Television deal means more money for Mariners
On Tuesday, the team announced it had reached a deal with DirecTV Sports Network -- its longtime television right holder -- on a new partnership.
Basically, the deal gives the Mariners controlling interest in ROOT Sports Northwest with DirecTV Sports Networks assuming a minority position. The new agreement will televise the Mariners through the 2030 season.
This move changes the landscape of the local television market and the Mariners financial future. Mariners' executive vice president of operations Bob Aylward wouldn't go into details of the deal, but said the team is making a "substantial investment."
"Today's the culmination of two years of negotiations to achieve this long-term agreement," Aylward said. "We had our first conversations about this in 2010. It's amazing to me how far off the radar the negotiations have been. It's a real credit to both sides for their respect of the confidentiality and the non-disclosure agreements."
A good reason the negotiations have been off the radar was also the perceived stance the organization held when it came to owning or operating a regional sports network. Both team CEO Howard Lincoln and organization attorney Bart Waldman as recently as six months ago in an interview with SportsPress Northwest said the team had no interest in such a venture.
Aylward shrugged off the past comments.
"There was a very strong desire that with the restrictions to maintain confidentiality with non-disclosure agreements that we felt obligated to honor," Aylward said of the team's previous public stance.
On the surface, nothing will change from the ROOT Sports Northwest programming. The Bellevue-based company will continue to operate the day-to-day operations of the network with the assistance of DirecTV Sports Networks. People who have ROOT Sports on their local cable systems in the Northwest will continue to receive it.
"From a viewer's aspect, there will be no visible change," said DirecTV Sports Networks president Patrick Crumb.
Beyond the day-to-day programming, the revenue generated should allow the Mariners to increase their player payroll significantly. Every team in the American League West has recently tapped into the lucrative television market. Both the Angels (17 years/$2.5 billion) and Rangers (20 years/$1.7 billion) signed massive television deals that have allowed them to push their payrolls well past the Mariners.
This deal will allow the Mariners to control all of the revenue generated from ROOT Sports Northwest, including any non-baseball programming. Much of that money won't have to be subjected to the mandatory revenue sharing required by Major League Baseball because it's generated by the network and not the team. It's a loophole that's proven beneficial for teams like the Yankees and Red Sox, who own their own RSNs (regional sports network).
The Mariners decided to go with a partnership with DirecTV Sports Networks instead of go it alone for several reasons. Starting your own RSN from scratch can be a bit risky. By partnering with DirecTV Sports Networks, the distribution rights and agreements are already in place. There would be no distribution disputes that are plaguing some RSNs and the Pac-12 network.
"There were number of options potentially available to the Mariners, one of which going the route of some other clubs with a team-own 100 percent RSN," said Steve Greenberg of Allen & Company, who helped the club reach this deal "What we ultimately concluded, if you can partner with a company like DirecTV networks, it's more viable. We made the judgment that partnering with them was a less risky, more stable decision for the Mariners, than go it alone."
Either way, the Mariners stood to benefit.
"All five clubs now have long term TV deals in place for a number of years," Greenberg said. "The Mariners are in a better position than some of their rivals and competitive with their rivals in their division."
Aylward admitted that for the Mariners to remain competitive and become more competitive, they needed to make a step in this direction.
"What drove the timing is what's going on in the market place," he said.
The previous television contract had an opt-out clause after the 2015 season. By then, the bubble could have burst on the absurd amount of money being thrown around.
"This was essential," Aylward said. "It gives us the ability to make the long-range planning that our competitors have been able to enjoy."
The financial freedom isn't just signing potential high-priced free agents, but also being able to lock up young players to lucrative, but financially smart contract extensions.
"The intention of this ownership is to compete for championship," Aylward said. "It's a piece of the puzzle. And it's an important piece."
Of course, the Mariners controlling ROOT Sports Northwest raises some interesting programming questions as the major RSN in the area. The possible return of the Seattle Supersonics and an eventual NHL team could make things interesting and even more beneficial financially for the team.
Hedge fund manager Chris Hansen, who is leading the group to purchase the Sacramento Kings and relocate them to Seattle, had hinted about the possibility of starting his own RSN as a revenue maker.
With the Mariners owning ROOT, that could change. The Mariners have been openly opposed to the construction of a new multi-purpose arena in the SoDo neighborhood next to Safeco Field. But Aylward said that disagreement would have no bearing on negotiating for the rights to the Sonics or an NHL team if they came to Seattle.
Aylward said they've met with Hansen in the past, but no talk of television rights was discussed.
"In our new role as a majority holder of an RSN, we want more professional sports teams in Seattle with a loyal fan base," Aylward said. "We've been open about our concerns for a SoDo arena, but it's not going to impact any negotiations for broadcast rights. We believe the Sonics or an NHL team would provide very good programming."
Crumb said the network still plans to continue it's programming of Seattle Sounders and Portland Timbers, Gonzaga basketball, West Coast Conference basketball and Big Sky Conference football.
"We want to constantly expand our year round coverage," Crumb said.
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