How MLB, ESPN (Eventually) Break Regional Sports Networks

Live sports have been on a bit of a roller coaster since March 2020.

As COVID disrupted seasons in 2020 and was followed by nearly two years of limited/no attendance, streaming has also come for one of the industry’s most dependable revenue streams: Regional sports networks.

Diamond Sports Group’s failures have put significant stresses on MLB and NBA teams, and has led to commissioners for both leagues actively seeking out ways to move beyond the RSN model.

For MLB, it’s come in the form of the league taking over rights for various clubs, while both baseball and basketball clubs around the leagues are also jumping to leverage a mix of streaming solutions and local broadcast (the latter, a return to the predominant approach of last century).

But to-date, efforts have been fractured. MLB has taken over TV for a handful of clubs, and local broadcast and streaming approach across both leagues (and the NHL as well) have not been uniform. But there’s a real chance that’s about to change, especially now that baseball has a bigger partner in the effort to do away with RSNs as we know them.

While nothing has been finalized yet, MLB’s rumored new deal with ESPN would not only feature the network carrying its out-of-market games package (much like it already does with the NHL now), but also in-market games for five teams. Specifically, the Arizona Diamondbacks, Cleveland Guardians, Colorado Rockies, Minnesota Twins and San Diego Padres.

Not coincidentally, those are also the five teams that the league is producing games for this season in lieu of regional sports network support.

If all of this comes to pass, it’s part of the larger ESPN volume play, for sure, as it launches its new “everything” streaming app. But the expansion into in-market games would present an entirely new model for the Worldwide Leader in Sports. And one that would give it a decided interest in ending RSNs that we haven’t seen before.

ESPN could’ve potentially done this years ago, mind you (when parent company Disney bought Fox’s entertainment assets, it sold the former regional Fox sports networks to Sinclair). The fact that it didn’t, though, not only saved ESPN from the financial losses it would’ve experienced from 2020-25, but allows it to staple the in-market approach on top of an all-in app that is more essential to the overall sports fan experience.

So now, they can slow-play it without being completely committed. From 2026-28, ESPN will have those five teams plus the data to support any further investment in more. MLB is invested in making this work as well, since it avoids the responsibility of finding an immediate RSN killer while letting ESPN do the work to make it happen.

But even if ESPN does crack this specific nut and present a viable solution for the NBA, NHL and MLB to do away with RSNs in favor of an ESPN-operated in-market endeavor, there are still various hurdles to creating league-wide solutions.

More than 30 teams across the three leagues air games on FanDuel Sports Networks (formerly Bally Sports, which are formerly the Fox Sports regional nets), but that’s not even half of the teams in question. NBCU and WBD have owned small collections of networks with varying contract lengths. Teams like the Mets, Yankees, Dodgers and Knicks (among others) also have lucrative and much longer deals than the majority of their peers. The Dodgers, in particular, are in the middle of a 25-year deal with Spectrum SportsNetLA that pays out $8.35 billion over the course of the deal.

Even if MLB can get the other 29 teams on board, it’s going to be difficult to create any arrangement that makes it worthwhile for the Dodgers what amounts to over $330 million per year in regional TV revenues. So you’re waiting until a timeframe closer to 2039 (when the deal runs out).

That’s a while from now. But if you tether the other 29 teams to a service, it’s still a viable solution for what’s pained MLB on that front.

The bigger question may simply be how much ESPN’s willing to invest here in incomplete RSN substitutes.

To make this work, ESPN’s effectively standing up dozens of regional TV operations with differing year-round demands. The infrastructure is in place for many of these, and they’d likely just contract with existing operations. But organizing everything under the ESPN banner and process and streaming aparatus still takes resources.

There’s also a specific number of teams that create critical mass for these direct-to-consumer in-market services to work, and it differs based on which ones are actually on board. A collection of smaller fan bases means you need more teams to make it financially viable. A smaller collection of large fan bases could probably get there faster, but also feels less essential as a larger ESPN or MLB/NHL/NBA product.

Assuming ESPN has the appetite to do this — and it’s not just a three-year flier on the idea — then it will happen. Eventually.

These services (or all-in offering across the three leagues) will eventually force the hands of the holdouts, and ESPN is uniquely positioned to make that happen in a way that its potential competitors can’t.

The next three years will be informative here. As ESPN and baseball play the long game toward severing RSN ties, we’ll see the pieces coming together for those five teams before (assumed) wider implementation. Even something generally resembling success — in terms of audience and revenues — should mean the green-light toward more.