Ed Botti
February 28, 2025
Between kicking off spring training, putting our focus on Aaron Boone’s contract extension, Giancarlo’s latest injury and Hal Steinbrenner’s change to the team’s long standing facial hair policy, another baseball related matter transpired.
MLB and Disney owned ESPN have decided to end their long term business relationship after nearly 40 years.
You do not need an advanced degree in economics to see why ESPN’s exodus was unavoidable.
Obviously economics were the driving force. But what else was involved, and how will that impact the fans and the game?
The break up is a clear-cut precursor of how even the most robust digital content relationships have come under amplified consideration in the streaming era, with sports rights increasing exponentially while entertainment syndicates are left to figure out how to pay the tab.
However, when dealing with the type of numbers involved in this contractual relationship, I think it’s safe to opine that nothing’s is cut and dry.
From ESPN’s perspective, the numbers just didn’t make sense anymore. They strongly feel that MLB wasn’t holding up their end of the deal, at least not enough to cost them $550 million per year in rights fees.
ESPN and MLB were in the middle of a seven year deal that included a mutual “opt out” clause in 2025, to allow either side to pull out under certain conditions.
We are now in a time when content consumers can pick and choose content on an impulse.
Sports and sports programming remain one of the limited formats existing that can draw the large and instantaneous audiences the advertisers need and desire.
According to reports, ESPN walked away from MLB and was somewhat stunned by Commissioner Rob Manfred’s memo to MLB owners that the league and network had mutually agreed to end their relationship.
MLB is of the opinion that they are in an upward trending market, and can get an even better deal than the ESPN deal. Why?
MLB drew over 71 million fans in 2024, the most in 7 seasons
MLB saw television viewing increase in 2024, including ESPN Sunday Night Baseball.
ESPN floated the idea for MLB to accept a lower license fee claiming they have been losing money on the $550-million-a-year deal.
MLB didn’t want any part of that, so when talks fell apart, ESPN invoked the opt-out clause to conclude the agreement, which was not going to expire until 2028.
The network stated they will hold up their end of the deal and live up to their 2025 MLB obligations, then move on to other ventures and opportunities.
MLB criticized ESPN’s attempt to renegotiate the license fees, and suggested that they will have no problems at all finding a new TV or streaming partner(s).
“Given that MLB provides strong viewership, valuable demographics, and the exclusive right to cover unique events like the Home Run Derby, ESPN’s demand to reduce rights fees is simply unacceptable,” the league stated.
The ratings for Sunday Night Baseball were up 6% in 2024 over 2023, at least according to MLB data. ESPN didn’t see it that way.
ESPN sees a shift in the model since networks suck up high costs of major sports rights at a time when cable channels such as ESPN are losing subscribers to cord cutters.
Ironically, MLB also has cord cutting issues of their own, since the majority of their games are shown on regional sports networks, including many that are sucking wind and losing money.
Just 10 years ago ESPN had 100MM viewers. That is now down to 54MM today. Not all of that is due to cord cutting.
Personally, over the last several years, I find watching Sunday Night Baseball (and ESPN in general) a chore, unless the Yankees are playing, when I have no choice but to tune in.
Too much nonstop talking, (at least for me). Too many charts and diagrams. And in all honesty, Carl Ravech, Jon Sciambi, Eduardo Perez, Buster Olney, Tim Kurkjian and David Cone were a little too much for me. I like Cone, but when he has his ESPN hat on, he is a totally different analysts then the one I got used to on YES. He is probably just following orders, but he is a bit much for me on ESPN.
I tune in to watch a game. I don’t need 5 people telling me what is going on the entire time. It's Baseball. Not a SpaceX launch.
So, I pass on Sunday Night Baseball for the most part, as well as many other ESPN programs.
ESPN has a problem with MLB over their willingness to do cheaper deals with streaming services.
Apple has a deal for $85MM, ROKU has a Sunday afternoon deal at $10MM.
ESPN wanted a similar markdown. Are they wrong?
Manfred didn’t see it that way, and the deal was killed.
Manfred is actively searching for new partners that are interested in airing a Sunday Night package, and other packages as well with a strategy of landing a huge payout in 2028, when MLB’s full national rights content will be available to the highest bidder.
Who knows how that will end up?
On another matter, it is now widely speculated within MLB walls, that there is a very distinct possibility that the owners will lock out the players at the end of the current CBA which will expire at 11:59 pm, on December 1, 2026.
Obviously that is a long way away from today. But, both sides are preparing for war. Some predict this could be the longest work stoppage the league has ever seen.
Why? The threat of owners seeking a salary cap, or even a salary “compression” are a couple of the reasons.
That may have a little something to do with the ESPN MLB divorce.
Capping salaries is a sore spot for many, both in the league and out of the league. I hear both sides of this argument all the time.
I don’t have a dog in this fight, I Just want good baseball.
But it is in my DNA to look at numbers. More on that below.
One of the issues that concerns me is Parity. That must seem odd from a Yankee fan. We are used to spending, and spending big, and not caring 1 iota what the other teams spend or don’t spend.
But the reality is, I prefer good competition.
We have a saying in my Martial Arts world; “Iron Sharpens Iron”. Meaning, you get better and stronger by competing against or training with better and stronger athletes.
At least, that is how we apply that saying.
I prefer it when the league has many elite teams, not 3 or 4 and 20 or so middle of the road teams and 4 or 5 that have zero chance of doing anything.
It makes winning that much sweeter.
Even during the “best team money can buy” Yankee era (1976 - who knows when they stopped saying that?), there were plenty of other serious threats throughout the league, i.e. “Parity”.
Teams like the Pirates, Reds and Royals, just to name a few, were no joke.
