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Pete Toms Article Archive
Written by Pete Toms   
Monday, 24 October 2011 13:53

Last Week in Bizball with Pete Toms

Please welcome back, Pete Toms - Maury Brown

This week in “Last Week in BizBall“, mandatory slotting, a strong season for MLB Network, plus tidbits.

MANDATORY SLOTTING

The successful conclusion of CBA negotiations is, reportedly, a real possibility during this World Series.  The current CBA expires in December.  I have blogged repeatedly here the past few years that one of the most important changes in this next CBA would likely be the introduction of mandatory slotting in the Rule 4 draft (aka amateur draft).  Since 2000, commissioner Selig has, with mixed results, presented clubs with “slot recommendations” prior to the draft.  In recent years, deals not adhering to the commissioner’s “slot recommendation” have not been approved by the league until the end of the signing deadline, delaying the prospect‘s entry into pro baseball.  Publicly, Selig and MLB’s senior labour executive, Rob Manfred, have long lobbied in the baseball media for the inclusion of “mandatory slotting“ in this next CBA.  Selig and Manfred have consistently argued that “mandatory slotting” would contribute to greater competitive balance in MLB (the signability issue).  Cynical observers, including me, believe that MLB’s insistence on obtaining “mandatory slotting” is motivated by their desire to lower player acquisition costs.  Some pundits theorized that MLB would successfully bargain for “mandatory slotting” by capitalizing on discontent within the ranks of veteran players over the sensitive issue of “rookie compensation”.  In exchange for the PA’s cooperation in imposing a salary cap on their newest members, MLB would funnel a higher percentage of revenues to veteran players.  But, as LWIB unfolded, some of the most credible baseball pundits had reported that there is a distinct possibility that mandatory slotting will not be included in the new CBA.  Early in the week, from Ken Rosenthal :

The two sides remain far part on the owners’ desire to institute “hard slotting” — predetermined signing bonuses — for the amateur draft, major league sources say.

However, the same sources suggest that the gulf between the sides on that issue could narrow quickly, and enough progress has occurred in other areas for an agreement during the Series to remain within reach.

A few days later Buster Olney reported, Sources say Major League Baseball is not close to getting the draft slotting system that it wanted at the outset of the labor negotiations with the union, and there is real doubt among club executives whether commissioner Bud Selig has the desire to dig in and fight for that change; rather, some believe he would prefer labor peace over a prolonged scrap.

A few weeks after the Rule 4 mid-August signing deadline had passed, Jim Callis of Baseball America wrote that the record spending in this year’s draft is the most recent evidence that the commissioner’s prolonged attempts at limiting club spending on amateur players is futile.  Callis notes that changes in the current CBA involving “drastically improved compensation for unsigned picks in the top three rounds” and an earlier signing deadline, initially resulted in a slight decrease in Rule 4 spending in 07 over 06.  However, as Callis notes, in 08, spending in the Rule 4 spiked dramatically with the Tigers and Yankees leading the way.  Over the course of this CBA, the annual amount of signing bonuses awarded drafted players has grown from approx. $150 million to approx. $230 million.  And why are commissioner Selig’s “recommended slots” increasingly ignored?  Callis simply observes that, “The draft is the most cost-efficient way to acquire talent.”  In recent years, some of the most chronically uncompetitive teams have concluded that outspending their competitors in the Rule 4, rather than competing for veteran free agents, is the path to the playoffs.  The Pirates, Nationals and Royals have led MLB in spending on draft bonuses over the past 5 years (see chart).  Not coincidentally, baseball fans in those markets have legitimate reasons (talented young players) to be optimistic in the near future. 

At the beginning of this CBA, removing the issue of “signability” from the Rule 4 draft was widely perceived as a key to future competitive balance in MLB.  But as the end of this CBA nears, it has become evident that the Rule 4 best serves competitive balance left largely as is. 

SELECT READ MORE TO SEE NEWS ON MLB NETWORK, PLUS THIS WEEK'S TIDBITS

MLB NETWORK UPDATE

I don’t too often think of MLB Network because it isn’t available in Ottawa (or anywhere in Canada)  But LWIB I came upon this Sports Video Group piece on the technical logistics of MLB Net’s live programming from the World Series’ ballparks.  Most of the piece I don’t understand but it did lead me to some recent reports, which I do understand, on the state of MLB Net .

This soon concluded season also marks the end of MLB Net‘s third year.  In September, John Ourand reported for SportsBusiness Daily that securing carriage on Dish Network had helped push MLB Net into 65 million homes, the most for any of the league-owned channels.  MLB Net initially launched in, a then record, 50 million homes.  Entering this season, the channel was in approximately 57 million homes.  Later in September, there was more good news, courtesy of Cynopsis Media.         

MLB Network scored the channel's best ratings for a single quarter ever for the third quarter of this year, boasting 42% growth in average viewers in total day as well as 31% growth in average viewers and 33% growth in the A18-49 demo in primetime. The network's studio show MLB Tonight saw a spike of 44% during that same period.

During this season, prior to the growth of both distribution and ratings, MLB Net was already expected to return the MLB owners their initial investment in the channel, plus return profits. (see this Reuters report from December) 

Going forward, MLB Net will also be strategically important when MLB’s national TV contracts are renegotiated.  (The current deals expire after the 13 season)  Because of the robust demand for live sports programming amongst sports cable channels, Comcast (Versus), Fox (for F/X), Turner (TBS, TNT, trutv) and ESPN (I can’t count their platforms), Commissioner Selig was likely correct last week when he predicted a healthy future market for MLB broadcast rights.  MLB will no doubt float the idea of broadcasting live playoff games on their own channel if only to increase competition for the rights.  And should MLB Net actually acquire rights to broadcast live playoff games it would likely result in increased distribution of the channel. 

TIDBITS

  • The city of Tampa suggested it could come up with about $100 million for a new Rays ballpark, but it would have to be in their city and not in St. Petersburg where the current park is located.  I guess it’s a step in the right direction…..and not a whole lot more.  If you want more details, start with Ballpark Digest and Field of Schemes.
  • The Red Sox have applied for Fenway Park to be included in the National Register of Historic Places.  If successful, the club will reportedly receive $40 million in tax credits, on top of the $40 million they have already received.  See BostonHearld.com (HT Sports Video Group)
  • The Cubs “Wrigleyville West” development, associated with their new spring training complex in Mesa, took another step forward.  These sorts of real estate developments attached to new stadia have a varied history, largely because their success/failure is tied to the fortunes of the local economy and the state of credit markets. 
  • Ballpark Digest tells us that, despite being the third-largest market in Texas, the San Antonio Double A franchise ranked last in Texas League attendance this year.  Evidently there are early discussions concerning the construction of a new ballpark for that city. 

You can follow me on Twitter @PeteToms


Pete Toms is senior writer for the Business of Sports Network, most notably, The Biz of Baseball. He looks forward to your comments and can be contacted through The Biz of Baseball.

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