When the Guggenheim Group paid a stunning $2.15 billion to buy the Los Angeles Dodgers and then made a series of personnel moves that upped the 2013 payroll to a big-league-record $220 million-plus, there were serious questions about just how deep the new owners' pockets were.
Those pockets are about to get very deep and very full. Recent reports indicated that the Dodgers were about to finalize a new local television contract with Time Warner Cable that will pay them in excess of $7 billion over at least 20 years, beginning in 2014. The deal will give the Dodgers their own regional sports network, a channel on Time Warner devoted strictly to Dodgers coverage. Time Warner made a similar arrangement with the NBA's Los Angeles Lakers before the current basketball season.
The $7 billion windfall would be the largest TV deal in sports history, and it would give the new Dodgers' owners a massive revenue increase. In 2012, the Dodgers received just $40 million from Fox Sports to televise their games in Southern California. That contract with Fox expires with the 2013 season. Every major league team also will get a boost in revenue next season when a new national television deal kicks in.
The Dodgers will have to submit the new TV contract to Major League Baseball for approval. A portion of it will be subject to revenue-sharing rules.
At $7 billion over 25 years, the average annual value of the contract would bring the Dodgers $280 million in revenue before they sell one ticket to Dodger Stadium. By contrast, the Angels signed a new TV deal with Fox Sports before the 2012 season for $3 billion over 20 seasons (an average of $150 million annually).
However, Dodgers fans can expect to pay for their team's new deal. Cable subscribers' monthly bills went up nearly $4 with the addition of the Lakers' channel. A similar bump is expected to follow the Dodgers' move to Time Warner Cable.