|Dodgers’ $7 billion TV deal changing baseball||| Print ||
Written by Jonathan Leshanski (Contact & Archive) on December 05, 2012
The biggest deal of the offseason wasn't the 12-player fire sale between the Marlins and Blue Jays, but a move that was made by the Dodgers that has largely been ignored by talent evaluators.
That deal was the $7B in local television rights the team sold to Fox for a quarter century of rights. Now that's a game changer. It's the largest amount of money ever to change hands for local television rights and it will make the Dodgers the richest franchise in the game with the possible exception of the Yankees, whose owners own both the team and the local sports network which relays the games in the New York area.*
That's why the Dodgers, even coming out of the Frank McCourt era, commanded a $2 billion purchase price. This single stream of revenue, which is only one of dozens, will allow the Dodgers and the teams who'll soon follow in their wake with new massive TV deals of their own to laugh again at the concept of competitive balance.
It's a terrible thing for baseball, unless you happen to be a fan of a big market team. For small- to mid-market teams this is going to be a nightmare. How can you compete for free agents and talent in a world where your entire revenue stream isn't even a fraction of just the television revenue of the top 6-8 teams?
Until recently small market teams could count on building a team via the draft, knowing they'd pay big signing bonuses, but that they'd be able to lock up quality young talent for 4-6 years. But as of last year slotting came into place and limits to the bonus money a team would be able to spend on amateur players became the new norm.
That doesn't hurt the large payroll teams, but actually helps them. The teams who spend the most money on the amateur draft aren't the Yankees, Dodgers, Angels, Rangers or Cubs, but the small market teams who stock their whole team not with free agents but with youngsters with potential. These are the teams who depend on the farm system, who have to raise their own stars, not buy them. And until recently the amateur draft was where they'd invest their limited talent dollars. Now everyone has the same limits, so small market teams have lost that advantage too.
So that brings it all back to dollars and cents, the haves and the have nots. And the Dodgers will have about $300 million dollars in television revenue to spend each year while teams like the Braves will make less than $15 million in TV revenue per year for the next two decades.
Woe be to the Florida teams, Pirates, Brewers, Royals and their ilk. Even with the revenue from the national deal (split evenly between all teams) and the money the Dodgers and big market teams need to kick in from their local revenue deals (roughly 34%) the small market teams will be squeezed from all sides.
It's going to take some talented general managers, creative owners and perhaps a new sabermetric paradigm to keep those small market teams competitive when the money starts flowing even more freely than it already has been.