MLB’s Billion-Dollar mistake with ESPN
Major League Baseball commissioner Rob Manfred made a costly error, perhaps losing nearly $1 billion.
Manfred adn other top MLB leaders insisted on including an opt-out clause in the final three years of their seven-year, almost-$4 billion contract with ESPN. ESPN’s chairman Jimmy Pitaro agreed, but asked for a similar clause for ESPN. Manfred and MLB agreed to this request.
ESPN then used its opt-out this February.
ESPN had planned to pay around $1.65 billion over the next three seasons for “Sunday Night Baseball,” the Home Run Derby, and first-round playoff games. Now,NBC/Peacock has taken over “Sunday Night baseball” and the first-round playoff games for close to $200 million a year,while Netflix will broadcast the Home run Derby,Opening Day,and the “Field of Dreams” game for $50 million per season.
These two deals total nearly $750 million over the next three years – $900 million less than what ESPN originally owed. Manfred’s initial negotiation strategy was a misstep, like swinging at a bad pitch instead of taking a guaranteed base and collecting $1.65 billion.
When ESPN announced its opt-out, Manfred stated that MLB was also opting out, reacting with what some described as teenage-like behavior. He then sent a memo to team owners calling ESPN a “shrinking” platform.
Despite Manfred’s strong words, many in the industry believed MLB and ESPN would eventually reconcile.
In June, Manfred admitted he regretted the opt-out clauses, calling them a result of compromise.
“We liked the deal we had,” Manfred said. “Looking back, I wish I hadn’t sold off three years so we could align our rights through 2028. The answer is yes.”
By July, Manfred and Pitaro patched things up at a conference in Idaho and MLB sold one of its biggest assets, MLB.TV, to ESPN. The deal also included the rights to six teams’ local games and 30 exclusive weekday regular season games.
MLB recovered the $1.65 billion, with ESPN paying $550 million per year for three years for these rights. Ultimately, money resolved the conflict.
MLB now claims it is making