Go Direct to Viewer?
Entry posted by JeromeTyleski ·
4,725 views
Twins Video
For those of us that keep an eye on the financial side of the Minnesota Twins, 2024 is going to be a big year. No, there’s no long-term albatross contract that finally comes off the books (at least not yet). 2024 is the first year of a potential new local TV rights deal with Fox Sports North (or whatever Sinclair will call the station once it takes over operations).
Currently, the Minnesota Twins receive around $40MM a year in local TV rights. Undoubtably, that amount will grow in the new deal to a potential $60-$80MM range. But what if they go another route? What follows is a rough idea that may not even be possible with current contracts, but let’s have fun with a thought experiment. It’s the offseason, after all.
What if the Minnesota Twins went ahead and bypassed the middleman (Fox Sports North) and distributed the games themselves?
One caveat here. There would still be a local TV deal. However, due to the existence of what I’ll call “Victory Sports” (I had to do the callback. It was either that or “Minnesota Twins+”), the amount of revenue from the broadcast option will be significantly smaller. For a complete shot-in-the-dark number, let’s say the revenue from that deal is $20MM/year. Assuming a new deal would land in the $70MM range, that leaves $50MM in revenue on the table.
The dirty secret here is that while the percentage of viewers for MLB games is high, the amount of viewers isn’t tremendous. In 2018, the average amount of viewers for a prime time Minnesota Twins game was 77,000, which is two Target Fields worth of fans. Not exactly the large number I thought it would be. In 2019 that number grew to 110,000. Let’s say that number drops to an even 100,000 in 2024.
Now, you can’t just spread a $50MM charge across 100,000 viewers. That’s expecting each household to pay $500/year just to watch Twins games (and actually you would need $700/year because at that point there would be no value in a broadcast rights deal). However, what if there was a nominal $20/year charge to subscribe to Victory Sports? Let’s say half the fans do that option.
$20 x 50,000 = $1,000,000. Nowhere close to $50MM. On a personal note, I’m a cord-cutter who paid $50/month for YouTube TV just to watch Minnesota Twins games, but I don’t expect many fans to make that financial decision. But even if we increase the cost of Victory Sports to $50/year, that only nets us $2.5MM.
However, Fox Sports North doesn’t pay the Minnesota Twins $40MM/year just to get 100,000 eyeballs on their channel every night during baseball season. No, Fox Sports North pays that much so it can sell advertisements. Across a season, there are 16.2MM viewers across all Minnesota Twins games, albeit a lot of those viewers are the same from game to game. What if the Minnesota Twins were to sell ads themselves and reap the revenue? I feel like that would be worth at least $50MM and potentially up to $80MM.
In addition, the team could sell curated product to each Victory Sports subscriber via e-mail or video advertisements. You like Eddie Rosario? How about a $20 discount off Eddie Rosario jerseys for Victory Sports subscribers the day after he hits a home run? How about other perks like first opportunity (after season ticket holders) to buy tickets for the Home Opener?
Now this doesn’t include the cost of producing games, which could either be potentially baked in to the broadcast deal, or any other production costs, but as smart TVs and phone apps become more common, I believe a direct-to-consumer option is worth exploring.
What do you think? Am I way off the mark here? Too much speculation? Let me know.
4 Comments
Recommended Comments