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Random thoughts: Dodgers strike it rich

11/28/2012

According to reports, the Los Angeles Dodgers could strike a new local TV deal with FOX Sports that would pay them $6 to $7 billion over 25 years -- or $240 million to $280 million per season.

Enough money, in other words, to buy Zack Greinke and Josh Hamilton and turn Carl Crawford into an expensive fourth outfielder.

Without turning this into the business section, the ramifications are certainly huge, and not just for the Dodgers. FOX recently purchased 49 percent of the Yankees' YES Network, as it gears up to launch a national sports network to challenge ESPN. Having the the Yankees and Dodgers as part of that network is apparently part of their master plan.

There seems to be some panic out there that this will put the Dodgers on an unfair playing field, especially since their ownership doesn't seem concerned with keeping payroll below the luxury tax threshold. An unfair playing field -- you know, like one owned by the Yankees, the team that has one World Series appearance in the past nine seasons and one World Series title in the past 12.

Maybe the Dodgers will sign Greinke and Hamilton. But they are long way from a powerhouse team right now. They have one great pitcher in Clayton Kershaw. They have Matt Kemp, who has had one superstar season. And then ... Adrian Gonzalez fell off last year, Hanley Ramirez isn't Hanley Ramirez any more, Crawford hasn't been good since 2010, Andre Ethier is a nice complementary player, Dee Gordon hasn't proven himself at shortstop and Mark Ellis is getting up there in age at second base. Greinke and Hamilton are terrific players, but it's not like you would be signing 1999 Pedro Martinez or 1993 Barry Bonds.

Some other thoughts out there in cyberspace:

  • First, a terrific job of research by Wendy Thurm at FanGraphs to list all the local TV contracts for each club. I've bookmarked this page. Did you know the Astros -- the Astros! -- signed a reported $3.2 billion deal with Comcast SportsNet Houston that begins in 2013, paying them $80 million per season. Of course, Houston is a large media market. Anyway, one of the team with the smallest local contracts: the Cardinals are getting only $14 million per year from Fox Sports Midwest through 2017.

  • Yahoo's Jeff Passan calls the deal "dangerous" for the sport: "Most of all, that's the siren that baseball's new era has arrived, one in which the sport's best revenue-sharing intentions cannot save it from the self-cannibalizing greed that drives these TV mega-contracts -- and drives a wedge between the haves and have-nots harder to extract than sword from stone." Jeff does point out that 34 percent of local TV money is pooled (although there is a dispute that the Dodgers only have to pay 34 percent on the first $84 million of revenue), so it's also true that's what good for the Dodgers is good for the game.

  • SB Nation's Rob Neyer, responding to Passan's column, isn't quite so doom-and-gloom: "(Y)ou can make a case that Major League Baseball has, for the last couple of decades, enjoyed as much or more parity than any of the other big American sports leagues. Which doesn't mean the next couple of decades will go just as well. But these things do have a way of self-correcting. Some of the teams with huge TV money will spend it wisely, and contend for championships almost every year. But some won't, which will leave room for teams with less money, but who spend what they do have very wisely, to nose in there for a year or two or three at a time. And if things really do get bad, with the same teams winning every year, the Lords of Baseball will step in and do something about it.

  • Marc W at the USS Mariner blog addresses the future of local TV contracts for teams like the Mariners: "More broadly, the Dodger deal seems to be the clearest signal yet that we’re dealing with a bubble. Competition and pliant cable companies aside, when we go from $20/30 million per year to $150-$300 million per year in the space of 5-10 years, we have to start questioning the assumptions at the heart of these agreements. Fewer and fewer people watch baseball on TV, as the record low ratings for this year’s World Series attest. Sure, national ratings don’t map to regional TV deals perfectly, but the Astros averaged 22,000 viewers per broadcast last year. 22,000! Obviously, they’re not always going to be awful, but local ratings for regional MLB games aren’t that high. The idea that cable companies will continue to fork over ever-increasing fees for the right to serve decent-but-not-huge segments of the market seems irrationally exuberant."