Everyone knew the number would be big. Major League Baseball hates involving the legal system, and it went to court for the number. A team sold for more than $2 billion because of the number. A management group went on a drunken-sailor payroll escapade anticipating the number.
Now we know the number. Big doesn't begin to describe it.
Over the next 25 years, Fox is going to pay the Los Angeles Dodgers somewhere between $6 billion and $7 billion to televise its regular-season games, barring a last-minute snafu in negotiations, according to Deadline.com. That's twice the previous record for local TV rights. That's at least a quarter-billion dollars a year for the Dodgers and Dodgers alone. That's maxing out at $1.73 million a game for each of the 4,050 scheduled. That's the final tummy tuck on a body's worth of cosmetic surgery that could happen only in Los Angeles.
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.
When the deal closes, the Dodgers will make more money from local TV alone than 26 franchises take in from all of their revenue streams. Only the Yankees, Red Sox and Cubs do better, according to Forbes' annual franchise valuations, though they'll soon be joined by the Angels, Rangers and Phillies. The first two have their own $3 billion TV deals; the Phillies are set to cash in on their own that will keep them in the sport's top stratum.
This goes well beyond the surface concerns about such deals. The justifiable anger toward regional sports networks (RSNs) and leagues for forcing the average consumer to subsidize their absurdity. The way such deals force MLB to keep its asinine local blackouts in place. (If MLB offers a-la-carte games or allows local broadcasts on the Extra Innings package, the incentive to pay stupid prices for cable channels would wane, and the size of these contracts would atrophy.) And even the possibility of that – of a revolution against cable and satellite, and of these RSNs' bubble bursting, the prices too big and the consumers no longer willing to support them.
Baseball has seen owners over-leverage themselves similarly. When Frank McCourt was skimming money from the Dodgers as owner, baseball did nothing. And when his divorce turned into a sideshow, the league bit its tongue. The Dodgers, an iconic franchise, spiraled into irrelevancy, and MLB watched it happen.
Until they threatened to screw with baseball's TV deals.
McCourt was negotiating a 20-year, $3 billion package with Fox, and that was unacceptable to MLB. Baseball has grown from $1 billion in annual revenue to more than $8 billion over the last 20 years through three gravy trains: a booming Internet, taxpayer-built stadiums and television contracts.
Frank McCourt wasn't going to derail the biggest of them.
So baseball took him to court, forced a sale and ended up with this new standard bearer, the contract against which all contracts will be judged for the team against all which will be judged. With the Yankees intent on lowering their payroll beneath the $189 million luxury-tax threshold, the Dodgers are the team to beat for free agents, the ones willing to swallow a contract that has grown too big for the rest of the teams that no longer can compete.
Yes, it's true that baseball shares 34 percent of its local revenues and that the Dodgers will be forced to give $80 million-plus of that TV money to the relatively poor. That still leaves them with a bigger deal than any team – and upwards of 20 times that of Atlanta, one of the best franchises in baseball that happens to be saddled with the sport's worst television contract for 20 more years as a term of its sale.
There are two ways to win in baseball today: Beat the odds (and the system) with a low payroll or buy a ring with a big one.
As much as the new eight-year, $12.4 billion national TV deal would seem to fund the lower-revenue teams, all 30 split that money evenly, which makes its net impact nil. And considering the new rules that limit draft and international spending, the prospect of a low-revenue team sustaining a long run of success lessens by the day and the dollar.
While a conspiracy theorist might posit that this is baseball's way of forcing a salary cap into place, it's nothing of the sort. The players' union likes these deals, too, because more money for the sport means more money for them, and nobody ever turned down a buck. Baseball might be the greatest example of free-market capitalism in America – a place where you get what you can, competitor be damned. The strong survive. The weak suffer. Smile on, Ayn Rand.
The juggernauts will only get bigger as the chasm widens, and neither the flat-tax revenue sharing nor the graded supplemental tax in baseball's latest collective-bargaining agreement can take this volume of wealth and distribute it competitively, let alone evenly. There are the haves and the have-nots, and over the next five years and beyond, never will they have been so evident.
Every chance he gets, Selig prattles on about baseball being in a Golden Era. In some respects, he's right. The fan experience is at its apex. The game itself never has been of higher quality. Baseball, in a vacuum, is quite superb.
And yet the sport is not played there. It is in real life, where Selig and the owners over whom he presides and the players who are in their employ worship the dollar, bow to it and judge themselves by it. Never, in that respect, has baseball found itself so gilded.
Nor, sadly, has it found itself so vulnerable to the vagaries set to come simply because the sport couldn't harness its own greed.
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