Yesterday, after months of rumored negotiations, news broke that Disney had agreed to acquire a 33% stake in MLB’s streaming-video division, often referred to as BAM Tech. According the report, Disney — which has ABC and ESPN under its umbrella — agreed to acquire one-third of BAM Tech for $1.16 billion, which puts the overall valuation for the entire streaming division at $3.5 billion. As part of the deal, Disney also has the right to purchase another 33% of the company in the future, which would allow them to become majority owners of whatever they choose to call BAM Tech long-term.

The deal is certain to have far-reaching implications for the future of streaming video, and it also could have implications in the upcoming labor negotiations as owners attempt to separate non-baseball revenue from baseball revenue despite its origins within the game.

With this deal, it is clear that BAM Tech is set to be distinct from MLBAM, focusing on streaming efforts outside of baseball. This development was first announced last August, coinciding with a deal to acquire NHL’s streaming rights. MLBAM has become a force in the industry, branching out from providing only MLB-related services several years ago to providing back-end help to ESPN, rolling out the WWE Network and HBO NOW, along with streaming the NCAA Tournament and PGA tour events.

MLB considered several options with their streaming-services business, from going public to staying put, but ultimately chose a strategic partnership with Disney. By retaining a large equity stake in BAM Tech, at least until the option to sell another third is due, MLB has bet on the continuing upside of the company. By partnering with Disney, the odds are good that more deals like what the league did with the NHL and HBO will come down the pike, and if MLB and Disney can grow the company together, the remaining equity the league holds will likely increase in value, perhaps significantly.

Disney, principally through ESPN’s networks, have made enormous profits off of the cable bundle over the last decade. Disney has negotiated favorable contracts with cable providers to provide their networks on the standard cable tier so that every cable subscriber gets ESPN and its sister networks, with the cable providers passing along the high per-subscriber costs onto their customers by bundling a wide range of channels to all customers and charging a favorable price for themselves. This model has worked well (and still does) both for networks and providers for quite some time, but the number of cable subscribers has begun to erode, leading to fears that the current model is not sustainable long term.

MLBAM is extremely well-positioned to capitalize on those fears, especially given their position with ESPN, already providing services the cable giant was unable to produce on its own. As consumers view more and more programming through over-the-top networks, Disney and ESPN were poorly positioned to provide consumers digital options in-house. ESPN has experimented being a part of a skinny bundle on Sling TV, but had the opportunity to get out if there were too many subscribers cutting into the traditional cable model. While the current cable model is likely to last in some shape or form for some time, the number of consumers willing to pay for one gigantic cable package will likely continue to fall, and content providers like Disney will look to provide programming to those customers. A partnership with the technology behind MLBAM provides that opportunity.

In the short term with television offerings, not much is likely to change. Bloomberg mentioned the possibility of streaming more of the less-watched sports, but this deal is more about positioning both BAM Tech and ESPN for the future. BAM Tech gets an infusion of cash and a strategic partnership from one of the biggest content providers, especially in sports, so they can ramp up their offerings and continue to stay ahead of the competition for online streaming. Disney and ESPN now have a fallback should cable revenues falter, and they have positioned themselves for a future they previously seemed ill-prepared to weather.

While the top-level headline is easy to interpret as MLB just getting over $1 billion in cash, the likelihood of this money actually making its way into the owners’ bank accounts is pretty low. MLB isn’t selling off part of BAM Tech because owners need to raise capital; as their acquisition of the NHL’s streaming rights show, the business sees its best path forward as becoming a rights-holder, not just a technology company. Streaming-media rights are of course quite expensive, and with this equity sale, BAM Tech is now positioned to bid on all kinds of streaming-video content, potentially setting themselves up to be the dominant player in the space.

Long-term, this is definitely good news for the owners’ revenue streams, as the partnership with Disney will allow BAM Tech to grow beyond what it is now, and the league is set up to reap significant revenues from the venture if it becomes what Disney is hoping they can help turn it into. In the short-term, though, this probably isn’t a cash-out for the owners; as Dave Cameron noted in his THT Annual piece on the collective-bargaining negotiations, the owners probably don’t want to be sitting on a mountain of newfound money right as they negotiate the new CBA.

Of course, it’s also going to strain credibility for the league to cry poverty in any negotiations given that they have a secondary asset worth billions, but given that BAM Tech is essentially a separate business outside of baseball, it isn’t clear that the players have a strong claim that this is baseball-related revenue. With the infusion of cash likely to be invested back into BAM Tech, this money probably won’t filter through to the teams and players. But long-term, this definitely serves to put the league and its 30 owners in a very favorable position, now that they don’t rely solely on the popularity of the sport of baseball for their profits.