Disney to give MLB another $1.58 billion for BAMTech. The players will see none of it.

Associated Press
52 Comments

Last year The Walt Disney Company bought a $1 billion stake in BAMTech, which is the streaming media unit created by Major League Baseball, originally used to power MLB.tv but since spun off into its own company and now used by multiple content providers both inside and outside of sports. That deal gave Disney a 33% share in BAM and put around $33 million into the pocket of every owner in baseball, give or take.

Yesterday Disney upped the ante, announcing that it has agreed to purchase a majority stake in BAMTech, putting its ownership share at 75%. The price for the new shares: $1.58 billion, so there’s another $52 million per owner, again, give or take. Major League Baseball and its owners will retain about 15% of BAMTech, with other minority shareholders making up the rest. Disney, as is its wont, will monetize the living hell out of BAM. It announced yesterday that it is launching its own streaming service, for sports with ESPN-branding on top of the BAMTech platform, and for Disney content, setting them up as a rival for Netflix and Amazon.

That’s big, big news. For our purposes, however, it’s worth noting just how much Major League Baseball and its owners have made off of its technology venture.

In 1995, baseball’s total revenues were about $1.4 billion. That was for everything: gate, merchandise, broadcasting, beer, hot dogs, you name it. In the past 12 months baseball has raked in nearly double that from selling off shares of a side business that didn’t even exist until a few years ago. Remember that the next time a team owner cries poverty, claiming that he can’t pay for his own ballpark or ballpark renovations or that he can’t keep that star outfielder you like so much when he hits free agency.

It’s also worth noting that the players aren’t seeing any of this money. Which on one level makes some amount of sense in that BAMTech is technically its own entity, legally no different than, say, a car dealership or a real estate firm in which a team owner has a controlling business. Reggie Jackson wasn’t given certified financial statements from George Steinbrenner’s ship building operation and when Ted Turner sold bison burgers and colorized copies of “Casablanca” it’s not like Jeff Blauser got a cut.

But that’s not a perfect analogy because BAMTech would not be a roughly $3.2 billion company if it had not had a wildly successful proof-of-concept phase via its successful streaming of Major League Baseball games. Baseball’s windfall is a function of it moving first and showing that its platform could handle live sports in heavy volume and that it could get people to pay to watch it, none of which was a given at the time. As such, it’s not unreasonable to say that, if it weren’t for the baseball games and the men who played them, they owners would not be raking in these Disney Billions now.

Which makes me wonder what, if anything, Tony Clark and the MLBPA intend to do about all of this.

The union and its players are watching the owners rake in megabucks, in part, because of player labor. While the union may not have standing to explicitly demand a cut of this, it’s been pretty clear for a good while that the owners were making a lot of money off of digital media and would be making more in the future (the last CBA was negotiated after the first Disney buy in, with the second one predicted even then). How have they pressed the owners to get any of this money to trickle down, directly or indirectly?

Overall player share of baseball revenue has been more or less steady for a good while (many argue it has decreased, but let’s leave that aside for now) but, thanks to smaller deals for post-free agency players and a greater reliance on younger, cheaper players, major leaguers are actually getting less of it. The ratio has largely been propped up by big spending on international players and amateur bonuses. With the new CBA imposing restrictive caps on those bonuses, it’s not hard to imagine that the share will now, in fact, go down. And, as we learn more about the new CBA, we see that the owners are coming out on top in more ways than just revenue share. The owners have been cleaning the players’ clocks at the bargaining table pretty consistently of late.

And now we get front page news about the biggest media company on the planet funneling billions to 30 guys who sign the players’ paychecks. Billions that would not be possible if it were not for thousands of streamed baseball games and the revenue therefrom showing Disney’s money men that buying BamTech would solve a lot of their problems. I imagine a lot of players are reading that front page news and are wondering if they are going to see any of that money, one way or another. I wonder what Tony Clark will tell them when they ask.

Texas Rangers ink free-agent ace Jacob deGrom to 5-year deal

Jacob deGrom
USA Today
0 Comments

ARLINGTON, Texas — Jacob deGrom is headed to the free-spending Texas Rangers, who believe the health risk is worth the potential reward in trying to end a six-year run of losing.

The two-time Cy Young Award winner agreed to a $185 million, five-year contract Friday, leaving the New York Mets after nine seasons – the past two shortened substantially by injuries.

