The National Hockey League playoffs are starting this week, and they are going to look a little different this year; all seven Canadian teams will be sitting out and watching from home. You may be wondering why I’m writing about the NHL playoffs on a strictly baseball site, but that’s because of the lack of Canadian content in the playoffs. And more specifically, because of how the state of the Canadian hockey teams this season impacts the Toronto Blue Jays. As many of you may already know, two years ago Rogers signed a 12 year contract with the NHL for their Canadian broadcasting rights for a staggering $5.2 billion. To say the deal has been a failure thus far is quite an understatement. The Globe and Mail’s David Shoaltz wrote last week about the firing of one of the top executives in Rogers’ hockey programming, Gord Cutler. In it, he described the downfall of what should be Rogers’ top hockey program, Hockey Night in Canada:
“While Cutler cannot be held responsible for a 16-per-cent decline in Hockey Night In Canada ratings through late March, which follows a 16-per-cent decline in the first year of the deal from the 2013-14 season, CBC’s last year broadcasting the show, his departure is a sign there may be unhappiness with the on-air product at the highest level of Rogers, even above Sportsnet president Scott Moore and Rogers Media president Rick Brace.”
That’s a pretty big hit.
So how does this have anything to do with the Blue Jays? Well, Rogers sells the advertising spots for the HNIC shows before the season with the promise of a certain audience. However, when they don’t meet those audiences, which happened ever so often this year because of the most attractive teams to Canadian fans being awful, Rogers needs to give them free advertising spots to make up for it, called “make-goods”. Most of those free spots are going to come during the NHL playoffs. Not all of them, though. From Shoaltz:
“The company is putting some make-goods on its Toronto Blue Jays broadcasts and entertainment shows, and that, too, cuts into the sales of advertising time.”
This is ridiculous.
When the deal was signed, then President of Rogers Media Keith Pelley appeared on the Fan590 and stated that “it does not affect the Blue Jays payroll in any way whatsoever.” That seems like it may no longer be true.
The minimum TV contract the Blue Jays sign every year with Sportsnet (for the purposes of revenue sharing) is calculated by the firm Bortz Media & Sports Group, and takes into account both ratings and advertising revenue. From their site:
“Our ‘Television and Radio Distribution Rights Valuations’ include the following services: Provide a competitive assessment of the broadcast, cable TV and DBS marketplaces for your programming—including an analysis of competing distributors, advertising, cable network license fees and audience levels.”
From that it seems clear that the loss of ad revenue caused by the Hockey programming should have an impact on the Blue Jays.
All we have heard for the past few months from Blue Jays President Mark Shapiro is that if the fans continue to show up to the Rogers Centre, and people still tune into the broadcasts, the payroll for the club will rise next year. But suddenly, the Blue Jays won’t even be able to be worth their entire value to Sportsnet, and their parent company, Rogers Media, the same company that owns the Blue Jays. Rogers Media’s profits are taking a hit because of the hockey contract, and because of the make-goods, the advertising dollars the Blue Jays will be able to make for Rogers Media are also being impacted. Rogers Media making less money combined with a potentially lower than reasonable valuation of the minimum contract could definitely have a negative impact on Blue Jays television rights revenue.
And this all matters because as Canada proved last summer, the people are willing to tune into Blue Jays broadcasts, and the pre and post game shows, if the product is good. And that has continued into this season. Just check out what the audience was for the Home Opener on Friday night against the Boston Red Sox:
Welcome back to the #6ix! Friday’s @BlueJays game was the most-watched Home Opener in @Sportsnet history, with avg. audience of 1.77 million
— Sportsnet PR (@SportsnetPR) April 11, 2016
In other words, more than five percent of the country was watching the Blue Jays on Friday night. And Rogers Media was not able to fully take advantage of that because they had to give some of those prime advertising spots to HNIC advertisers. How does that seem fair? It doesn’t, and I guess that is just something we have to live with, as Rogers has time and again decided that their hockey content is more important than the Blue Jays. They give the Maple Leafs seemingly endless resources to improve the aspects of the game not covered by the NHL salary cap, yet when no such cap exists for the Blue Jays, they demand that fans show up before committing to increasing payroll, rather than the other way around. I’m not naive enough to believe that they have been operating in a way that doesn’t make smart business sense, but with the abject failure of their investment in hockey recently, it opens up some questions as to why they are willing to take multi-billion dollar risks in the hockey department but seem to be frugal penny pinchers in baseball, when they should be operating with one of the top payrolls in the league.
Now, the obvious caveat to this piece is that we have no way of knowing what percentage of advertising dollars would be put back into the Blue Jays. Rogers tends to keep that information very secret. However, this wouldn’t be the first time the Blue Jays are getting messed over from at TV perspective. When the Jays approach the deadline and try to take on a contract or two, the money just might not be there.
I’ll leave with this tweet from @James_In_TO, because it sums everything up pretty nicely.
@GideonTurk It's sad the biggest loser of the NHL playoffs not making any Canadian markets may very well be the Blue Jays.
— James G (@james_in_to) April 12, 2016
Sigh. Do better, Rogers.
Lead Photo: Dan Hamilton-USA TODAY Sports