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As we continue to enter a “new era” of TV broadcasting approaches (franchises owning networks, networks owning franchises) the Los Angeles Dodgers landmark 25-year, $8B (that’s billion, which is almost half of the annual NASA budget) deal for broadcast rights may benefit smaller market teams. Bill Shaikin of the Los Angeles Times has the extensive detail, but snippets are brought to you below:
Dodgers ownership
Under MLB rules, teams must contribute 34% of local television revenue to a pool designed to help small-market clubs.
MLB has adjusted its rules. If a team assumes the risk of ownership in a television channel, the team can keep all the revenue. However, MLB can determine what a fair-market broadcast rights fee would be and can assess the team 34% of that amount for the purpose of revenue sharing. In theory, whether the New York Yankees accept an annual rights fee or run their own network, the Kansas City Royals still can get a fair share of the Yankees’ TV money.
I’ve been a long-time proponent of the principle of revenue sharing (for competition sake), however I’d be somewhat frustrated if revenue brought to my club via cable/satellite subscriptions by people paying their bills in my market were taken and doled out to franchises who, in some cases, seem to stay just bad enough to draw a few fans, then take the dole. Combine this with the luxury tax (shockingly, the same teams are hit) and it’s tough to turn a buck. However, unchecked, and you could be talking teams with $300m – $400M salaries (yes, $15M per player) vs. teams that couldn’t afford $50M total, and that wouldn’t be good for the long term health of the game.
- Dave (@lhd_on_sports)
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