“Padres Question Worth Asking”

==================

If you dropped a nuclear bomb on Petco Park, the fallout from the radio activity would be devastating.

Have the Padres been hit with a nuclear bomb and how bad will the after-effects be?

No one wants to talk about the Padres loss of their TV contract when Bally Sports went dark, and Diamond Sports, the parent company went into bankruptcy refusing to pay the rest of the 60M owed in TV rights this year to San Diego.

As we have marched from day-to-day since MLB seized the TV package last Tuesday night, the damage seems to be growing.

Diamond Sports Group told a bankruptcy judge  in the midst of a 20-hour hearing at the end of the week, they were losing 20M per season on Padres telecasts.  In essence, they grossly overpaid in annual rights fees, and the 60M price tage was choking them.  They found San Diego was not as big an advertising market to generate the revenue they needed.  Now they have walked away.

Now we find out that MLB ‘bribed’ the Padres into walking away from Diamond-Bally, by agreeing to use MLB money to give the Friars 32M-of what was owed by Diamond as a trade off for being the first one thru the wall in forming MLB-TV streaming.

But that 32M-added to the 20M-the Padres got in their only Diamond payment, is for this year only.  There is no promise for next year..

There is no MLB payment for 2024.  There is no 60M-rights fee payment for Diamond and Bally will go dark.

Here’s the radio active fallout from what we have just seen.

The Padres will be shorted 420M from what they were still owed on the final 7-years of the Bally TV deal.  How do you make that up?

The other story is that the Padres top 6-players, from Macado-to-Tatis-to Bogaerts-to-Darvish-to-Musgrove-to-Cronenworth, are owed 1.25B, contracts that in some cases run 10-to-14 years in the future.  How are the Padres going to pay those deals, some of which contain big back ended salaries.

And I have not included how they might be able to sign Juan Soto if his price tag becomes 50M per year.  Any solutions here?

MLB wants to invoke ‘Team 30-Streaming’.  They want to establish the rights to own the streaming for all 30-teams and be able to sell big time ‘Network rights’ and charge big time ‘Network fees’ to advertisers.

But they have a problem.  The Yankees-Mets-Red Sox and Dodgers, have lucrative TV deals now.  They don’t want to give all that up to MLB, forfeit all that money.  So ‘Team 30’ might be a good idea, implementing it might be really difficult.

It drives home the reality, San Diego is a mid-sized advertising market.  The Padres have been, up till recently, a small market team.  Now Peter Seidler’s spending spree has created a real issue.

How much more can you charge for ticket prices and parking and food, having raised seats 38% over the last two years?  Maybe that’s why they are furiously going to develop Tailgate Park as another revenue stream.

And as part of the sale of the franchise to the Seider-Fowler group, they also took on 20%-ownership of Fox Sports-San Diego, that became Bally Sports, and now it’s like owning an empty building with no way to rent out space.

I’d be really worried.  The Padres spent so much on future contracts, back-end loaded, because their TV deal was back end loaded so there would be increased money coming in to fund all that.

But if the Padres don’t become dominant, don’t become the Dodgers, and win the pennant race year after year, how do they bankroll all they have committed to?

And all of a sudden that ugly word has raised its head in the conversation.  All winter long, people in baseball questioned the viability of what Seidler and AJ Preller were spending.  And now there is a significant problem with money owed vs money that won’t be coming in.

This is a problem in other places too, Cleveland, Cincinnati, Pittsburgh, Houston, Texas, but it seems a more serious problem in San Diego because of the way the Padres check writing off seasons have gone recently.

All of a sudden the word ‘sustainability’ has resurfaced, triggered by the collapse of Diamond-Bally and the Regional Sports Networks.

Now the question is not just will Manny hit, or how many games you going to win, or what would an Ohtani-Soto in the lineup look like?

Now the real question, how you going to pay for all this, with a TV deal payday that has gone away?

The sports-business website ‘Sportico’ did an evaluation and interviewed former owner John Moores, who cast doubt on what the franchise has become since he sold it.

Not finishing 1st, or losing to the Dodgers, or getting booed at home with all these losses early in the season, might be the least of your problems.

Hope that’s not a nuclear cloud on the horizon.  But these are questions worth asking now as we learn more day-by-day.

==============================

Please follow and like us: