Once we get past the excitement of Rays fans over Evan Longoria’s new contract, and the jokes from other fans (“I was wondering who would be playing third base for the Brooklyn Rays in 2020”), the big question is: How can the Rays afford to give Longoria a $100 million contract extension? And the simple answer is “television revenue.”
First, there are the new national television contracts signed by Major League Baseball with Fox, TBS, and ESPN, which will double the Rays’ national television revenue to approximately $50 million per year. That is an extra $200 million over the next eight years alone.
In addition, the Rays will also see a huge boost in local television revenue after their current TV deal expires in 2016. That’s significant because Longoria’s new extension begins in 2017. And based on the Rays strong television ratings, and deals recently signed by MLB teams, the Rays’ next TV deal could be worth $50-100 million per year*. That would be an increase of 150-500% over the $20 million annually they are receiving now.
So by 2017, the Rays total television revenue could be $150 million per year. That would be ~$100 million increase in revenue every year without selling any extra tickets. And just another reason why the attendance problem is overstated.
In the end, the extension makes perfect sense from a financial standpoint and should not be surprising.
* This also makes me think the Rays have already had preliminary talks about a new local television contract. The Rays are very careful with their financials, and it would be surprising if they made a deal like this without at least have some confirmation about what their next TV deal will look like.