Net Zero for Technology, Media & Telecom (TMT) – Now What?

Research — April 11, 2025 MLB steps to the plate in 2025 after an offseason rich with storylines By Michael Johnson With Major League Baseball Enterprises Inc. (MLB) throwing out the first pitch of the 2025 season, a multitude of storylines have ruled the offseason. Teams have made impactful roster adjustments, with standout free-agent signings reshaping the competitive landscape, highlighted by high-level spending by the Los Angeles Dodgers and Juan Soto's monumental 15-year, $765 million contract with the New York Mets, the largest in MLB history. The rise of young talent and the introduction of the automated ball-strike challenge system is set to further impact the league, while evolving media rights strategies are expected to influence what could be a pivotal year for many franchises. With the backdrop of the league's sudden national media rights negotiations, the stage is primed for a season filled with significant moments both on and off the field. ➤ The historic two-game series between the Dodgers and Chicago Cubs at the Tokyo Dome was a home run, setting records for viewership, attendance and merchandise sales. ➤ ESPN's decision to terminate its rights deal with MLB three years early has prompted the league to explore breaking up media rights into multiple parts. ➤ MLB.TV has experienced growth in viewership minutes, as MLB's streaming strategy continues to evolve. ➤ A widening economic divide among teams is evident, as salary cap discussions are likely to resurface ahead of the expiration of the collective bargaining agreement (CBA) in 2026. MLB revenues have reached new heights since the pandemic MLB reported $12.1 billion in revenue for the 2024 fiscal year, setting a record for the league and surpassing the previous high of $11.6 billion in 2023. Over the past 10 years, annual revenue has increased over 25% despite massive disruptions caused by the COVID-19 pandemic in 2020. Among the four major US sports, MLB's total revenue over the last three years ranks comparably to the NBA in the $10 billion to $12 billion range, behind only the National Football League (NFL), which has increased revenue to over $20 billion in 2024. Dodgers and Cubs begin 2025 season with record-breaking Tokyo series The 2025 MLB season has officially begun with a two-game series between the Dodgers and Cubs at the Tokyo Dome, marking the league's largest stand-alone international event to date. This historic visit set multiple records for viewership, attendance, and merchandise sales, reflecting MLB's increasing popularity in Japan and the enthusiastic reception for superstars like Shohei Ohtani. The first game averaged 25 million viewers in Japan, surpassing the previous MLB viewership record, while the second game attracted over 23 million viewers. In the US, the first game garnered 838,000 viewers on FOX (US), and the second game averaged 350,000 on FOX Sports 1 (US), with US viewership overall surpassing 2024's Seoul Series by almost 60%. Combined attendance for the two games and four exhibition games reached over 250,000 and the MLB Tokyo Series Fan Fest drew over 450,000 fans, making it the most-visited fan festival in league history. Merchandise sales also broke records, exceeding the previous high from the 2024 London Series by 320%. With ticket resale prices reaching Super Bowl-like levels, the Dodgers won both games, launching their World Series title defense on a strong note. A key player in the record-setting event was Amazon.com Inc., capitalizing on the popularity of baseball in Japan and the presence of prominent Japanese players in MLB. The streaming giant recently sublicensed the highly anticipated Tokyo Series and will collaborate with Spotv Co., Ltd. to stream 54 games from the upcoming MLB season. S&P Global Market Intelligence Kagan anticipates that this move will bolster Amazon's service in Japan, where it already holds the largest subscriber share in the local subscription video-on-demand market. The MLB Tokyo Series and the 2025 season represent Prime Video's most significant direct investment in sports content in Japan. These additions, along with global rights to the 2025-26 NBA season, are expected to enhance Prime Video's market position, with its subscription share projected to exceed 30% by the end of 2025. The league explores divided media rights strategy as ESPN opts out of current rights deal One of the most significant storylines in sports media has been unfolding over the offseason, culminating in ESPN (US)'s decision to terminate its rights deal with the MLB three years ahead of schedule, potentially ending the 35-year relationship. ESPN reportedly sought to cut its rights payment to MLB by $350 million, proposing to reduce the fee from $550 million to just $200 million, a significant decrease underscoring the stark difference in how the two parties value the league. Rather than a single rights holder coming in to take on the rights being forfeited by the Walt Disney Co.-owned network, MLB is increasingly looking at breaking up those rights into several parts. A key consideration is whether this new media rights strategy will generate a total sum greater than the current $550 million annual deal with ESPN, which is set to expire after the 2025 season. Among the potential suitors for the rights previously held by ESPN, Amazon appears to be a natural fit, although they may choose to wait until 2028 when all of MLB's national contracts come up for renewal. Baseball would seamlessly integrate into Amazon's 2026 sports lineup, which includes rights to Thursday Night Football in the fall and winter, as well as exclusive NBA games leading into the spring. However, there is currently a gap in their summer programming before Thursday Night Football resumes, making baseball an ideal option to fill this void. Moreover, if Amazon enters the baseball market now, it positions itself to secure preferred local and national rights in 2028. The streamer