Deregulated cable feeding baseball’s high-money fire

COMMENTARY By Evan Weiner, NBCSPORTS.COM CONTRIBUTOR

Aug. 20 — If and when the Major League Baseball Players Association walks out, there will be plenty of accusations directed at Commissioner Bud Selig and baseball’s 29 owners along with Players Association Executive Director Donald Fehr and the players.

BUT THERE ARE two other entities that will go largely unnoticed that deserve a good deal of the blame as well. Congress and the Federal Communications Commission. Congress and the FCC have fingerprints all over sports. By not regulating cable television, both have contributed to skyrocketing player costs in baseball, hockey and basketball. Congress and the FCC have given monopoly powers to the cable industry and cable networks like the Walt Disney Company’s ESPN, Rupert Murdoch’s FOX Sports Network and AOL-Time Warner’s Turner Sports have spend an enormous amount of “other people’s money” on buying baseball, hockey, basketball, college games for programming on their various sports networks. Baseball teams share in Murdoch’s FOX Sports over-the-air TV monies, but baseball has not changed its rules on local revenue sharing in more than a century and that’s where the financial inequities between the teams occur.

The New York Yankees-owned cable YES Network produces more money than the bottom seven team’s local cable television contracts combined. That gives the Yankees a financial advantage over those teams who for a variety of reasons ranging from a lack of imagination to form a cable network to a lack of population cannot compete with the Yankees. If there is a strike, Yankee owner George Steinbrenner will be at the center. A good many of baseball’s “neediest” owners want a slice of Steinbrenner’s cable TV money. The union wants Steinbrenner to be able to pay players because he keeps salaries high.

But there is a third party here, an invisible party to those who are heavily involved. Cable television “basic” subscribers, who are footing the bill for salaries without knowing it. The 76.7 million basic cable subscribers are
paying at least $3 billion in annual fees to subsidize both professional and college sports.

Sports lives on cable TV’s basic tier and that means that all subscribers, whether they are sports fans or not, all paying for sports. In some instances, non-sports fans are paying as much as $200 annually for the right of not watching sports on their cable. Cable networks have confidentiality clauses with systems operators to not divulge actual network costs to consumers.

Because of deregulation, the Congress and the FCC have crafted a system that has created a bank for sports and has left consumers with no choices and no rights. It’s led to a so-called lack of competition problem in baseball, and could lead to an ugly basketball lockout.

And here’s major consumer problem that both Congress and the FCC will need to address. The NBA starts its a new six year, $4.6 billion contract in the fall with AOL-Time Warner and the Walt Disney Company and one of the provisions with the ESPN portion of the deal is that the so called sports leader, ESPN, will pay rights fees to the NBA in either 2004 or 2005 if the owners decide to lockout the players once the present collective bargaining agreement ends. Disney then threw in a sweetener. They would not only pay the owners and provide seed money for a lockout fund but would also air replacement or scab games. So why are we, the cable subscribers, paying for a lockout fund? And how many cable TV subscribers know that a portion of their bill may be earmarked to break a union, the NBPA? Probably just a handful of people.

That’s the beauty of sports and cable. Whenever any sport needs a few quick dollars, they go to a local regional sports cable network or form a cable network charging high rates for programming that doesn’t draw a lot of viewers. The cable TV systems operators take the sports networks, place them on basic and just pass on the cost of the network, along with their take, to consumers whether they want the sports networks or not. The owners and players will share the public blame if the players walk, but Congress and the FCC have some responsibility in this. Cable TV needs regulation. Congress and the FCC should change the cable TV rules not because of a sports strike but to protect consumers from being ripped off.

Evan Weiner is a commentator on the “Business of Sports” for Westwood One’s Metro Networks.