The Detroit Tigers have seen their attendance and local television ratings dropping over the past two seasons, and that could cost them a lot of money when the time comes to negotiate a new television contract. The Tigers have a contract with Fox Sports Detroit that pays them $ 50 million per year through the 2017 season, according to Bill Shea of Crain’s Detroit. Judging by deals that other clubs have signed, Detroit will land a much more lucrative television deal when the current contract expires.
Tigers fans are among the most loyal in the game when it comes to tuning in on television. Only the New York Yankees have more homes watching them, despite the fact that there are several other markets much larger than Detroit. The Tigers still draw an average audience of over 135,00 homes, good for a 7.22 rating, through the first half of the 2015 season, according to Sports Business Daily.
The ratings continue to decline, however, falling another 4 percent from 2014, which was down 21 percent from 2013 when the Tigers led all of baseball with a 9.22 rating. The rating is the percentage of all homes with television in the area that tuned into watch an average game that season. Attendance at home games is also down by almost five percent this season, on pace to draw 2.77 million fans this season.
The St Louis Cardinals, who led the major leagues with a 7.76 rating in 2014, just agreed to a new contract that will pay them $ 1 billion over 15 years, as well as give them an ownership stake in Fox Sports Midwest. The deal will increase the team’s revenues by $ 20 million per season. The Tigers had the second highest rating in 2014, at 7.62. The Cardinals had an average of 95,000 homes watching last season, and that is up 23 percent, to almost 117,000 homes through the first half of 2015. Detroit’s audience is 15 percent larger than St Louis for an average game.
The Kansas City Royals have seen their television ratings soar to a league high 12.06 percent, up 119 percent over 2014. 111,000 homes in Kansas City watch an average game this season. The Cardinals now have the second highest ratings, and the Tigers have fallen to third.
Each team that has signed a new television contract in the past several years has seen a significant increase in local television revenues. The Arizona Diamondbacks signed a deal worth $ 1.5 billion in February. The Texas Rangers have a 20 year contract that will pay them $ 85 million per season, and the Philadelphia Phillies have a 25 year contract worth $ 5 billion. $ 100 million per year will come from the broadcasting rights and as much more will come from a 25 percent stake in Comcast’s Sports Net Philadelphia. The San Diego Padres and Seattle Mariners also signed new television contracts in the past year that pay $ 1.2 billion and $ 2.5 billion, respectively. The Mariners own over 70 percent of the ROOT sports network in Seattle.
The New York Yankees have the largest television deal, which pays them $ 7.7 billion over 20 years, or an average of $ 385 million per season. The team also has a 20 percent share in the YES network. The Los Angeles Dodgers have the second largest television contract, a 25 year deal that pays them over $8.35 billion from Sports Net LA. Ironically, the club has a rating of just 0.75, the lowest of any major league team because the vast majority of television homes in the area do not get the network.
Major league baseball agreed to a series of eight year national television contracts with ESPN, Fox, and Turner Broadcasting which will net them $ 12.4 billion from 2014 through the 2021 season. That is more than double their previous national television contracts. Under the terms of the collective bargaining agreement, all teams share in the national television revenue, with each team increasing their share of national revenues by $ 26 billion. All teams must give 34 per cent of local revenues to MLB, which redistributes the local monies unevenly according to a formula in order to "level the playing field" somewhat between bigger and smaller market teams.
Forbes reported that the Tigers had annual revenues of $ 254 million in 2014, ranking 13th in the major leagues. That figure was down from $ 262 million in 2013. $ 50 million of that comes from local television revenues. They are also valued as 13th most valuable franchise, worth an estimated $ 1.125 billion. An increase of $ 50 million per year, which is not out of line with comparable television contracts signed by other clubs, would boost them up to the top five teams in revenue, corresponding with their top five payroll.
We are not likely to be made aware of any television contract negotiations or terms until a new deal is announced. What we do know is that advertisers pay for viewers, and the Tigers need to maintain high ratings in order to maximize their leverage when working out a new local television contract. This is something that has to be considered when one sees big salaries being paid to players. A couple million dollars spent on a bullpen that is blowing games on a regular basis would seem to be a wise investment.