Report: Phillies, Comcast SportsNet reach agreement on TV deal

David Murphy of the Philadelphia Daily News is reporting that the Phillies and Comcast SportsNet have reached an agreement on a TV deal. Details including financials and duration have not been released yet, but rumors indicate the deal is for 20 to 25 years for a “massive” amount of money. Matt Gelb of the Philadelphia Inquirer suggests it is worth “billions“.

To get a feel for how the Phillies’ deal compares with others around baseball, check out this article at FanGraphs by Wendy Thurm (@HangingSliders).

The contract will begin following the end of the 2015 season, when the Phillies’ current TV deal expires.

Following the sale of the Dodgers to the Magic Johnson Group and with their massive TV deal on the horizon, the Dodgers traded with the Red Sox to acquire Carl Crawford, Adrian Gonzalez, and Josh Beckett, taking on roughly $270 million worth of salary in the process. The Dodgers opened up 2012 with a $105 million payroll, but more than doubled that to begin 2013 at nearly $217 million. They added roughly $20 million more during the season, finishing at $237 million.

That is one example of the kind of financial flexibility that the Phillies could have in the coming years. Of course, they will be mindful of the luxury tax threshold, which will be at $189 million through 2016. If the Phillies exceed $189 million, they will be charged a penalty, which goes to “potential refunds”, player benefits, and the Industry Growth Fund. This past season, the Yankees and Dodgers were the only teams to exceed the luxury tax threshold. Per ESPN, the Yankees were penalized over $28 million (penalties escalate for consecutive infractions: 17.5% the first year, 30% for a second consecutive year, 40% for a third consecutive year, 50% for a fourth year or longer) while the Dodgers were penalized $11.4 million.

With the new deal, the Phillies will feel only a minor pinch, as the Yankees and Dodgers have felt, should they decide to exceed the luxury tax threshold. Still, they will want to show discretion with their spending nonetheless. Right now, they can confidently get involved in the bidding for Japanese pitcher Masahiro Tanaka. In order to sign Tanaka, the Phillies would need to first relinquish $20 million for a posting fee (per the new agreement between MLB and Nippon Professional Baseball) given to the Rakuten Golden Eagles, then pony up the requisite money to sign the free agent himself. Rumors have a potential deal at six years and in excess of $100 million. Yu Darvish signed for six years and $56 million with the Rangers in January 2012 but the Rangers also paid a $52 million posting fee. That deal was also inked before the influx of money from the national TV deal, a portion of which gets divvied up among all 30 MLB teams.

The Phillies could also become big players in the free agent market next year. Among the players they could potentially be interested in include shortstops Asdrubal Cabrera and Hanley Ramirez if they don’t sign an extension with their current teams (Indians and Dodgers, respectively), as well as outfielders Brett Gardner and Colby Rasmus, and starters Jon Lester, Justin Masterson, and James Shields. They could also offer salary relief to teams as the Dodgers did with the Red Sox, but it remains to be seen which opportunities will present themselves.

The new TV deal won’t affect their 2014 season very much. The Phillies have already finished a majority of their business, though they could still make one more big signing (it would almost certainly have to be Tanaka, as the top free agents remaining are tied to draft pick compensation, so the Phillies would have to give up a second-round pick). There is no amount of spending the Phillies could do between now and the start of the season that would make them legitimate contenders in the NL East in 2014. The most likely scenario is that the Phillies finish with with a bottom-ten record once again, giving them a protected pick in the 2015 draft. That would give them the flexibility to spend freely on big name free agents and put together a competitive roster.

One more draft pick early in the first round along with continued development of their Minor League system, plus a new cavalcade of free agents thanks to the new TV deal, sets them up well to consistently compete in 2015 and beyond.

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13 comments

  1. JRVJ

    January 03, 2014 09:04 AM

    IF this deal is as big as is being suggested, the Phillies will be in position to be much more aggressive in their FA spending.

    At a minimum, I would want the Phillies to be VERY aggressive regarding Japanese and Cuban players (regarding the latter, I refer to Cuban players like Miguel González and José Abreu, who can be signed as FAs outside of the international FA spending pools).

  2. amarosucks

    January 03, 2014 09:48 AM

    Just what amaro needs, more money to flush down the toilet.

  3. Ryan

    January 03, 2014 10:05 AM

    This narrative fits in nicely with Amaro’s recent insistence on short term contracts that has the team with only eight players under contract after 2015 and five players on the books after the 2016 season: Hamels, Howard, Utley, MAG, and Ruiz. Only Hamels is really on the books after that unless Utley is still producing (this would be a good thing). RAJ appears to have learned some lessons and apparently has a plan after all…

    RAJ could accelerate this time frame if he was willing to take a short term hit for long term success Sam Hinkie-style. Who knows what will happen? I will certainly be interesting to watch.

  4. NickFromGermantown

    January 03, 2014 11:20 AM

    Ruben Amaro Jr. must be so jealous of Comcast right now. Comcast managed to lock up a declining franchise to a $1B+ deal for 20-25 years.

  5. derekcarstairs

    January 03, 2014 11:57 AM

    It’s nice to have all that additional revenue, but the important questions have always been: 1) how motivated are the Phillies to be an elite team again? and 2) do you trust the baseball judgment of those who control the pursestrings? Pay no attention to the words coming out of the front office; just follow the actions.

  6. Pencilfish

    January 03, 2014 05:45 PM

    According to Matt Gelb, the deal is more than 2.5 billion for 25 years, so that kind of averages to 100M/year, though it will be somewhat less in the early years and somewhat higher later on.

  7. Mcneildon

    January 04, 2014 12:59 PM

    This deal is considerably less than what the Angels and Rangers got several years ago. Either these RSN deals are shrinking (which has been predicted), or the Phillies negotiated a very poor deal.

  8. Pencilfish

    January 04, 2014 02:11 PM

    The Phillies also get 25% equity in Comcast and a share in advertisement revenue (not common in other teams’ agreement). This is *supposedly* in addition to the $2.5 billion over 25 years, which is simply payment for the right to televise. For comparison, the current deal pays $35 million/year for rights, 100% of ad revenue but no equity share in Comcast. On the surface, it looks somewhat less than what the Rangers and even the Mariners got, but that depends on the size of the ad revenue stream and the value of the equity.

  9. Tim

    January 04, 2014 03:40 PM

    This deal seems to have upside that others do not:
    1) The Phillies have an equity stake in a successful RSN, not a fledgling one. The Phillies could have partnered with a competing media company to form a new RSN, but they would have struggled to get carriage.

    2) They have a share of advertising revenue, which is a condition of the existing deal.

    Revenue from the equity stake in CSN is not subject to revenue sharing (unlike the fee). I’m not sure how the advertising revenue is treated (I assume not shared because it seems odd they would sell advertising otherwise).

  10. Mark66

    January 04, 2014 06:12 PM

    I still question whether or not the leaders at the top are capable of making long term decisions with respect to roster moves. They haven’t shown much recently.

  11. Mcneildon

    January 05, 2014 01:09 AM

    Thanks, I hadn’t seen that article, only David Murphy’s article.

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