SBD/January 6, 2014/Media

Phillies' TV Deal Reportedly Doubles Rights Fee, Gives Team Stake In CSN Philadelphia

The Phillies under their new deal with CSN Philadelphia doubled their annual average TV rights fee and picked up an ownership stake in the RSN, according to several sources. NBC Sports Group, which operates the RSN, has agreed to a 25-year deal that will see it pay an average of $100M per year for the rights, with the annual fee growing between 3-4% each year, sources said. That figure doubles the rights fee the team had received from CSN Philadelphia and its over-the-air partner, WCAU-NBC. The Phillies also increased their ownership stake in the RSN to 25%. It is unclear how much of CSN Philadelphia the Phillies had owned before. The Phillies' TV deal was set to expire after the '15 season. The more than $2.5B in aggregate rights fees places the Phillies in the upper echelon of MLB teams, and the initial annual figure of $100M currently trails only the Dodgers, Angels, Rangers and Mariners -- though it also will be eclipsed by the Yankees (Ourand & Fisher, Staff Writers).

LONG-TERM LARGESSE: In Philadelphia, Gelb & Fernandez cited sources as saying that the new deal, which will last through '41, "will provide the network with precious live summer programming" and the Phillies with "another substantial revenue source." Ad revenue from broadcasts "will still be split in some manner." The major financial provisions "will not go into effect" until '16. A source said that while the average annual rights fee for the duration of the contract is $100M, the figure "will begin smaller and grow each year." The Phillies are paid approximately $35M per season "in rights fees under the current contract." The new deal "combined with the ownership share and advertising revenue" is one of MLB's "most lucrative." The Phillies' deal "preserves Comcast SportsNet's market power in the Philadelphia area." The net also televises Flyers and 76ers games (PHILADELPHIA INQUIRER, 1/4). FORBES.com's Maury Brown noted the value of the Phillies' TV deal "will jump a staggering" 186%, which alone "would make the broadcast deal align somewhat with others that have been met, namely the Rangers and Angels," who have signed 20-year, $3B agreements. But the Phillies also are "acquiring a 25 percent minority ownership stake in [the] venture, thus adding an equity component to the mix." The total value of deal including escalators "should come in at, or slightly above $3 billion in total value" (FORBES.com, 1/3).

HEY, BIG SPENDER: In Philadelphia, Ryan Lawrence wrote the Phillies with the new deal "should have no excuses in remaining among the game's most aggressive spenders." The Phillies "roughly have $65 million more to spend each year," and that "doesn't include the $24 million the team ... received this winter" as part of MLB's new national TV deal. Phillies President David Montgomery said of the effect the new CSN Philadelphia deal will have on spending, "It might not represent quite a significant change as what has occurred in other markets. But we continue to believe, thanks to the tremendous fan support, that we'll continue to be one of the top five clubs in payroll each year" (PHILADELPHIA DAILY NEWS, 1/5).
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