The Texas Rangers losing Bally Sports is good for the fans and bad for the team

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A U.S. Federal approved a plan by Diamond Sports that could potentially bring to an end the bankruptcy proceedings. That plan involves handing back the media rights to the 11 MLB teams it broadcasts by the end of the 2024 season.

Fans rejoiced at the thought of being able to watch their favorite teams without having to sign up for cable or a streaming service. The game is going to be returned to the fans and taken away from the cable providers. The cord cutters now will be able to access their favorite teams' games more easily. Everything is good, right? Not quite. This is probably better news for the fans than it is for franchises like the Texas Rangers.

As reported by Evan Drellich of The Athletic Texas Rangers fans might see a change in the television broadcast as soon as the start of the 2024 season(Athletic subscription required). A Diamond Sports lawyer had this to say in court this week regarding their plans for the 2024 season,

Our intention is to broadcast almost all of (our) Major League Baseball teams next year. There are a few, a very few, for which we do not have agreements in place. And that, frankly, at this point, are too expensive for us to broadcast without concessions. I am told that those discussions are taking place, there have been reach-outs to both of the teams involved
Diamond Sports Lawyer

Texas played hard ball in 2023 and were willing to walk away if Diamond did not pay them in full. If that is still their stance then they will not negotiate with Diamond for a lower payment for 2024. It stands to reason that Diamond will walk away from their coverage of the Texas Rangers in 2024. I think it warrants examining what this could mean for the Texas Rangers going forward and what benefits the fans could see as a part of this news.

What this means for the Texas Rangers in the short term?

The World Series champion Texas Rangers will likely not see any effect from this move this offseason. Bally Sports has already paid Texas its full amount for the 2023 season. Texas was also able to bring in additional revenue through six playoff home sellouts, concessions, merchandising sales, and suite sales during the postseason. I do not see Texas having to make drastic reductions in payroll like the San Diego Padres and Cleveland Guardians are having to make. San Diego is apparently trying to slash their payroll by $50 million and Cleveland DFA'd Cal Quantrill this week because of his rising salary in arbitration and the uncertainty in their media rights deal with Bally Sports.

The one area where this could impact Texas is how much salary Texas is willing to add this offseason. Their agreement with Bally paid the team $111 million per season and Texas still had several years left on the agreement. That revenue source will go from $111 million to something significantly lower. It is too early to say what this means as far as what Texas will be looking to do. This could take them out of the Shohei Ohtani chase and maybe Josh Hader.

Texas can still be active and add to the roster. They just might not be looking at the top of the market players as they have for the last two offseasons. It will just force Chris Young to be more creative and look to add players for less than maybe will take a discount to play for the World Series champion Texas Rangers.

The second question that the Texas Rangers ownership and front office will have to answer is if they are willing to remain a team that is having to pay the competitive balance tax. Texas in 2023 had was in excess of $242 million in team payroll. The competitive balance tax in 2023 was set at $233 million. So Texas will have to pay a penalty for being in excess of that number. They did win the World Series so I am sure ownership will not mind paying this penalty. The question becomes will ownership support being over the tax for a second year?

Penalties do increase every time a team goes over the tax line. Texas will have to pay a 20% tax for going over the tax line. It increases to 30% for a second year and then 50% in the third year of going over. If you want to read more about the competitive balance tax click on this link. I believe ownership will support going over the tax for a second year, but they may not support going over a third year. Chris Young will likely have to find a way to spend money for 2024 with a plan of getting back under the tax in 2025.

The Texas Rangers front office will not have it easy this winter. The desire will be spend to put together a roster that can challenge for and win another World Series. The financial realties of losing Bally Sports will be in conflict of that desire. Chris Young will have to walk a tightrope of putting together a good roster, while also not exhausting all of the Rangers' financial resources. It will not be easy.

Losing Bally Sports is a winner for Texas Rangers' fans

Bally Sports from day one had one arm tied behind its back when it came to covering Texas Rangers' baseball. Bally was in charge of the television distribution for the Texas Rangers. The in-market streaming rights belonged to the team. The out-of-market streaming rights belonged to MLB. Bally has spent considerable time and resources launching Bally Sports plus. It was their subscription streaming service that they charge upwards of $20 per month for. They sold fans on being able to watch their favorite teams without having to have a cable subscription. If you were a fan of the Dallas Mavericks, Oklahoma City Thunder, or Dallas Stars then you could watch their games. If you were a fan of the Texas Rangers you could not.

The Texas Rangers and MLB refused to hand over the streaming rights to Bally Sports as the company went through bankruptcy proceedings throughout the 2023 season. It became increasingly difficult for fans to access Bally Sports unless they were signed up for cable or had a Directv Stream subscription. The ability for much of the fan base to watch Texas Rangers games did not exist. Bally Sports was not carried on Youtube TV or Hulu Live. It will be good news for fans if this agreement is finalized in court in the coming weeks.

The Texas Rangers have been trying to get their media rights back since April of 2023. Now they might get them back this offseason. Texas would then be able to go to market having just won the World Series and try to negotiate carriage agreements throughout Texas the regional viewing area. They would also be able to sell in-market streaming subscriptions for cord-cutters. Texas will have the opportunity to sell its team to a much wider audience than is currently able to consume Texas Rangers baseball.

The downside of this is that when all the contracts are signed it likely will be for far less than $111 million that Texas was scheduled to collect in 2024 from Bally Sports. The ability to market their product to more people will widen their reach across Texas and the Southwest region. It will lead to more people consuming their product, more people watching their games, and more people buying their merchandise. If ever there was a good time for this to happen it is now. The high of winning the World Series and selling networks on being the home of the World Series Texas Rangers will lead to deals being struck.

Short term this will be a financial hit for Texas. It could impact what they are able to do this winter as far as adding to the team. It will be less money coming to the team. It is a winner for the fans and good for the game. More people being able to watch the Texas Rangers play is always better than fewer people being able to watch them. I guarantee that Texas will make up some of those losses from what will likely be a massive increase in season ticket sales and single-game ticket sales in 2024. I think the real impact will come after the 2024 season when Texas is likely to be aiming to get under the tax for the 2025 season. That is when the loss of the Bally Sports revenue will be really felt.

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