SBD/August 28, 2012/Franchises

Dodgers' Big-Ticket Player Acquisitions A Sign Of Ownership's Confidence In New TV Deal

Adding Beckett, others, makes Dodgers' payroll among MLB's highest
The multi-player trade made by the Dodgers with the Red Sox last weekend “offered the latest evidence of the extraordinary rise in the price of sports TV rights and their growing impact on the field and onscreen,” according to Jon Weisman of the DAILY VARIETY. While some took Dodgers Owner Guggenheim Baseball Management's “carefree attitude as a sign of business insanity, others saw simple confidence in the lucrative local cable rights deal the Dodgers are negotiating.” Fox has an “exclusive negotiating window for an extension with the franchise through Nov. 30, along with a right of first refusal after that date.” Weisman wrote all indications are that the “communications lines between the current partners are open.” Estimates for the Dodgers' TV extension “start at $4 billion over 20 years, though that amount could be altered depending on whether the baseball team takes equity in the television business” (VARIETY.com, 8/27). ESPN's Jayson Stark said, “One of the big issues for me is they’re spending TV money that they don’t have yet. But it’s the TV money that has driven what they’ve done." The Dodgers owners have committed to $419.5M in salaries "beyond this year, just since they’ve bought the team." Stark: "This is all that drives the negotiations for that TV deal. It’s very possible that the added value of the TV deal now pays for all of it and that’s a big part of their thinking” (“Mike & Mike in the Morning,” ESPN Radio, 8/28). The Chicago Tribune’s David Haugh said, “You’re also talking about the future of big-market baseball. ... The television revenue created this trade” (“Chicago Tribune Live,” Comcast SportsNet Chicago, 8/27).
 
MONEY IS NO OBJECT: In L.A., Steve Dilbeck noted the Dodgers are “already committed" to a payroll of $192.6M next season, which would “give them a higher payroll than every team this season" other than the Yankees. The money spent by the new owners since they took over the team in May totals $432M, more than former Owner Frank McCourt “paid for the team ($421 million) in 2004” (LATIMES.com, 8/27). GRANTLAND’s Jonah Keri wrote, “All the Dodgers did was completely rethink the way baseball teams spend money, and thus run their business.” The Dodgers have “hinted that budget might not matter all that much to them.” The Dodgers “became the most dangerous team in baseball.” Keri: “Dangerous to other clubs in their ability to outspend the competition anytime they want. And dangerous to owners of baseball's richest teams as well as the commissioner's office, who risk having their excellent and wildly profitable scam exposed” (GRANTLAND.com, 8/27).

THIS IS HOW WE DO IT: Dodgers investor Magic Johnson said, “I laugh when people ask if we're trying to upstage the Lakers after they got Dwight Howard and Steve Nash, but that's what we need here in Los Angeles: stars. This is an amazing time in L.A. with all the great teams and players we have now. Hollywood is the land of stars. L.A. is used to big Dodger personalities, from Tommy Lasorda to all the great players in the organization's history. The Dodgers have always been about winning and stars” (MLB.com, 8/27).
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