SAN ANTONIO — This October, the anticipated balance in Major League Baseball faced a setback as the financially powerful New York Yankees, Los Angeles Dodgers, and New York Mets emerged as three of the top four teams in the playoffs.
The overpowering force of financial resources seems to reign supreme in these instances. As the offseason begins, small- to mid-market teams in the league now find themselves in a tough position, required to devise strategies to remain competitive amidst various challenges, notably the instability of cash flow stemming from the decline of the regional sports network model.
“It’s going to be a challenge for MLB’s leadership,” remarked St. Louis Cardinals General Manager John Mozeliak recently. “The question is how to maintain some level of competitive balance when numerous teams boast significantly higher revenues than their lower-tier counterparts?”
The distress expressed by the Cardinals about their financial outlook is concerning, especially considering their history as a consistent and successful team in baseball, having secured World Series championships in both 2006 and 2011. While they may not rival the financial muscle of franchises like the Dodgers, Yankees, or Mets, the Cardinals have traditionally operated with a reasonable budget.
“We’ve always managed to exceed expectations,” said Mozeliak. “Now, the reality is setting in that our media contracts and ticket sales will impact us more than we anticipated.”
The Cardinals’ predicament reflects a broader issue faced by several other franchises as well. MLB recently announced it will take over the local broadcasting rights for the Cleveland Guardians, Milwaukee Brewers, and Minnesota Twins for the coming year, following the expiration of their contracts with Diamond Sports Group at the end of the season.
In a similar vein, the Texas Rangers have opted not to renew their agreement with Diamond either and are currently exploring their options for the next season.
With the addition of these teams, MLB will oversee the media operations for at least six franchises by 2025. Previously, the Arizona Diamondbacks, Colorado Rockies, and San Diego Padres were among the first to take this step.
Moreover, it is likely that MLB may acquire additional teams as the Diamond Sports Group continues navigating bankruptcy proceedings.
On Thursday, the Cardinals announced a new media rights agreement, although the financial details were not disclosed. They are among five franchises that have a stake in their regional sports network, alongside the Cincinnati Reds, Kansas City Royals, Los Angeles Angels, and Miami Marlins. These networks have connections to FanDuel Sports Network, following a naming rights deal struck last month.
While MLB Commissioner Rob Manfred remains optimistic about the long-term financial stability of all 30 franchises, he has acknowledged that adjustments may involve some short-term difficulties.
Arizona Diamondbacks General Manager Mike Hazen believes that lower payrolls should not excuse poor performance. The Diamondbacks impressively reached the World Series in 2023, despite ranking 21st in the league regarding payroll.
Last offseason, the team benefitted from postseason revenues, allowing them to increase spending and solidify their position among the league’s fiscally mid-range teams. Hazen expressed readiness to participate actively in free agency yet recognizes the obstacles ahead.
“Of course, this brings an element of uncertainty for us, but we collaborate with ownership to determine our budget, what we can afford to add, and then proceed accordingly,” Hazen explained.
Last season, the Mets ($332 million), Yankees ($311 million), and Dodgers ($266 million) boasted the highest payrolls in baseball, with slight modifications expected as bonuses are calculated this winter. In stark contrast, the Guardians were positioned 23rd at $109 million. Unlike their counterparts in the NFL, NBA, and NHL, Major League Baseball lacks a salary cap.
As exemplified by the Guardians, achieving playoff success with a limited payroll is possible but increasingly challenging.
“It requires tenacity and strategic planning to make moves and hope they yield positive results,” Guardians manager Stephen Vogt noted last month. “Conversely, for the major players, they primarily finalize their lineups and step onto the field.”
Some industry experts argue that not all MLB teams are facing significant financial difficulties. Notably, baseball super agent Scott Boras described the uncertainty surrounding regional sports networks as “last year’s news,” asserting it may have minimal impact on the upcoming free-agent market.
“Clubs have received contract proposals from RSNs and opted to decline; they are constructing their own platforms and employing varied streaming strategies,” Boras stated. “Teams like Texas and Milwaukee have been presented with offers but believe alternative methods will yield better results.”
“This shift in approach highlights their forward-thinking strategy regarding streaming,” he added.
