2016 Reds

Reds and Fox Sports Ohio extend TV deal for another 15 years

The timing of this is great, since Reds broadcaster Chris Welsh will be our guest on this week’s episode of the Redleg Nation Radio podcast. (The episode will be available soon.)

This has been widely discussed for some time, but the Cincinnati Reds and Fox Sports Ohio have put the finishing touches on a new television deal:

The Reds have agreed to a 15-year extension of their local television broadcast rights agreement with FOX Sports Ohio, the club announced on Wednesday.

The financial terms of the deal, which goes into effect in 2018, were not disclosed. Reds chief operating officer Phil Castellini noted that the agreement, which had been in the works for some time, gives the club an equity stake in FOX Sports Ohio.

“We really view it as a new relationship that looks more like a partnership,” Castellini said. “It’ll operate very much the same as it has — FOX will be in charge of all elements of the broadcast, the technical aspects — but we are in it more together.”

Go check out the quotes from Reds chief operating officer Phil Castellini about the deal, both at mlb.com and in Zach Buchanan’s piece for the Enquirer. There’s a theme in Castellini’s remarks: we’re very happy, but it’s not that much money. We’re still a small market team!

We’ll have more analysis once we get the specific numbers, but at first blush, this is nothing but positive news for the club. It’ll be an infusion of cash, and the Reds now have an ownership stake in Fox Sports Ohio. I really can’t wait to see all the details.

Zach had this interesting nugget to add to the mix:

About three or four years ago, as Phil Castellini tells it, the Cincinnati Reds began researching an eye-opening idea. With their broadcast deal with Fox Sports Ohio set to expire after the 2017 season, baseball’s oldest franchise began looking into the notion of cutting out the middle man by establishing and operating their own regional sports network.

The Reds hired a consulting firm to explore that avenue, but ultimately decided they were better served by sticking with FSO.

We had heard some of those rumors, but there will be no Reds network (which could have been fun). I was really hoping that they’d need content, and we could reach an agreement to run the “Redleg Nation Power Hour” every Tuesday night at 3 a.m. (if Fox Sports Ohio wants to sign us up for that television deal, I can be found at dotsonc AT gmail DOT com).

As I said, I’m interested in seeing all of the details, but from what we know right now, it’s looking like Steve Mancuso was remarkably prescient when he wrote this here at Redleg Nation about a year ago:

So expect something less than Arizona and more than San Diego.

That would put the Reds in the neighborhood of $70-75 million (which is consistent with other published estimates) per year on average. Look for the Reds to receive a sizable chunk of equity in the RSN, maybe 20-25 percent. An 8 or 9-figure signing bonus may be included. Higher annual payments are typically phased in over time. For example, for the Reds the new deal may start at $55 million in 2017 and grow to $85 million by the end of the contract.

The Reds agreement won’t pay as much per season as St. Louis’ new contract, but it will start a year before the latter deal kicks in. And it may be for a longer duration than 15 years. The Reds deal won’t quite match the Cardinals. But it won’t be far behind, either.

Stay tuned. We hope to have further analysis of the deal in the next couple of days.

30 thoughts on “Reds and Fox Sports Ohio extend TV deal for another 15 years

  1. Are there any worthwhile international FA’s left to spend the signing bonus on? Looks like the team will be left out in the final year of international free agency (before the international draft is instituted) based on going over this year. May as well use next years money, and some of this FSN signing bonus to add a little more talent where/if we can.

  2. The Reds are trying to put a positive spin on what isn’t a very good deal. Castellini’s statement doesn’t exactly reek of joy. They signed with their only realistic option. This didn’t drag on for a year because the Reds were deciding on which great offer to take.

    In my opinion, the 55 million starting point predicted is nowhere close. I believe, It will be reported that the total value is about 750 million which comes out to a 50 million midpoint. It will start at around 40 million per year and end around 60. The average will be about 15 million less per year than the Cardinals.

    To put things in perspective, 15 years from now, the Reds cable revenue will be 25 million less per year than what the Cubs bring in NOW. The 2017 increase in rights fees doesn’t equal the revenue decline from the 2016 attendance drop. If 2017 attendance stays stagnant, the Reds will still have less revenue than they did in 2015.

    The “start our own network” talk was a non-starter.The Reds weren’t getting anything close to what they anticipated and they had no Plan B. They have no winter sports team to partner with and no cable channel was going to put on a channel that has 500 hours of live baseball and 8,000 hours of Jim Day reflecting on the legacy of Bernie Stowe. They had no leverage and no where else to go.

