Tuesday, January 22, 2013
The Price of Contention: The TV-money pipeline
By Mark Saxon
The Los Angeles Dodgers' new owners have spent more than $600 million in acquiring players since they bought the team less than one year ago. They will enter the 2013 season with the highest payroll, at more than $220 million, in baseball history.
Now, the only question is whether they can turn money into wins.
We’ll take a look at some of the issues facing the Dodgers as they enter a season filled with promise, but as always, fraught with peril. What are the costs -- and what are the opportunities -- inherent in such a high-stakes gamble?
Part three: What the Dodgers' new TV network with Time Warner Cable Inc., reportedly worth upward of $7 billion, will mean to the team moving forward.
Shortly after the Dodgers' new owners fired their first major cannon shot at the rest of baseball -- the trade that brought in Adrian Gonzalez and three other players and sent about a quarter of a billion dollars heading to Boston -- a high-ranking club official told me this: "It's all about the TV money
all of it."
The Dodgers' new TV deal, which could be announced later this week, is the answer to the question that has been hovering over this team these past 10 months: Where's it all coming from? This is where it's all coming from. All of it.
The Dodgers' annual TV revenues are about to go from roughly $40 million to somewhere in the neighborhood of $300 million, starting in 2014. That pays for a lot of middle relievers.
So, maybe the question we should be asking isn't, "Why are the Dodgers spending more than any baseball team has ever spent?" but "What are they doing with the other $80 million?"
This week's news -- presuming it actually is announced this week -- is good news for a lot of people, probably in a similar order to this: 1. Dodgers' owners, 2. baseball players, 3. player agents, 4. Time Warner Cable, 5. Major League Baseball. And, last but not least, maybe it's even good news for you. Hey, what's not to like about a channel devoted exclusively to the Dodgers, right?
But fans should keep a couple of things in mind as this very expensive ship sets sail in about two and a half months. First, you're the one paying for it -- whether it's through a steeper cable bill, eye-popping ticket prices or an $11 beer. Mark Walter, Peter Guber and the other owners didn't get where they are -- in bigger houses than you or I -- making frivolous business decisions based on emotion. If you like sports and participate in the sports economy, you and everyone like you are the ones paying for it.
Second, it's one thing for the owners to spend so lavishly now, with the TV deal headed their way and with the odor of the McCourt era still lingering around the team. It will be another thing to keep up the talent hunt in five or six years, when these owners are looking to make their business as efficient as possible, and it dawns on them that reinventing their team via free agency every year is an unsustainable effort.
If all goes as planned, that last point will be moot because scouting and development, looted by McCourt, will be rebuilt into the humming factory it used to be.
Presuming the cable-bill hike isn't too punishing, it will probably be worth it for serious fans, who likely will get more Dodgers news, more analysis and more baseball-centric shows from a channel devoted to their team.
The debate it will stir on a national level is whether it's fair. The Dodgers' mega-deal and others like it aren't possible in Kansas City, Tampa or Milwaukee. It may not be possible anywhere outside New York or Los Angeles.
While the Dodgers continue to stockpile star players -- and make it more expensive for other teams to do so -- the smaller-market teams have to fight even harder, make even smarter decisions to keep up. Will it even be possible for Oakland, Milwaukee or Tampa Bay to compete with the big-city teams in a half-dozen years?
Of course, if you live in this market, you can always make the counter-argument. We pay a high cost of living in part to gain access to the best restaurants, the best entertainment options and, now, some of the most varied sports programming in the country.
Dodgers' management has already proven its willing to spend a share of its gains on the team. The next thing it has to prove is that it can translate that into wins. If the Dodgers can combine the new revenue streams with an effective baseball operation that makes smart personnel moves, this team seems destined to be the game's model franchise for a couple of decades, at least.
Something tells me most Yankees fans didn't care what Kansas City thought when they were winning all those World Series.