“We acknowledge the risk, but we also acknowledge that in order to get great players, there is a risk and a cost associated with that,” Rangers general manager Chris Young said. “And one we feel like is worth taking with a player of Jacob’s caliber.”

Texas announced the signing after the 34-year-old deGrom passed his physical. A person with direct knowledge of the deal disclosed the financial terms to The Associated Press. The person spoke on condition of anonymity because the club did not announce those details.

The Rangers were also big spenders in free agency last offseason, signing shortstop Corey Seager ($325 million, 10 years) and second baseman Marcus Semien ($175 million, seven years).

The team said deGrom will be introduced in a news conference at Globe Life Field next week following the winter meetings in San Diego.

“It fits in so many ways in terms of what we need,” Young said. “He’s a tremendous person. I have a number of close friends and teammates who played with Jacob and love him. I think he’s going to be just a perfect fit for our clubhouse and our fans.”

Texas had modest expectations after adding Seager, Semien and starter Jon Gray ($56 million, four years) last offseason but still fell short of them.

The Rangers went 68-94, firing manager Chris Woodward during the season, and then hired Bruce Bochy, a three-time World Series champion with San Francisco. Texas’ six straight losing seasons are its worst skid since the franchise moved from Washington in 1972.

Rangers owner Ray Davis said the club wouldn’t hesitate to keep adding payroll. Including the $19.65 million qualifying offer accepted by Martin Perez, the team’s best pitcher last season, the Rangers have spent nearly $761 million in free agency over the past year.

“I hate losing, but I think there’s one person in our organization who hates losing worse than me, and I think it’s Ray Davis,” Young said. “He’s tired of losing. I’m tired of losing. Our organization is tired of losing.”

After making his first start in early August last season, deGrom went 5-4 with a 3.08 ERA in 11 outings. He helped the Mets reach the playoffs, then passed up a $30.5 million salary for 2023 and opted out of his contract to become a free agent for the first time.

That ended his deal with the Mets at $107 million over four years, and deGrom rejected their $19.65 million qualifying offer in November. New York will receive draft-pick compensation for losing him.

The fan favorite becomes the latest in a long line of ace pitchers to leave the Mets for one reason or another, including Nolan Ryan, Tom Seaver, Dwight Gooden and David Cone.

The Rangers visit Citi Field from Aug. 28-30.

When healthy, deGrom is perhaps baseball’s most dominant pitcher. His 2.52 career ERA ranks third in the expansion era (since 1961) behind Los Angeles Dodgers lefty Clayton Kershaw (2.48) and Hall of Famer Sandy Koufax (2.19) among those with at least 200 starts.

The right-hander is 4-1 with a 2.90 ERA in five career postseason starts, including a win over San Diego in the wild-card round this year that extended the Mets’ season. New York was eliminated the next night.

A four-time All-Star and the 2014 NL Rookie of the Year, deGrom was a ninth-round draft pick by the Mets in 2010 out of Stetson, where he played shortstop before moving to the mound. He was slowed by Tommy John surgery early in his career and didn’t reach the majors until age 26.

Once he arrived, though, he blossomed. He helped the Mets reach the 2015 World Series and earn a 2016 playoff berth before winning consecutive NL Cy Young Awards in 2018 and 2019.

But injuries to his elbow, forearm and shoulder blade have limited him to 26 starts over the past two seasons. He compiled a career-low 1.08 ERA over 92 innings in 2021, but did not pitch after July 7 that year because of arm trouble.

DeGrom is 82-57 with 1,607 strikeouts in 1,326 innings over nine big league seasons. He gets $30 million next year, $40 million in 2024 and 2025, $38 million in 2026 and $37 million in 2027. The deal includes a conditional option for 2028 with no guaranteed money.

The addition of deGrom gives the Rangers three proven starters along with Gray and Perez, who went 12-8 with a career-best 2.89 ERA in his return to the team that signed him as a teenager out of Venezuela. Young didn’t rule out the addition of another starter.

With several holes on their starting staff, the Mets have shown interest in free agents Justin Verlander and Carlos Rodon to pair with 38-year-old Max Scherzer atop the rotation.

Now, with deGrom gone, signing one of those two could become a much bigger priority.