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Massive RSN Contracts With MLB Teams Are Altering Sport's Revenue Structure

Two "seismic transactions" this winter -- the Angels' signing of 1B Albert Pujols and the Rangers' signing of P Yu Darvish -- are indications that MLB's revenue structure "has been forever altered by a massive infusion of money from cable television deals," according to a sports section cover story by Bob Nightengale of USA TODAY. New multibillion dollar contracts from Fox Sports' RSNs "enabled the Rangers to break the Red Sox's record for money spent on a Japanese import" when they signed Darvish last month for more than $111M and allowed the Angels to make Pujols "baseball's second-highest-paid player." Nightengale notes those agreements are "likely just the beginning of a wave of deals that will enrichen many franchises, yet further isolate those at the bottom of the revenue spectrum." The Rangers were the "first to hit pay dirt in August 2010," as sources peg their deal with FS Southwest as worth $3B over 20 years. Sources said that the Angels in December struck a "similar pact with Fox Sports West, a 20-year commitment valued at slightly more than the Rangers deal." The Dodgers, Phillies, Mariners, D'Backs and Nationals "could be the next group to cash in, with deals that expire or have reopener clauses" by '15. The Padres are also "poised to sign a deal with Fox Sports, pending MLB approval, that will guarantee them $75 million a year for 20 years." MLB "thinks these TV deals will not only enhance the teams' wealth but also provide even greater parity." Brewers COO Rick Schlesinger said, "If you're fortunate enough to be in a market with some dramatic bidding wars, your deal is going to be pretty good." However, there is a "fear that the new TV deals could create an even greater separation between large- and small-market clubs." White Sox Chair Jerry Reinsdorf: "The big TV deals are basically a function of market size and competition. There's no way that Kansas City can get a deal comparable to what the Angels did" (USA TODAY, 2/10).

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