    The Reds ratings are rather good,but Cincinnati lacks eyeballs. The Chicago White Sox have amongst the lowest local ratings in the game….the Reds have amongst the best…yet, more people are watching a random White Sox game because of the difference in population between the Chicagoland area and greater Cincinnati. It is what it is.

    The Reds lost Columbus to the Tribe in the 90’s and they’re losing Indianapolis to the Cubs now. Reds Country has shrunk over the past 20 years and this deal is a reflection of that. Cincinnati has limited population growth. The average Reds TV viewer is a man over 55. He already knows what truck he wants to buy, what beer he wants to drink and where he wants to bank. This isn’t a demographic that advertisers are coveting.

    Small market+limited population growth+limited advertising viability= Not a great cable deal.

    I will gleefully accept the scorn associated with being wrong if any of my statements are proven false. If one looks at the Indians deal and simply takes a 25% deduction from the Cardinals deal it was very easy to determine about where they were going to wind up.

    • I think what’s turned out to be a major mistake by the Reds was allowing the Dragons to be established in Dayton; or at least the failure of the Reds to really capitalize on the arrangement has been an error.

      Over the time since the Dragons came into being, Cincy and Dayton have moved well down the road to being a single market (just look at one of those night time satellite photos and try and decide where one ends and the other starts).

      Several thousand folks representing the demographic the Reds need are at every Dragons game; and, I’d wager most of them seldom if ever make it down to GABP. And how many of them watch on FoxSports? A relative small percentage I’d guess.

      • Im not sure Dayton and Cincinnati can be compared on a strict apple to apple basis. Major league games have gotten very expensive. This is what has enabled minor league teams, and especially those in close proximity to major league parks, to thrive. For families, the cost of attending a mlb gets ridiculous. Ticket prices multiply when adding a child. Even attending minor league games can add up.

        The price point demands winning now. Blowing $12 to go enjoy a bunch of guys most casual fans dont even know is one thing…those fans are there for the baseball experience and to cheer the uniform. When fans start dropping $40 or more a ticket…and for families it multiplies…they start gauging quality and return on investment.

        • I’d have to agree with that. Two different audiences – Dragons are focused more on less expensive family entertainment in their marketing and are set at a much lower price point/greater affordability.

          The other facet, to invoke obscure Greek philosophy, falls under the classification of Paramanides’ Fallacy….i.e. if the current choice didn’t exist, the alternative would be a more desirable outcome or at least one in line with one’s preferred reasoning. Odds are, if the Dragons weren’t here, very few of the fans/families that attend their games would displace down to GABP…especially when travel time, parking, total cost are all added up — the Reds have to be planned and budgeted for, the Dragons can be a quick and easily accessible night out for the kids With the Dragons, the Reds have a vehicle to showcase their up-and-coming talent in the expectation that the fans will follow them to their ultimate destination down the road..

    • They have no winter sports team to partner with…

      Only one of the hottest high school football areas this side of Texas. Six NCAA D1 athletics programs (UC/XU/NKU/MU/UD/WSU) and a plethora of NAIA colleges with sports teams. Fox in this area largely fills the winter this kind of content originating out of the Cleveland area.

      • UC’s first and second tier rights belong to ESPN. Fox does own the big East and Xaviers rights but I think those are reserved for the national fox channels.

      • Jim,

        No one is going to watch Centerville High School track meets or Thomas Moore College volleyball matches. What would an ad cost relative to production cost? It would be a financial disaster.

      • Jim isn’t wrong; as a Dayton resident I’m mentally preparing myself for four long months of FSN showing Columbus Bluejackets hockey and Cleveland Indians highlights

        • I happen to be a hockey follower; so, I’m glad to have CBJ on FoxSportsOH 🙂

          That said if a person was looking to set up a regional network in Cincy, don’t overlook the Cyclones as winter content. The East Coast Hockey League is offering a live streaming video pack age of all games. Right there is a big piece of the production cost it would take up front to put the Cyclones on a regional net.

          I don’t doubt that the Castellini group counted the beans and went with what they thought was best for them. However, if a group had the Reds as their anchor tenant, I regional network based in Cincy isn’t a total nonstarter.

        • Hockey fan here too. I’d be more in line with Jim on this if the Cyclones were a Blue Jackets affiliate but they aren’t. The AHL affiliate for the Blue Jackets is based, not surprisingly, in Cleveland. It’s why there are some Monsters games on FSN. The Jackets loan some minor league players over to the Cyclones but there is no affiliation there and I think that hurts. Plus, the Cyclones draw well for an ECHL team but there just isn’t enough there to make putting them on TV profitable. Just not enough interest in Cincy I don’t think. Heck, we had the Ducks in the AHL which is pretty darn good hockey and yet they couldn’t sell tickets.