Today?
Just look back at those Yankee Royal series of the late 70s and you will witness some of the best baseball you will ever see played.
Here are some of the numbers that I referenced above.
In 1977 the Royals went 102 and 60. Their team salary was roughly 5% of the league’s total payroll. Today, the Royals payroll is 2.4% of the league’s total payroll.
In 1977 the Reds went 88-74. Their team salary was roughly 5.75% of the league’s total payroll. Today, the Reds payroll is 2.18% of the league’s total payroll.
In 1977 the Pirates went 96-66. Their team salary was roughly 5.10% of the league’s total payroll. Today, the Pirates payroll is 1.58% of the league’s total payroll.
In 1977 the Dodgers went 98-64. Their team salary was roughly 5% of the league’s total payroll. Today, the Dodgers payroll is 6.78% of the league’s total payroll.
Incidentally, in 1977 the Yankees went 100-62. Their team salary was roughly 7.0% of the league’s total payroll. Today, the Yanks payroll is 5.85% of the league’s total payroll.
As expected, the big markets paid more. But that delta has expanded greatly in the current era.
In 1977 the Pirates, Reds, Royals and Dodgers had almost identical payrolls (Cinci actually had a higher salary than LA). Today?
No chance.
Some may say the Pirates, Royals and Reds ownership aren’t spending enough today, and that may be true, to a degree. Or, is it that those teams can’t spend enough due to economic factors.
Here are some more numbers that I was blown away by when I calculated them. The below measures the rate of increase from 1977 to 2025 (data obtained from the US Census Bureau).
CPI - + 411.55%
AVG US salary - + 338%
Minimum Wage - + 573%
*MLB salaries - + 9,662%
*Data obtained by Bureau of Labor Statistics
According to the economic data, since 1977 the fan base has seen their salaries increase by 338% and MLB players have seen their salaries increase 9,662%.
Think about that for 1 minute.
You are in business and your customer’s (fans) salaries (including disposable income) escalated at 338%, while during the same period the employees you have to pay to provide the services, who already made 3 times the amount of your customers, escalated at 9,662%.
Could you stay in business? Maybe, if you provided a lower quality of goods or services at a premium price. But, I doubt it.
As an aside, that does not include the off field marketing income paid to players (according to Ken Rosenthal of The Athletic, Ohtani makes almost $100 million from endorsements alone annually) or the daily MLB per Diem of $117.50 per day while on the road.
The next argument is that players were underpaid in 1977. Let’s take a look.
At the top of the heap, Reggie Jackson made approximately $700,000 ($3,645,602.31 in today’s dollars), and Mike Schmidt made approximately $600,000 ($3,124,801.98 in today’s dollars).
I think both could get by pretty well in 2025, let alone 1977.
Not all of the players made that kind of money. What kind of money did the rank and file players make in 1977?
The MLB average salary was $76,066. The average US household income was $16,101.25 (According to the Bureau of Labor Statistics).
Players made 372% more than the average household in 1977.
The dollar had an average inflation rate of 3.50% per year between 1977 and today, producing a cumulative price increase of 420.80% (CPI can vary slightly between markets).
FYI- $76,000 in 1977 is the equivalent of $398,399.27 in 2025.
In 2025 the average MLB salary is $4,222,193. The average US salary is approximately $60,000. Players make 6,936% more than the average salary in 2025.
Again, I do not have a dog in this (pending) fight I’m just pointing out numbers.
As you can see players’ salaries have escalated at a far more accelerated rate than the rest of the US work force/consumers.
Kind of crazy when you actually see those number, huh?
Hal Steinbrenner used the term “unsustainable”. Was he over reaching?
Last week it was reported that the Yanks were “out of loot” according to columnist Jon Heyman.
I am not sure who that quote was attributed to, or if it was even true. I couldn’t find the context of that quote. If you have it, please put it in the comments section.
Now, can we get back to Baseball?
Camp is underway, it’s far too early to predict any roster spots.
I just hope for health at this point of spring training. The battles for the open spots won’t become relevant until 2nd week of March. Before that, it’s all speculation and conjecture.
RIP Gene Hackman, Roberta Flack, Al Trautwig and Lou Cucuzza, Sr.
I don't think 1977 is the right place to start the calculations. That was the first year after the McNally decision, so only a small number of players could take advantage of it. I'd be curious to know the numbers from 1982 to date (not that I presume to assign Ed or anyone homework). I pick 1982 because it is six years after McNally, so every MLB player (assuming they stayed in the Majors) would have had the opportunity to pursue free agency. Put another way, in 1977, player salaries were still artificially depressed because the full effects of McNally were yet to be feld.
yup, times have kinda changed
a little
once upon a time, MLB's owners and league officials were a little less concerned with maximizing revenue
and tv networks were a little less concerned with making a profit with sports programming
or even news programming
some things were considered to be worth doing per se. some things were considered to be prestigious and to serve as a way to draw in consumers ...and ad revenue.
in recent decades there is a greater choice awaiting both the baseball teams.......
and the baseball players
the end of the reserve clause has directly led to the substantial increase in players' median salaries
and the greater number of broadcasters has led to the substantial increase in…
You made a lot of really good points in this article. You and I have discussed many times how the current model of baseball is economically unsustainable in the long run. If you look at how salaries continue to increase, take the Soto contract, how could that continue?
I wonder how much the worst teams in baseball (I.e. White Sox, Marlins, Angels) reinvest in their product? There were games last summer in which the White Sox had less than 50 people in the stands. Is the answer a floor rather than a ceiling? Make the owners invest in their teams?
I don’t know what the answer is, but I know that if I were offered $10 million or more a…