How Michigan watches the Tigers, Red Wings and Pistons is likely to change
When they’re good, the Tigers dominate local TV ratings. But the Tigers haven’t contended in years and their local TV ratings have dwindled.
by Bill Shea (Bridge Michigan)
The summer of 1984 was glorious for Detroit Tigers fans, with Sparky Anderson managing the likes of Alan Trammell, Lou Whitaker, Kirk Gibson, Jack Morris and Willie Hernández as they etched their way into baseball history.
By that fall, the Tigers had won 104 games and eventually dispatched the San Diego Padres in five games to win the World Series.
While the Fall Classic aired nationally on NBC, fans that watched Detroit’s regular season at home instead of at Tiger Stadium didn’t get to see every game: The Tigers played some games on Detroit’s WDIV-TV (Ch. 4) but also 80 games on Pro-Am Sports System (PASS), an upstart cable channel started by former Tigers owner John Fetzer.
Fast-forward four decades and Tigers fans across Michigan — along with Red Wings and Pistons fans — could again find themselves sorting through a mix of platforms to watch their favorite teams, with some games on free broadcast television, and others on paid cable or streaming services.
Why? The local distribution model that for 30-some years propped up U.S. major league baseball, basketball, and hockey — known as regional sports networks (RSNs) — is rapidly falling apart as more consumers ditch cable and satellite subscriptions for streaming services.
In March, Diamond Sports Group, which owns regional sports networks across the country — including Bally Sports Detroit — declared bankruptcy under the weight of more than $8 billion in debt as it sought to reduce or walk away from what it pays local teams for viewing rights.
Diamond has broadcast rights deals with 42 U.S. major league teams, including payouts of well over $100 million annually for the Tigers, Pistons and Red Wings aired on Bally Sports Detroit across Michigan. (NFL teams are not included because their games air nationally and not on RSNs.)
In court, Diamond is trying to reduce its payments to carry games. So far, there has been no disruption to telecasts of Detroit’s professional teams. The Tigers continue to be paid, though Diamond recently stopped payments to the San Diego Padres and earlier this year to the Cleveland Guardians, Minnesota Twins, Texas Rangers and Arizona Diamondbacks. Diamond’s NBA and NHL contracts were fully paid for their recently completed seasons, but the future of where those basketball and hockey games appear in local markets remains uncertain.
The Tigers, Red Wings and Pistons declined comment. But the leagues they play in say they’re prepared to assume production and distribution of live games and have already done so in the case of the Padres.
So what sort of future could Detroit sports fans face when it comes to watching their teams? That’s the multi-billion dollar question whose potential answers are playing out in real time.
Industry observers expect regional sports networks to continue, but likely as smaller and more efficient properties. The RSN model has been good for channel owners, distributors, teams and fans for a long time.
“One benefit of the RSN model in Michigan of the past 25 years is the statewide footprint,” said Matt Friedman, a former news producer at WDIV and co-founder of public relations firm Tanner Friedman in Farmington Hills that does media consulting work. “That’s worked for the teams and has been easy for the fans.”
A ‘splintered’ model
One potential solution to the distribution uncertainty is unfolding out West: The owner of the NBA’s Utah Jazz intends to air next season’s games on a local broadcast station and on a to-be-rolled-out streaming app, which the team says will reach more fans. Jazz games had aired on AT&T SportsNet, one of a small handful of RSNs owned by Warner Bros. Discovery, which is exiting the RSN business and isn’t challenging the switchover.
A similar plan in Arizona has been blocked for now. Metro Detroit wholesale mortgage billionaire Mat Ishbia, who bought the Phoenix Suns and Phoenix Mercury basketball teams earlier this year, proposed walking away from Bally Sports Arizona in favor of a local broadcast TV and streaming plan. But his plan is halted for now by a federal judge after Diamond filed suit.
Depending on how the Diamond bankruptcy plays out, a hybrid system of free local TV and paid streaming could be in store for fans of Michigan’s three major league teams.
Commercial television broadcasters in Michigan have taken note of the proposed RSN solutions in other markets, Friedman said.
“The next model is going to be splintered. That’s going to be very different around the state. I’m hearing that the teams and owners of broadcast TV stations are considering how over-the-air (traditional) TV could be a part of a new sports model,” Friedman said.
Bally Sports Detroit, on cable and via streaming, likely will be part of the delivery model for years to come, but additional options may emerge. And baseball has the option of putting home games, if necessary, on the league’s subscription MLB.TV that’s currently used for fans to watch out-of-market games.
“If anything is going to be long term, it’s going to be a platform buffet,” Friedman said. Which is part of the wider problem of consumers trading cable packages for a series of streaming services that begin to rival cable’s cost in aggregate.
Diamond isn’t trying to shutter all its RSNs — it’s seeking to reorganize in bankruptcy, not liquidate — but wants to reduce the amount it pays teams to carry games on cable and satellite and position itself to gain streaming rights to all MLB clubs (it currently has such rights to five baseball teams, including the Tigers). MLB has made it clear it isn’t interested in giving those rights to Diamond.
Keeping a cheaper but lucrative set of RSN deals makes business sense for Diamond because of the willingness of fans to watch and pay (and advertisers’ willingness to spend on commercials).
A bad time for bad teams
When they’re good, the Tigers dominate local TV ratings. They led all baseball markets with a 9.21 local Nielsen rating in 2012 and a 9.59 rating in 2013 — coinciding with then-owner Mike Ilitch’s willingness to spend huge sums on salaries for great players vying for the World Series.