    • Partial agree/partial disagree. Looking at this in short/middle/long-term perspectives. In the immediate future, the Reds get a timely injection of cash to reinvest in the future of the club in an attempt to bootstrap up in competitiveness. In the medium term, however, I worry that any such gain will be evanescent – a momentary advantage because of where the Reds stand in the time cycle vs. other competing clubs revising/renewing -their- broadcast contracts. The question is the extent to which contract revenues scale with the size of any given teams natural territory. If they do scale, with anything near linearity, then the Reds will again find themselves at a financial disadvantage vs clubs with larger natural territories – and all that will happen is that everyone continues to bid up talent. Long term, no one knows how cord-cutting, over-the-top distribution or media saturation will affect the revenue stream – but that will affect all clubs. This needn’t be totally catstrophic -if- the partnership agreement gives the Reds an opportunity to expand into new distribution methods ahead of their rivals…i.e. if they have the flexibility to innovate.

      So it comes back to the same fundamentals – the Reds have to make better, smarter use of their limited resources compared to everyone with a larger resource base (which for the Reds probably means 25 or more clubs). Treat this as a temporary injection and remember that more isn’t more if you don’t change investment patterns.

  3. Chuck,

    No scorn from me. Your skepticism is well-founded, IMO, and why this is the best place for Reds opinions and discussions.

    As a Columbus resident, I do disagree on the Reds losing the Columbus market to the Indians. There was no radio station in Columbus even broadcasting Indians games in 2016 (http://cleveland.indians.mlb.com/cle/schedule/radio_affiliates.jsp).

    My sense is that, overall, there is roughly a 50/50 split in town between Reds and Indians fans. Both teams could do so much more to attract fans from this area, but sports marketing among all the Ohio teams is about as lazy and basic as it gets.

    • I tend to agree with you on the marketing aspect. Aside from the Dayton area which I spoke to above, most of Columbus and much of Indy plus the sprawl along the connecting Interstates fall into Cincy’s 90 minute market. Then there is the area along I-75 down to Lexington. From what I read and hear, because of congestion, it takes many folks in larger metro areas 90 minutes and more to get to and from MLB games. The Reds have literally hundreds of thousands of potential customers within the same time radius they don’t really pursue.

      It seems to be easier to cry the small market blues than to get out and really work the areas more than a few miles outside of the 275 loop.

      • I’ve worked on a theory for the past few years that MLB is attempting to push people in front of their tvs for games, and that they’ve pulled away from the boosterism of game attendance. The game day prices reflect this. Prices are built around the young adult drinking crowd, and the upper middle class.

        I always think back to Bill Veeck and how hard he worked the offseason speaker circuit. Game attendance paid the bills. It’s still important, but I do believe they look at the NFL as a model. I can’t tell you the number of people I know who are NFL fans and have never once been to an NFL game.

        MLB.tv is also changing the fabric of a teams fandom. We’ll see Reds fans in places well outside the region.

        • In Veeck’s era, did MLB teams get much money from tv? I suspect that live attendance was a more important financial issue then. But what you say makes sense, since my understanding is that the NFL gets most of its enormous revenue from tv.

      • greenmtred-

        Veeck owned teams from the dawn of the tv era up to about the advent of cable, so no the tv money wasn’t there on the level it is now. In fact, much to his resignation, most owners fought tv. It supposedly kept people from attending. This resulted in the draconian blackout policy that we still deal with.

        My concern is that, unlike football and hockey, baseball is truly better when viewed live. Football never really took off until tv came along. I dont think its good for the games future when they want to compete in the general tv entertainment realm…not with how many choices available. Things look good from a financial standpoint now…atleast from the owners perspective…but Ive never seen a time when fan apathy was higher. Thats my personal perception. And what is spent on tickets..merchandise…is purchased on credit to a great extent. My concern is that when the baby boomers pass…when younger people have their visa come due…baseball will have trouble. If kids arent becoming baseball fans now….this is a major storm brewing for baseball. Consumer debt loaf isnt baseballs fault…but vanity entertainment becomes a victim. I suspicion this is why TV is being pushed so strongly. A stagnant economy will probably still allow for a cable bill or even $125 for mlbtv, and game attendance will be left to the less economic averse…the corporations…what’s 40 or 100 for a game to them…many times its a tax write off. At some point baseball fans aren’t being created though. It might take a generation…but baseball is in trouble most likely.

  4. I hope there is plenty of guaranteed cash up front. Their won’t be baseball in Cincinnati if companies don’t start moving in and hiring people.

