Are the Pirates Truly in Trouble in Upcoming TV Deal Negotiations?

Many fans misplaced anger with Frank Coonelly over the current TV deal won’t go away unless a better one is struck this time around. Photo by George Gojkovich/Getty Images

There are happenings on the horizon that play a pivotal role in the Pirates’ ability to compete for the foreseeable future and they have nothing to do with young players developing, the upcoming trade deadline, or anything even close to player related for that matter.

The Pirates’ television deal expires after the 2019 season, and as any fan following sports finances knows, while gate receipts, merchandise, and other revenue streams are nice, the real money is in television. It ?s how the Dodgers can afford $200 million payrolls, and how the Yankees have led the league in payroll for much of the last two decades.

Stuck in a small market, the Pirates won ?t ever see similar TV money that these big market teams capitalize on, but are they stuck with the same low revenue deal moving forward?

While no total value is truly known, the annual revenue from the current deal is believed to be in the area of $20-25 million per year. With ratings dropping over the last several years ?as well as the marked drop in attendance — many speculate the Pirates will see little, if any, increase in their upcoming deal. All may not be lost, however. While you can ?t compare the Pirates to the Dodgers or Yankees, two teams in similar positions as the Pirates recently re-upped on their deals ?the Cincinnati Reds and Tampa Bay Rays ?and it ?s worthwhile to analyze their respective situations to see if anything can be gleaned regarding the Pirates ? upcoming negotiations.

New Deals

Before comparing the three teams, we ?ll establish the details of the new agreed upon deals.

Before the start of the season, it was reported that the Rays ?who were entering the final year of their current agreement ?had forged a new 15-year pact, worth $82 million per year, or $1.23 billion in total. The deal that is coming to an end was due to pay the Rays $35 million in 2018.

As for the Reds, they also recently re-upped for 15 years; this time the agreement was made in 2016 and was set to start at the beginning of the 2018 season. While valuations for the Reds ? deal weren ?t as readily available, the old deal paid an estimated $30 million per season, and many seem to speculate that the new agreement could be in the neighborhood of $1 billion, which would equal around $65 million per year ?more than double the old deal. Even if those amounts are high, it ?s likely to be a substantial boon to the small market franchise.

So, do the Pirates stand any chance for a similar windfall? Several factors can be examined to try and make that determination.

Market

As already stated, the Pirates are what ?s known around baseball as a ?small-market team. ? Many fans bristle at this notion, but it ?s backed up by the league ?s Collective Bargaining Agreement. The basic tenet of the new Revenue Sharing system in Major League Baseball, Market Score ?while not defined in the CBA ?is believed to be a rating assigned by the league that factors in measures such as population, income, and cable households in a given market. A score of 100 is the cut off for teams receiving and paying Revenue Sharing, so that score is basically considered average.

In 2016, at the time of their new deal and under the old agreement, Cincinnati was at 28^th in Market Rank in the league ?tied with the Pirates. For reference, they are last in the league in Market Score under the new agreement, with a score of 51.

As for the Rays, they are tied at 19^th in the league with the Arizona Diamondbacks at a score of 72 in the new agreement. Obviously, this is a more favorable rating, but still lies in the bottom half of the league and within the realms of receiving Revenue Sharing.

How do the Pirates compare? Under the new CBA, the Pirates have a Market Score of 56, which ranks 27^th in the league.

As for actual market size, Pittsburgh is the 26^th largest market in the U.S. at roughly 2.33 million people, while Tampa-St. Petersburg is 18^th at 3.09 million and Cincinnati 29^th at 2.18 million.

Performance

The theory goes that TV partners will only pay for a winner, but is this truly the case? In the three years leading up to their respective deals, the Rays had an average record of 76-86, while the Reds were much worse, with a mark of 69-93. These records obviously didn ?t stop the teams from signing new, much larger TV deals, but will it hold back the Pirates? Using a projection for 2018, the Pirates have a three-year average record of 78-84, more in line with the Rays, who scored the bigger deal.

Attendance

With a swirl of fan apathy, poor performance by the team, bad weather, and whatever other factors one wants to attribute, it ?s inarguable that the Pirates have seen a drastic decrease in attendance this season. Again, based on estimates for 2018, the percent change ?all decreases ?for the previous three seasons are as follows: -26.28%, -14.66%, -9.98%. These are obviously troubling numbers, but again, how do they compare to our test subjects?

While the Rays saw much more modest decreases in their three years leading up to their deal ?2.53%, 0.07%, 11.02% ?the Reds realized one big drop amongst three straight declines before their new deal was agreed upon ?21.72%, 2.31%, 0.62%. Obviously, the Pirates have realized the worst attendance declines of the three.

All attendance figures were courtesy of Baseball Reference.

Television Ratings

Here ?s what one would assume to be the biggest factor in determining an upcoming TV deal; why would a network want to pay big money for a team no one wants to watch?

In 2017, the Pirates ranked 6^th in TV ratings across the entire league; however, their 5.02 rating was a 30.47% decrease from 2016, when they were 5^th, which was also down 21.09% from 2015. The Pirates ranked 3^rd in the league in 2015 with a 9.15 rating, which was a 7.77% increase from 2014. For reference, a recent tweet indicated that the Pirates were currently 6^th in the league in TV ratings at this point of the season, but no percentage increase or decrease could be determined.

As an aside, for those of you probably wondering how the Pirates are pulling such great rankings but still crying ?small market it ?s truly about how many people are watching, not the rating. A point on the Nielsen scale represents 1% of all the televisions in a market, and with a much smaller number of televisions in the Pittsburgh market, higher ratings still mean less eyes than a bigger market with smaller ratings. Moving on ?

As for the Rays, they saw ratings decreases of 8.47% and 28.4% leading into their new deal, with a 2.74% increase from 2014 to 2015, while the Reds saw three straight years of decreases ?22.17%, 28.71%, and 19.48%.

All ratings information was courtesy of Forbes.

Conclusion

Obviously, we have no way of knowing what will happen until a new deal for the Pirates is announced in the upcoming months. While many critics are prognosticating doom and gloom, these numbers help paint the picture that TV hasn ?t quite hit the bubble that many have been predicting. The fact remains that live sports are still the biggest draw on TV ?the Pirates are number one on cable in the Pittsburgh market and number two across all TV. The entirety of the baseball season just provides too much content for networks, and they are still willing to pay top dollar for it.

Unfortunately, no matter how the Pirates stack up to teams that recently signed new deals, there ?s one factor that wasn ?t mentioned that may be most important of all ?competition. It ?s somewhat understood that ROOT Sports (now AT&T SportsNet) was the only network vying for the Pirates in the Pittsburgh market. I have no idea what kind of network competition the Tampa-St. Petersburg and Cincinnati markets have, but without other bidders in play, it will be that much easier for AT&T SportsNet to lay an offer on the table that the Pirates more-or-less have to accept. Without some savvy dealing from Frank Coonelly, more bidders in the race, or the threat of a team owned network, it ?s possible the Pirates end up right back in the same boat they have been in for the past 10 years.

It remains to be seen, but the Pirates ?and fans ?should be hoping the television bubble hasn ?t burst just yet.

*All estimates are through 7/15/18