so highly regional that any game you saw that wasn't in your conference was a special event...which is partly why Bowl Games mattered. Now, every Saturday you can literally watch college football from like 9am to midnight. Baseball has to change the rules because people are bored watching on TV 162 days a season. (no one cares about the radio under the age of 40) The NHL has spent the last 20 years pretending it is a bigger deal than it is and the NBA sold out all of its credibility a long time ago.

Personally I can't wait...I think every sport will be 1000% more interesting and enjoyable when they stop making it TV ready. Well except baseball...what they let the nerds do to that sport makes it unwatchable. Screw them and screw MLB, screw the greedy azz players it is just worthy of choking on its own vomit.

 

[dxmnkd316]

As a network nothing. But the TV model is dying and it would give you streaming rights which could be helpful if you know what to do with them. The money lost is going to be a problem though.

Personally I dont think the MLS system is sustainable in the long run (I doubt Apple will stick with it unless its popularity really jumps) but it is a smart move for both. Soccer has a rabid following and potential but sooner or later that won't be enough. I dont think that will work for any other sport though because I dont see major corps making that kind of an investment in a sport. Considering how badly E$PN is dragging down Di$ney (there is a reason the studios and Disney+ have a blank check but E$PN gets cut almost quarterly) it has been obvious for a while the money just isn't going to be worth it and they have contracts for some very popular sports. Does anyone think spending billions for exclusive rights to MLB is going to look good on your P&L perspectives? Baseball and Hockey are way too big for say Amazon to purchase the exclusive contracts for rights. Neither on their own would bring in enough value to really make the price worth it even if they were handed most of the infrastructure. The ad revenue is just not worth it for them in most of the markets.

There is no perfect solution. College probably did it the best having conferences start networks but even half of those suck. (Pac12 and Big 12 are pretty weak) The problem is the leagues all expanded way too much and everyone got used to the fact that games would always be on. Teams stopped tailoring games to the fans in attendance and tailored it more for TV and now fans don't care to attend and only watch the games that interest them. That is a massive recipe for disaster.

I think if something isn't figured out in the next few years lockouts will be the least of their worries. Contraction in all leagues will happen. Salaries are going to crash. (especially MLB where its a friggin joke...just look at the Padres) PPV will become a thing only it will be streaming based and not TV based and the quality is going to full on suck because there will be no money to upgrade. The shedding of fans many teams already have will be kicked into overdrive.

There is only one sport that is truly safe, the NFL. And sooner or later that will hit its nadir too. It wont be hastened though because nothing will replace it. The disturbing trend of youths getting away from the sport though is going to catch up with it sooner or later.

I think you're substantially right. I really don't think it's possible to underestimate how bad this is going to be. The Mets, given how much they locked in for the better part of the next decade, are as hyperfucked as anyone.

I truly think this is the peak of sports as we know it. Sports as king are over. They aren't going anywhere, but salaries are going to have to get cut in half. That's... not ideal for front offices. The only league that isn't boned long term, I think, is the NBA. They've got the smallest player base and the smallest minor leagues outside of the NFL (who somehow got colleges to pay for their minor league).

I think the NHL will be fine, but contraction is a huge likelihood. Almost a certainty in my mind. And I think that's going to make for a much healthier league long term given the collapse of RSNs.

 

[Handyman]

This is exactly right. I don't know what fraction, but it's not insignificant.

Well it isn't that hard to figure out actually. How many people pay for any service that has an RSN whether it is cable, satellite or a streaming package? What is the actual viewership of any one game? There you go.

I did a Google Search and found that in 2020 141k people watched the Twins on average per game. (which is up!) How many people in Minnesota do you think pay for a service that has Bally's on it? (likely somewhere between 1-3 million if not more!) Hell I bet 3/4 of the Twin Cities does so that is hundreds of thousands right there! The non-watchers are subsidizing everything.

 

[Jimjamesak]

I think you're substantially right. I really don't think it's possible to underestimate how bad this is going to be. The Mets, given how much they locked in for the better part of the next decade, are as hyper****ed as anyone.

I truly think this is the peak of sports as we know it. Sports as king are over. They aren't going anywhere, but salaries are going to have to get cut in half. That's... not ideal for front offices. The only league that isn't boned long term, I think, is the NBA. They've got the smallest player base and the smallest minor leagues outside of the NFL (who somehow got colleges to pay for their minor league).

I think the NHL will be fine, but contraction is a huge likelihood. Almost a certainty in my mind. And I think that's going to make for a much healthier league long term given the collapse of RSNs.

Of the leagues I think the NFL, NBA and MLS will be fine. The NFL will continue to strongarm the networks and media companies with their ratings. The NBA and MLS will be fine because they both have global appeal and therefore a larger audience to spread out the cost. Yeah MLS has to compete against the Euro leagues but that’s probably the next bubble to burst (it’s a massive house of cards). The NBA has short term pain coming with the RSN collapse but they’re competent enough they’ll get through it until they can put an MLS style package together with either Google or Apple. Like I said, they have enough global appeal that they could have 10 million plus subscribers easy.

I’d have more confidence in the NHL if it wasn’t run by a bunch of morons. I’m sure there’s some owners that want to put together a streaming package but the Canadian teams and especially teams like the Bruins, Rangers, and Blackhawks will fight that to the death.