Weeks ago, long before the news leaked to The Athletic or any defiant press release was issued, Jimmy Pitarovisited Rob Manfred to deliver the news in person that ESPN was likely going to opt out of the last three years of its broadcast deal with Major League Baseball. The ESPN chairman didn’t want to get out of baseball entirely, but he did want to work out a deal that either resulted in a lower rights fee payment, or additional programming—like local rights streams or bringing back midweek games for linear and streaming—for roughly the same amount, about $550 million per year.
Pitaro and Manfred had always had a good working relationship. Indeed, the commissioner had hosted Pitaro’s senior executive team at the World Series in October. But when Pitaro started to bring up potential contract changes, Manfred stopped him and indicated that he couldn’t be asked for a chit he couldn’t deliver. Baseball’s owners, after all, were already irritated with executives in Bristol. Back in 2021, when it signed its current deal, ESPN gave up weekday MLB games, allowing the network to negotiate downward its $750 million per year deal to an average of $550 million. MLB couldn’t allow ESPN to negotiate a lower rate again, especially not after Manfred and team owners watched ESPN pay handsome increases to keep the NFL ($2.7 billion per year), NBA ($2.6 billion), and College Football Playoff ($1.3 billion).
Plus, Manfred believed he had leverage. He and his team had been speaking with other mediacos and were optimistic that MLB would find other bidders—surely for 2028, when the league’s national rights deals with Fox and Warner Bros. Discovery expire. To that end, MLB has been talking to streamers like Amazon and Netflix, and has had informal talks with officials from Skydance, which is in the process of buying CBS (and streamer Paramount+). NBC has shown some interest as well. In any event, it appeared that MLB was keen to establish relationships with more media companies in advance of 2028, even if it meant accepting lower rights fees for the next few years. But Manfred was not going to take a lowball bid from ESPN back to his owners.
During their meeting, Manfred told Pitaro that if ESPN exercised its opt-out clause, MLB would take the rights to the open market. Pitaro understood the risks, but he also answered to Disney’s board, which had grown apoplectic over the rights deals MLB signed after 2021: Apple secured a package of Friday night games for around $85 million per year, and Roku picked up a package of Sunday morning games for $10 million annually. Sure, ESPN’s Sunday Night Baseball was an exclusive window, compared to the Friday night and Sunday morning windows that have to compete with local games. But Disney and ESPN executives felt strongly that MLB had reset the rights market with those deals.
And, frankly, baseball was not as important to ESPN as it once had been. (ESPN canceled the studio show Baseball Tonight way back in 2017.) Executives in Bristol believed that they could put plenty of other sports in that Sunday night window that would do just as well: After all, NBA and NHL playoffs run through June, and the NFL and college football start in August. To plug the gap, was ESPN better off investing in smaller upstarts like TGL than relying on a league that had defined its past? Alas, these are the sorts of unsentimental decisions that drive the sports media business these days.
Flagship On Deck
ESPN still liked being associated with baseball, however, and Bristol executives were hopeful they could work out a deal. Pitaro was also mindful of the direct-to-consumer service that ESPN plans to launch this fall, code-named Flagship, which would ideally carry local MLB streams. ESPN had told MLB executives that its weekly national MLB game on ESPN+ helped drive subscribers, and adding in local streams would facilitate Flagship’s launch.
Manfred and his owners were unmoved. If ESPN wanted to work out a new deal for the streaming rights, it would have to negotiate those separately. If ESPN exercised the out clause, it potentially would be ending the whole relationship.
Pitaro knew the risks last Thursday morning when he called Manfred to tell him that he would be exercising the out. Pitaro told Manfred that, per the contract, he would overnight an official letter formalizing the move.
Manfred subsequently sent his owners a memo saying that the upcoming season would be ESPN’s last with baseball. ESPN’s production of Sunday Night Baseball, the Home Run Derby, and the wild card playoff games would end after this year. The weekly ESPN+ game ended immediately.
Manfred’s letter to owners rankled some ESPNers for its aggressiveness, particularly when he bashed pay TV as a “shrinking platform.” After all, other pay TV channels that carry MLB playoff games, like FS1 and TBS, aren’t exactly growing in the streaming age. Anyway, sources tell me that ESPN is still willing to negotiate a new deal. Sources inside the league, however, suggest that MLB is hellbent on drawing more companies into the ’28 auction, even if it results in smaller, short-term deals for the Sunday Night Baseball package. Either way, this is certainly the most notable baseball divorce since Marilyn and DiMaggio… or at least the McCourts.