Forget the new rules — the biggest story in baseball right now is the collapse of the regional sports networks

Forget pitch clocks and defensive positioning — the biggest story in baseball right now is the collapse of the regional sports network and what that means for the future of how fans view games. Changes are imminent that could impact broadcasts, power outages and ultimately the economic landscape of the sport.

Shortly after the World Series ended in November, MLB held its quarterly owners’ meetings at the Commissioner’s office in New York. Finally, Commissioner Rob Manfred informed the media that a lengthy report on the future of the RSNs had been presented to the owners. Citing the need to cater to both cable subscribers and cable cutters, he praised the league’s new partnerships with streaming services like Apple and Peacock, and predicted “a relaxation of that exclusivity” long inherent in lucrative RSN deals.

It was perhaps the least bombastic way he could have announced that there might be an impending fix to one of baseball fans’ biggest frustrations.

MLB practically invented streaming. The in-house engineering behind MLB.tv was top notch in many ways. But blackouts have been seen as a structural imperative from the start. In short, RSNs give teams money because they get it exclusive Right to Broadcast Games in a Specific Territory. Making games available online for local fans would pay against what the RSNs pay for. So while MLB.tv made streaming games technically possible, the existing economic structures required the service to shut down games in local markets, essentially excluding what is literally the target audience. (Also, certain parts of the country have been hit by debilitating, overlapping power outages, sometimes without the ability to watch those games on TV.)

In the two decades since MLB.tv’s inception, people’s expectations of their ability to watch whatever they want, wherever they want, without the restrictions or gibberish of traditional television, have exploded. As content consumption becomes increasingly à la carte, power outages have become a serious impediment to the game’s growth and a top concern for fans.

The story goes on

But as local television deals accounted for a larger and larger percentage of teams’ earnings — calculations by FiveThirtyEight in 2020 estimated about 22% of the average team’s total earnings — the RSN-enabled blackouts seemed insurmountable. Even as cutting cables became an increasingly looming threat to the cable bubble, it was hard to imagine how MLB would make the transition to something equally lucrative and modern in scale.

In December, at baseball’s annual winter meetings, Manfred doubled down on his allusion to an imminent resolution of the exclusivity problem. In January, the league announced it had hired an RSN veteran for the newly created role of executive vice president of local media, responsible for “overseeing MLB administration and distribution of local media rights.”

Less than a month later, Diamond Sports Group — known to viewers as Bally Sports and which airs games for 14 MLB teams — missed an interest payment that triggered a 30-day grace period and was largely viewed as a harbinger of bankruptcy. The company is facing financial difficulties, both due to the exodus of cable cutters and the sheer amount of debt Sinclair — of which DSG is essentially a subsidiary — assumed when it bought the bundle of RSNs in 2019.

At the time, MLB bid for the rights, which eventually went to Sinclair/DSG, at a price the league somewhat presciently felt was too high, and has been monitoring the situation ever since. It hasn’t escaped the league that DSG’s bankruptcy, while introducing an uncomfortable level of uncertainty in the near term, could allow MLB to begin redesigning its broadcast options to align with a more modern market.

In fact, Manfred said so at press conferences marking the start of spring training in both Arizona and Florida.

“I think our aggressiveness in terms of stepping in when Bally’s isn’t able to broadcast was driven in part by the fact that we saw it as an opportunity to resolve this blackout issue,” he said two weeks ago in Florida.

(He also said, “I don’t like all of this,” which honestly seems like a bit to much protest—so much, in fact, that some might take it as evidence to the contrary.)

In the event DSG files for bankruptcy and loses the ability and rights to broadcast games — which eliminates bankruptcy court complications and the possibility that not all teams and RSNs face the same consequences — MLB stands ready to close local games, according to Manfred produce and broadcast.

“We know we can offer these games digitally in conjunction with MLB.tv, and we are in the process of working out agreements that will enable us to make these games available on cable bundle as well,” he said.

He speaks of making the games of the DSG losers available both on traditional television and via streaming, which should at least represent a solution to the blackout problem for affected markets. It’s also possible that MLB will use this as an opportunity to renegotiate what have proven to be so restrictive exclusivity terms with DSG, although this would only affect the 14 teams transferred to Bally.

Additionally, Warner Bros. Discovery, which operates RSNs for four teams, recently informed Teams that it intends to divest its interest in RSNs as well. Combined, that would make up nearly two-thirds of baseball teams, while clearly the ultimate goal is for MLB to control the distribution of all of its games.

“I hope we get to the point where on the digital side, if you go to MLB.tv, you can buy whatever you want,” Manfred said. “You can buy the out-of-market package. You can buy local games, you can buy two sets of local games, whatever you want. I mean, for me, that is the definition of what will be a valuable digital offering in the future.”

In other words, the a la carte streaming options that consumers have become accustomed to.

“There is still a lot of work to be done on this project,” said Manfred. “But I think if you move more nationally, by definition you’re going to have more central revenue.”

And now we’ve reached some of the broader implications of the cable bubble bursting. Currently, as has been noted, local broadcasts account for a significant portion of any team’s revenue. This is true across the board, but actual dollar amounts vary widely; Recent estimates by FanGraphs put the spread at more than $200 million per year.

But as Manfred said, if the local TV product were centralized in production and distribution, that revenue would presumably come through the league office and could be shared more fairly.

Or, as the Commissioner put it: “A more national product generates centrally shared revenues, which narrows the pay gap, which in turn, we hope, would narrow the pay gap.”

A logical leap to a more level playing field in payroll is a nifty preemptive justification as long as the correlation between revenue and payroll (or lack thereof) is ultimately left to individual owners. (Just ask Padres owner Peter Seidler, whose local TV earnings rank 22nd out of 29 teams reported by FanGraphs, below the Rays, A’s and Orioles.)

Still, a sport with fully centralized TV revenue is likely to look very different. For one thing, the distribution of that revenue would have to be negotiated collectively with the MLB Players Association.

“They have an opportunity to reach out to the RSNs and have told us they have a plan,” MLBPA executive director Tony Clark said in a recent meeting with media representatives. “What we don’t know is anything beyond that and how it will affect the system. That requires a conversation.”

Like Manfred, Clark expressed confidence that while the potentially protracted and painful dissolution of the RSN model could cost teams immediately, “long-term growth will still occur.”

More precisely, there will be growth If MLB can navigate itself from an already outdated model to something more nimble and accessible. Currently, the league publicly expresses its confidence without much concrete, which makes an assessment difficult.

Ultimately, however, the results will determine the legacy.