Oh, so that's why Guggenheim Baseball Management paid $2.15 billion for the Dodgers. The team is close to completing a long-term television contract with Fox that is worth at least $6 billion, per both Nikki Finke of Deadline Hollywood and Bill Shaikin of the Los Angeles Times.
The deal could be as much as $7 billion over 25 years, per both reports. The Dodgers' current deals with Fox and KCAL end after 2013.
To put that in perspective, the Dodgers will receive $39 million from Fox in 2013 for the rights to air about two thirds of their games on Prime Ticket. The new broadcast deal will average at least $240 million per season.
All of a sudden, $22.5 million for Brandon League doesn't seem so bad.
Fox's exclusive 45-day window to negotiate with the Dodgers ends on Friday. Shaikin explains:
If the two sides do not strike a deal by Friday, the Dodgers would have until the following Friday to present Fox with a final offer, according to the team’s current contract. Fox would then have 30 days to accept or reject the offer.
In the absence of a deal, the Dodgers would be free to open talks with Time Warner Cable SportsNet or launch a team-owned cable channel.
Oh, and there is also this parting gift from Frank McCourt, whom commissioner Bud Selig wanted out so badly that MLB was reportedly willing to bend over backwards with a sweetheart provision to the team's next broadcast deal. Per Shaikin:
In addition, because of the U.S. Bankruptcy Court settlement between McCourt and Major League Baseball, the portion of the Dodgers’ television revenues contributed to MLB revenue sharing would be about $1 billion rather than about $2 billion. (MLB disputes that interpretation of the settlement, but the court rather than the league has the final say.)
The Dodgers had a 70% jump in ratings on Prime Ticket in 2012 per Sports Business Journal, but their numbers are still near the bottom of regional sports network ratings.
By contrast, the Yankees are at the top of the list in average audience and as part of their deal to sell part of their YES Network (the Yankees received $270 million for a nine-percent share of the network as part of News Corp's purchase of 49% of YES, per ESPN) the Yankees agreed to continue broadcasting games on the network through at least 2041.
The Yankees receive $85 million per year in television revenue in 2013, "with escalators at four percent a year and rising" per Darren Rovell of ESPN, and Shaikin reports the annual revenue could reach $300 million by 2042. A quick and dirty estimate of the next 25 years (assuming a constant 4.45% increase, which would achieve the $300 million by 2042) is approximately $150 million per year, which is far less than the reported Dodgers' deal on the table with Fox.
What this all means is that the Dodgers will have some money to spend, which the new ownership group has not been shy about. In the signings of Andre Ethier, Yasiel Puig, and League, and the acquisitions of Hanley Ramirez, Adrian Gonzalez, Carl Crawford, and Josh Beckett, the Dodgers have added over $440 million in salary commitments since the team was sold on May 1. That doesn't include the $25.7 million for the bidding rights to pitcher Ryu Hyun-jin, whom the Dodgers have until Dec. 10 to sign.
The 2013 payroll is estimated at over $210 million already, and that's without adding a free agent starting pitcher, which seems likely. But team CEO Stan Kasten said at the end of the season that the Dodgers' spending was not out of line.
"We try to be responsible," Kasten said in October. "Everything we've done is economically is supported by the market size and business forces at play."
Those market forces are in play alright, and the Dodgers could soon find their financial windfall with this new television contract.