    • Dan do you mind expounding on your statement. Unless I have missed something the Cincinnati region has been thriving the last few years.

    • Baseball really doesn’t have anywhere else to go that doesn’t present another small market scenario all over again. Markets are saturated for 81 home games. If anything, the Reds can thrive due to not having a 3rd major sports team to split the pot with. That’s actually Portlands selling point. Right now its Bengals and Reds…and winning will help for the Reds.

  5. It looks like we, the viewers, will be getting more Big Mike’s Car Wash, Apollo Heating, Window World, and Jim Day’s Off commercials. It would seem that FSO would get more national products and companies to advertise during the games. Some diversity among the advertisers would be nice. I get tired a seeing the same commercial for a company about a dozen times during a televised game.
    I hope some money is spent on some upgrades of the Reds games telecasts. The pre-game and post-game shows could use some updating. I wish they would get rid of the revolving door of play-by-play announcers and analysts on the TV telecasts. They need a more professional set-up and announcing crew. I like Chris Welsh, when he actually is on. I like Jeff Brantley on the telecasts. They should pair these two up as the analysts and have one play-by-play guy, whether that be Thom B. or not. No more George Grande. No more Jim Kelce on TV, he should be Marty’s new partner on radio. No more Sean Casey in the booth. No more Jim Day in the booth. FSO and the Reds put on a decent telecast, but it could be soooo much better.

    • I watch on mlb.tv. What ive never understood is why the between innings commercials are blocked out. That seems like a lot of missed revenue for teams. They could be pitching products on a national and global level.

    • The ads are local because 80% of the audience is within 25 miles of Fountain Square. Also, the ads are cheap since the audience is overwhelmingly men over 50 and the universe of potential advertisers is limited.

      • Is this true about the 25 miles? It seems to me that the advent of mlbtv has done in some way what WGN and TBS accomplished in the 80’s by making every team a global team. In fact when someone streams mlbtv..they are blacked out locally, and must be watching someone else.

        I’m in KS and this is how I watch the Reds, and I suspicion Im not alone. I’m blacked out of the Royals. Teams are taking on a national presence. Reds will never be the Yankees or Red Sox in national fan base…but that is definitely growing.

        I can remember being a kid…if I wanted to see various teams and parks…I had to wait until the Cubs went there. Now every night I have access to every game.

        Revenue is coming from more than just the straight tv deal.

    • I thought Grande was a very pleasant breath of fresh air over what Thom usually brings to the table. I’m ok with him working a few games. He’s positive and upbeat and it’s nice for a change. I really enjoy Welsh and wish they’d bring in a steady play-by-play person to work with him that isn’t Thom. Not going to happen though. I think Kelsh should be on the radio only but if it’s just he and Marty, there is no analyst. I’d keep Brantley teamed up with Marty. When Marty retires, I don’t know if Kelsh should be the guy. I like him but he’s just like 100 other play-by-play personalities. Not sure who they could bring in though. I agree 100% on Casey and Jim Day, even though Day has been a lot better than I thought he’d be. I love Sean Casey but man he’s brutal in the booth.

  6. Any information on if this new deal is for broadcasting a 162 game schedule? Or will they keep televising only about 145 games a season, which is bogus??

    • I wouldn’t be surprised if there was actually a decrease in games carried. Fox and the other networks have mortgaged themselves to the hilt on the NFL and that bubble is showing signs of collapsing or at least seriously contracting. They will probably prefer to drop a few $M extra on the Reds to get out televising any game that would be up against an NFL game, like the Mondays and Thursdays in September along with the Sundays which they shut down this year once the NFL regular season started.

  7. Chad, thanks for the report of the new cable contract with fox. living here in the l a area, redleg nation is about my only source of info on the reds. I think Steve’s estimate made a year ago may have been a little optimistic re: the contract figures. But he wrote a excellent article on this, he just didn’t have a crystal ball to tell how bad (and how injured) the starting pitching would be in 2016, the repeated horrible seasonal record, the subsequent review by fox of the attendabce, viewership, and performance of that team.
    Hopefully, the reds will be 82 and 82 in 2017, give or take 5 games. Hopefully I can survive my illness and join the next couple of seasons as the reds improve and become contenders for the wildcard again. Best of health to the bloggers and commenters on redleg naion. Go reds!

    • Thanks Larry! Take care of yourself. Hopefully we’ll see some glimmers of hope in 17.

  8. What kind of money would a TV deal have to be worth to move Cincinnati out of the small market designation? My word, $70-$75 million (I know that’s just a guesstimate) would seem like a lot of money!

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