The meaning of the Dodgers' new TV deal

Kirby Lee-US PRESSWIRE

Or maybe they'll call it Dodgerfiles. Or Lasordamentaries. But it looks like somebody's going to have come up with something to fill a lot of air time, because the Dodgers are getting their own television network. Along with a MASSIVE AMOUNT OF MONEY. Here's Joe Flint and Bill Shaikin (via the L.A. Times):

The Los Angeles Dodgers have negotiated a long-term television deal that would pay the team $7 billion to $8 billion, a move that would help cover its recent spending spree and quiet critics who scoffed at the record $2.15-billion purchase price paid by the new owner, Guggenheim Partners.

The expected 20-year agreement with Time Warner Cable could be announced this week, according to people familiar with the matter. They asked that their names not be used because the deal has not yet closed.

--snip--

Under the terms of the proposed contract, Guggenheim would own a Dodgers-dedicated television channel that would start carrying games in 2014, said the people with knowledge of the pact...

Let's be conservative and assume the final figure is just $7 billion. That's still $350 million per season. This year, the last of the Dodgers' existing deal with Fox Sports, they'll earn $39 million.

$350 million vs. $39 million. Pause for a moment, and swirl those numbers around in your mouth for a moment.

Now, there is some good news here, even beyond making Fox Sports unhappy: A lot of that revenue will be shared with the Dodgers' competitors. According to MLB's current rules, 34 percent of all local revenues must be sent to the central pool. It's not 50 percent (which I would prefer), but 34 percent is substantial. This new deal won't lift all boats like it will lift the Dodgers, but some revenue sharing is a lot better than no revenue sharing.

Some bad news if you're not a Dodgers fan but you live in Southern California: Your cable bill's probably going up.

The addition of a new Dodgers network would bring the number of local sports channels in Los Angeles to six, the most in any major city in the United States. Besides Time Warner Cable's SportsNet and Deportes, and Fox's Prime Ticket and Fox Sports West, the Pac-12 Conference also has its own channel here. Fox Sports West carries Los Angeles Kings and Los Angeles Angels games.

"That's too many channels," said Marc Ganis, a sports industry consultant in Chicago. "I can't imagine that is sustainable on a long-term basis."

Sports channels aren't cheap. Time Warner Cable already charges other cable and satellite operators close to $4 a month a subscriber for SportsNet. The Dodgers and Time Warner Cable are expected to seek as much as $5 for their new channel, which is double what Fox charges for Prime Ticket, according to industry consulting firm SNL Kagan.

--snip--

But non-sports fans and pay TV companies are increasingly frustrated at having to pick up the tab for big sports deals. There have been calls to sell sports channels "a la carte," or separately from other programming.

The Dodger agreement with Time Warner Cable may be a tipping point.

It may be. I doubt it, though. A lot of people in Southern California might be annoyed when their bill goes up $5, but a lot of them won't even notice it. Five dollars is, what, one large decaf mocha? And even if they notice, I don't know how a bunch of annoyed Southern Californians will change what happens when, for example, the Twins get their next deal.

Ah, but Craig suspects the politicians might get involved:

All it takes is a political groundswell — and someone talking about how we should think of the children who just want to watch "Spongebob" is a great way to get that going — for Congress to wade in and either begin legislating or begin threatening to legislate with respect to cable TV in such a way that a la carte pricing becomes available. If it does, companies in Time Warner’s position won’t be able to demand across-the-board rights fees like they are now and, in turn, they won’t be able to offer sports teams like the Dodgers the billions of dollars in rights fees like they’re currently doing.

If that bubble bursts, down with it comes the TV money. Then down go the franchise values, which are escalating due to the TV money sports teams are attracting. If team values go down, team payrolls will eventually come down too. No aspect of baseball finances would be untouched by it.

Will it happen? I don’t know. And if it does, I don’t know when. But I also know that no bubble in history has ever failed to burst, and that when they do burst, the bubbles tend to take down just about everyone.

Is this really a bubble, though? I don't know. Professional sports just doesn't feel the same to me as tulips or second homes or pets.com. Professional sports -- the big ones, anyway, have seen their attendance and their television audiences just go up and up and up, for some decades now. Sure, we don't know what will happen. One reason why sports have been somewhat insulated from the problems suffered by other television programming is that games have been relatively DVR-proof; that is, fans want to see the games live, so they don't/can't skip past the commercials.

Will that continue forever, though? Maybe the next generation won't care so much about seeing the games exactly as they happen. Maybe the next generation will happily start watching a baseball game an hour after it begins, and skip the commercials. Maybe the next generation won't watch the games at all, but will instead opt for a 20-minute version that eliminates all the breaks between pitches.

Or maybe the next generation, having skipped the commercials, will simply be forced to pay for everything á la carte. You want to watch the Dodgers game? Two dollars, please. Would you pay two or three dollars to watch a Dodgers game? If I were a Dodgers fan, I certainly would.

Would the Dodgers be worth more money, or less, if you paid specifically for Dodgers games, either singly or in a season-long package? I don't know. I do believe there will be, for quite a while anyway, a great deal of money available to whomever owns baseball teams. It's difficult to predict exactly how much money, or how that money will be collected, and from whom.

What surprises me about the Dodgers' new deal is the reported length; 20 years seems like an awfully long time, considering how quickly things can change. Maybe there are some clauses in the contract that allow for some flexibility or renegotiating. But if not, 20 years might come to seem like an awfully long time.

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