But the Tigers haven’t contended in years, remain mired in a long rebuilding effort, and their local TV ratings have dwindled — they averaged a 2.4 local rating in 2022. That still led metro Detroit primetime cable ratings, but is far behind the St. Louis Cardinals, which lead MLB with a 7.87 primetime rating.
The Pistons and Red Wings also perform well locally when winning, but don’t draw like the Tigers.
The future, or at least an interim, for local live game delivery is likely to be a mix of traditional RSN coverage, broadcast TV channels and streaming — at least until the next technology comes along and consumer habits shift again.
“For fans of Michigan’s local MLB, NBA and NHL teams, the Diamond Sports Group bankruptcy adds additional complexity in the short run,” said Patrick Crakes, a former Fox Sports executive turned media industry consultant, via email. “Overall though, Diamond should emerge from the Chapter 11 proceedings an economically viable entity which means Bally Sports Detroit will be part of a more stable business. With that in mind and in context of the current environment described above, look for the Pistons, Tiger and Red Wings to remain connected to their RSN for at least the medium term.”
And longer term?
Metro Detroit businessman Mark Gorosh, who co-hosts a Tigers podcast with Detroit Free Press beat writer Evan Petzold, said he expects the hybrid cable-streaming model to last a while, but said the tech giants rather than traditional broadcasters may eventually dictate how games are delivered to fans.
Amazon, Apple, and Google all have major league streaming deals valued in the billions of dollars, with more on the way.
“In the end, in the course of the next decade, it will not shock me if Google or Apple dominates sports, whether it’s streaming or cable or both,” Gorosh said. “They’re going to own the rights and figure out how to optimize the platform to make sure the most people can see it. If they don’t do it, that’s telling you they think there’s finite money to be made and don’t think it’s as good as others think.”
Such payments to teams account for about 15 percent of the NBA’s $10 billion in annual revenue while for MLB it’s about 20 percent of its $10.8 billion in revenue. It’s been unclear how much RSN fees account for NHL team revenue, but as the smallest of the four legacy U.S. major leagues at $5.7 billion in revenue, the money is certainly important to balancing team budgets.
RSN payments are ultimately footed in large part by consumers. Last year, the average RSN fee on a monthly cable or satellite bill was $4.14, according to data from S&P Global Market Intelligence. Bally Sports Detroit and Bally Sports Ohio each average more than $8 a month, trailing only Bally Sports Arizona at nearly $9 a month. And those fees are paid by shrinking subscriber bases: About 1 million for Arizona, and under 2 million each for the Ohio and Detroit RSNs, per S&P Global reported by the Wall Street Journal.
With rising costs, inflation, and other pressures on Michigan family budgets, choices have to be made in many households on whether to pay for cable, streaming, and going to Comerica Park and Little Caesars Arena in person.
“Attending games used to be discretionary; now, it’s paying to watch,” Friedman said. “How much of your entertainment budget goes to sports (on TV)?”
A tricky transition
Cable was losing customers even before the pandemic. Last summer, for the first time, streaming platforms outperformed broadcast and cable in total U.S. viewership.
Comcast, which is the biggest cable provider in Michigan, lost 614,000 customers nationwide in the first quarter, Variety reported.
In Michigan, the 30-plus cable providers measured by the Michigan Public Service Commission had 1.47 million customers in 2022, a decline of more than 151,000 from 2021. These declines have put financial pressure on the RSN owners and the media companies that distribute them.
“RSNs are caught in a vise. The revenue generating system that carried them for 30 years is still profitable but in accelerating decline while the new system (digital streaming) has yet to prove it can support businesses like RSNs,” said Crakes, the former Fox Sports executive.
Fans are not flocking to Diamond’s new streaming app, called Bally Sports Plus, which is priced at $20 a month and includes Detroit’s three teams.
But streaming continues to gain traction overall. It accounted for 36.4 percent of U.S. television consumption in May, with broadcast (22.8 percent), cable (31.1 percent), and other services (9.7 percent), accounting for the rest, per Nielsen’s most recent national numbers.
How and where to watch the Tigers, Pistons, and Red Wings isn’t the only concern to spring from Diamond’s troubles. Loss of RSN revenue could jeopardize how much teams can pay players, though there doesn’t appear to be an immediate threat that a loss of RSN dollars will imperil any of the teams’ ability to field a team or ink free agents.
Detroit’s baseball, hockey and basketball teams have wealthy owners with the financial flexibility to ensure everything is paid. The Tigers are owned by a trust run by Christopher Ilitch, son of the late Mike Ilitch. Current Red Wings owner Marian Ilitch is estimated by Forbes to be worth $4 billion. And the Pistons are owned by private equity tycoon Tom Gores, who moved the team to the Ilitch-operated Little Caesars Arena in 2017. He’s estimated to be worth $6.2 billion.
Teams make the bulk of their money from national league revenue, corporate sponsorships, game tickets and sales of concessions and merchandise. But they still rely on RSN payments to help balance the books.
“Any new distribution model must replace 100 percent of the economics that teams receive from RSNs immediately,” Crakes said. “If not, there will be a cascading revenue crisis surrounding team payrolls and daily operations as local economics from RSNs make up approximately 20 percent of aggregate team revenues.
It doesn’t help that the Tigers, Pistons and Red Wings have not competed for playoff berths, much less championships, in years. Not exactly ideal circumstances to ask fans to shell out more money to watch them, but the teams are proven draws when they win.
“It seems like the timing could not be worse for this market for this to be happening,” Friedman said. “If any of these teams start an uptick, there’s going to be demand. That can happen again if the team wins, and the accessibility would allow for it.”
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