has already demonstrated interest in collaborating with MLB through an agreement with the FanDuel Sports Networks, making a short-term deal for ESPN's former inventory a logical next step. Fox also stands out as a strong contender, as the network is MLB's largest media partner, paying over $700 million annually for regular season games, the All-Star Game, and the World Series. Additionally, NBC (US) Sports should not be overlooked. With a rich history in baseball dating back to 1947, securing Sunday Night Baseball alongside its NFL and NBA properties would allow NBC to provide a premium live sporting event on Sunday nights throughout the year. Netflix Inc. could also emerge as a potential wildcard for event-specific rights, such as the Home Run Derby, as MLB is increasingly considering breaking up the rights into multiple segments to maximize potential long-term value. MLB's streaming and regional strategies continue to evolve, while ESPN could emerge as key player MLB is seemingly transitioning to a streaming-based model to engage consumers who have cut the cord, although Commissioner Rob Manfred acknowledges that streaming has not yet fully replaced the essential revenue from linear TV. The potential shift aims to attract younger fans, with a hybrid model expected to balance revenue streams moving forward. MLB.TV has seen significant growth, with total minutes watched increasing from 12.70 billion in 2023 to 14.50 billion in 2024. This transformation is part of a broader strategy to consolidate national and local rights by 2028, addressing revenue and payroll disparities that concern both fans and team owners. ESPN may have an opportunity to re-enter the broadcasting of MLB through reported discussions about incorporating regional sports networks (RSNs) content into the upcoming direct-to-consumer (DTC) Flagship streaming service. A localized streaming bundle deal could enable ESPN to access regional MLB content at a reduced cost, enhancing the Flagship service and helping to minimize subscriber churn during the summer while addressing scheduling gaps with other sports. This move would align with the growing trend of streaming bundles and position ESPN as a solution to the challenges facing regional sports media, complementing its national coverage of the NBA and NHL by offering additional regional games. Amid financial challenges in the RSN industry and expiring contracts, several MLB teams are moving away from traditional RSN coverage this offseason in favor of innovative over-the-top and DTC strategies. The Texas Rangers have launched their own Rangers Sports Network, with games available on the Victory+ streaming service, while the Cleveland Guardians and Minnesota Twins are joining other teams in MLB's in-market services for the 2025 season, enabling streaming and broadcasting without local blackouts. Additionally, teams are increasingly partnering with local TV stations for select games throughout the season. Currently, there are 23 RSN agreements with teams across the MLB, with the Dodgers, New York Yankees and Los Angeles Angels being the most valuable on an average annual basis. Main Street Sports Group LLC, which rebranded from Diamond Sports Group this offseason, holds rights to nine MLB clubs. Concerning DTC offerings, the Seattle Mariners have recently become the latest team to introduce an option for fans in their area, marking them as the 14th team to implement a DTC option this offseason. As we head into the 2025 season, the Washington Nationals, Baltimore Orioles and Houston Astros remain the only teams without a DTC option. Fans are attending MLB games at a high rate, showcasing a positive viewership trend As MLB enters the 2025 season, it aims for a third consecutive increase in attendance, having exceeded 71 million total fans last season, the highest since 2017. This rebound follows a decline from 2012 to 2019 and is driven by factors such as rule changes that have made the game more dynamic, a strong lineup of star talent, and the success of big-market teams like the Dodgers, Mets, and Yankees. Additionally, viewership metrics show significant growth, with ESPN's Sunday Night Baseball viewership rising from 1.42 million in 2023 to 1.51 million in 2024, and World Series viewership surging 67% to 15.8 million as a result of the 2024 Los Angeles versus New York matchup. Results from S&P Global Market Intelligence Kagan's US Consumer Insights survey indicated over 25% of MLB fans reported attending a baseball game in person over the past year, the highest percentage among US professional sports leagues. However, a significant majority, 77%, of MLB fans watch live games on broadcast or cable TV, or through online streaming services like MLB.TV. MLB's economic divide continues to widen As MLB faces widening economic disparities, spending behaviors among teams ahead of the 2025 season highlight stark contrasts. The defending champion Dodgers are significantly retooling their roster with high-profile acquisitions like Blake Snell and Roki Sasaki, bringing their projected tax payroll to over $390 million, nearly $75 million more than the second-highest team, the Mets, and over six times that of the lowest-spending Marlins. Meanwhile, teams like the Cubs, with a payroll of about $200 million, face fan criticism for not matching the investments of similar larger market teams, while consistently low payrolls for teams like the Pirates and Marlins contribute to ongoing fan unrest. As frustrations grow, the league may be heading toward a potential lockout after the expiration of its collective bargaining agreement in 2026, reigniting discussions about a salary cap, though such measures are deemed unlikely due to concerns over revenue and profit dynamics. Gain access to our full news & research coverage and the industry-specific data that informs our insights This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global. Economics of Networks is a regular feature from S&P Global Market Intelligence Kagan.