The owners may have voted unanimously to allow John Fisher to move forward with his plans to move the Oakland Athletics to Las Vegas, but there are still a number of hurdles that will need to be cleared before any shovels hit the dirt.
MLB is at an interesting inflection point right now, with the Diamond Sports Group bankruptcy debacle. DSG filed for bankruptcy in early 2023, aiming to clear over $8 billion in debt from its ledger. 14 MLB teams, and 42 professional teams in total, were affected by the filing. These teams were put at risk of losing a significant portion of their annual revenues provided by their local television contracts.
DSG has fought to pay significantly less to these affected teams than their original contracts require. It was recently reported that the Rangers and Twins will both be getting their broadcasting rights back sooner than later. The Twins will be able to pursue a new deal after the 2024 season, and the Rangers will be able to sign after 2025.
The league itself was forced to step up and provide broadcasting services for the Diamondbacks and Padres during the 2023 season. According to a report ($) from Evan Drellich and Ken Rosenthal of the Athletic, the Padres opted to take out a loan worth $50 million to cover cash flow discrepancies tied to the loss of their annual local tv deal.
Many MLB teams print money, but one major reason why is because of the lucrative local tv contracts they have. On the extreme end, the Dodgers currently earn $240 million annually from theirs.
Teams aren’t going to be happy taking a pay cut, and if things really go sideways with the DSG proceedings, you can expect a long labor battle between the owners and the players association when the current CBA expires after the 2026 season.
How will teams cope with a loss in tv money
With so many teams staring down the barrel of lost revenue, despite the growth in revenue in nearly all other buckets, it’s no wonder why commissioner Rob Manfred is pushing so hard for expansion.
Manfred has stated that prior to any serious expansion consideration, the Athletics and the Rays need to settle their stadium situations. For John Fisher, that means leaving Oakland in favor of Las Vegas, despite whether they have a sufficient plan in place to do so.
When the owners voted unanimously in favor of the A’s move on Thursday, they signaled to fans everywhere that they’re concerned about money, first and foremost. The A’s will be a permanent revenue sharing recipient in Las Vegas, and Manfred has said the league is opting to waive the standard relocation fee of roughly $300 million for Fisher.
MLB is trying to move this process along as quickly as possible so they can check this box off the list and move on to the Rays situation in Tampa. There are other owners angling for taxpayer money for ballpark updates, specifically in Boston, Milwaukee, and Kansas City. But Manfred hasn’t put expansion on hold while those situations get resolved.
The sooner Fisher and Rays owner Stu Sternberg have their plans in place, the sooner MLB can move forward with expansion. Current expansion fees are estimated between $2 billion and $2.5 billion, per franchise. Split 30 ways, that’s somewhere in the range of $175 million to each current owner.
MLB likely wants to move this process forward now, or else risk a change in franchise valuation based on local tv rights deals. For teams who are losing revenue due to the DSG bankruptcy, the quick cash from expansion is quite the golden goose.
It’s hard to believe that the owners would approve relocation for the A’s despite all the unanswered questions unless they have some ulterior motives. It’s not necessarily nefarious, but there is certainly evidence that the owners see what’s ahead of them in the battle for local television money, the revenue drop that will come from a move to a direct-to-consumer streaming model, and know that shoving the square peg into a round hole that is the A’s relocation efforts is the quickest way to getting the expansion revenue.