Why can Yankees pay so much to Ma-kun?  マーくん獲得の資金源はテレビ放映権? ―巨額契約金を払う米大リーグ球団の台所事情―


  Masahiro Tanaka, the ace hurler of the Tohoku Rakuten Golden Eagles, signed a seven-year contract with the New York Yankees on January 22 for 155 million dollars (approximately 15.9 billion yen). This contract money, the fifth biggest for a Major League Baseball (MLB) pitcher, drew wide attention. The 25-year-old Tanaka, popularly referred to as Ma-kun by his fans, swept the three titles of the greatest number of wins, the best earned run average and the best win-loss record in the 2013 season. He won 24 consecutive decisions from the start of the season, a new Nippon Professional Baseball (NPB) record, leading his team to the victory in the NPB championship series for the year. He was selected as a member of Team Japan to compete in the World Baseball Classic (WBC) series twice in 2009 and 2013. The Yankees evaluated his career NPB records to the maximum, which led to this big contract.




  The money Tanaka receives is just over 20 million dollars (approximately 2.2 billion yen) in terms of annual salary, making him the 21st major leaguer to earn that much per year. Why can an MLB club pay such a huge amount of money? One of the background factors is obviously the upsurge of TV broadcasting rights fees in recent years. More clubs annually earn hundreds of millions of dollars in such fees these days. Conversely why can TV stations pay them so much? An analysis of the mechanism may make clear where the source of funds for big MLB contracts come from.





Ad revenue, reception fees support TV stations/テレビ局支えるCM収入と受信料

  Broadly speaking TV stations in the United States make their revenue from commercials and reception fees. Ad revenue normally increases in proportion to rises in audience rating. However, viewer ratings for MLB telecasts have been generally on the decline in recent years. Nevertheless TV stations have been getting more ad sponsors. How come? That is thought to come from changes in the American people’s TV viewing style. HD (hard disk)-capable cable boxes with built-in DVR (digital video recorder) have burst into a popular choice across the country in the past four to five years. It is now common for families to record TV programs directly on such device.




  Viewer rates cover part of those recorded programs. In other words, a higher rate for a program does not necessarily mean that it is viewed alive by more people. This has prompted ad sponsors to change their mind. As commercials are more often skipped when programs are recorded, they have shifted their ad budget to live telecasts of MLB and other sports events in which ads are less likely to be rejected despite their relatively lower rates. TV stations have begun to put greater emphasis on sports broadcasts that yield more ad revenue, which in turn has led to a remarkable rise of rights fees for MLB games.




The reception fee, another income source, is more crucial for the management of TV stations. When people buy a TV set in the United States, they are required to sign a contract with a local cable TV company. At the time, they cannot single out the programs they want to view. They pick up a package that contains more programs they want to watch. Even the cheapest package offers more than 100 programs which include many tied-in ones they will never watch. This system allows TV stations to get subscription fees in a stable manner regardless of audience rating as far as each family signs a package deal. That stable revenue broadly underpins the TV business.




Do salary bubbles burst? / はじけるか?年俸バブル

  Then, how much do the TV stations get from the fees that each family pays? That ratio greatly affects their income. Sports programs which form the core of most tied-in packages command a strong position here. For example, while sports programs at most account for 10% of an average package, 40-50% of the fees paid for their reception go to the TV stations. According to research company SNL Kegan, the average charge by cable TV companies almost trebled between 2001 and 2011. The big markup was presumably possible primarily because of an increased number of sports programs. This mechanism has made each baseball club that holds the broadcasting rights financially rich enough to pay big money to star players like Tanaka.




The question is how long that system can hold on. As the modality of the TV business and lifestyle change, people who choose to watch live sports telecasts may decrease in number. People who begin recording them 30 minutes after the start of a game to skip commercials may become the mainstream. This will inevitably prompt ad sponsors to shift their budget in a new direction. People who are not interested in sports and those who do not watch any sports programs are already frustrated, complaining about repeated hikes of subscription fees. TV stations may see their revenue structure collapse if they change the present system into one that allows people to choose only the programs they want to watch for the purpose of preventing contract cancellations. Should this happen, the MLB salary bubbles might burst away.






Written By : Jun Miura