Dodgers Send Shock Waves Through Local TV Landscape

Recent Billion Dollar Deals

The tentative Dodgers-Fox contract is just the latest billion-dollar local TV deal. The Texas Rangers kicked off this new frenzy in late 2010 with it’s 20-year/$1.7 billion deal with Fox Sports Southwest. But it’s not just the big-market teams cashing in. The San Diego Padres — who play in one of the smallest media markets in the league — signed a 20-year/$1.2 billion deal with the new Fox Sports San Diego before the beginning of last season.

A note about equity. With the exception of the Dodgers’ deal — the final terms of which are still to be revealed — all of these new local TV contracts grant the teams an equity stake in their broadcast partner. The teams typically receive a percentage of profits commensurate with their equity holdings. But that revenue is not included in the team’s “net local revenue” and therefore not subject to revenue sharing under the Collective Bargaining Agreement. For more on the workings of the league’s revenue-sharing program, read this post I wrote a few weeks ago.

Los Angeles Dodgers	25 years/$6b – $7b$240m – $280m per year  (tentative)	Fox Sports West	Begins in 2014 seasonExpires after 2038 season
Los Angeles Angels	17 years/$2.5b$147m per year  25% equity stake	Fox Sports West	Began before 2012 seasonExpires after 2028 season
Texas Rangers	20 years/$1.7bOne time $100m fee  $80m per year 10% equity stake	Fox Sports Southwest	Begins in 2015 seasonExpires after 2034 season
Houston Astros	20 years/$3.2b$80m per year  45% equity stake	Comcast SportsNet Houston	Begins before 2013 seasonExpires after 2022 season
San Diego Padres	20 years/$1.2b$60m per year  20% equity stake	Fox Sports San Diego	Began before 2012 seasonExpires after 2031 season

Team-Owned Regional Sports Networks

There was a time when the Yankees and Red Sox stood above the other 28 teams in local TV revenue with their team-owned regional sports networks. When it comes to yearly rights fees, that’s not the case anymore. But the owners of the Yankees and Red Sox — and now Mets, Orioles, and Nationals — continue to rake in millions of dollars in profits from the operation of their RSNs. And again, as noted, these profits are not subject to revenue-sharing.

The Orioles-Nationals’ joint ownership of MASN is complicated — an outgrowth of MLB’s decision to move the Montreal Expos to Washington, D.C., and into the Orioles’ broadcast area. I explained the details of the Orioles-Nationals-MASN relationship — and the current dispute over annual broadcast revenue —  in this post.

New York Yankees	Team-controlled holding company owns 34% of YES Network (Yankees Entertainment & Sports Network)	$90m per year in revenue, increasing to $300m by 2042
New York Mets	Mets owners (Wilpons) own 65% of SNY (SportsNetNew York)	$65m per year in revenue, increasing to $83m by 2015	25-year contract
Boston Red Sox	New England Sports Ventures owns Red Sox and 80% of NESN (New England Sports Network)	$60m per year in revenue
Baltimore Orioles	Orioles own 87% of MASN (Mid-Atlantic Sports Network)	$29m per year in revenue
WashingtonNationals	Nationals own 13% of MASN	$29m per year in revenueNationals seeking increase to $100m per yearDispute in mediation	Agreement creating MASN includes provision allowing Nationals to re-set annual rights fee every five years

 

The Hybrid Comcast SportsNet Deals

I wasn’t sure how to characterize the broadcast deals for the White Sox, Cubs and Giants. All are big media-market teams, yet none controls its own regional sports network or has cashed in (yet) in the new market paradigm. What they share in common is a significant equity stake in the local Comcast SportsNet. The White Sox and Cubs have more traditional rights-fee agreements (fee per game broadcast) while the Giants receive a percentage of revenue generated by advertising during the broadcasts. The White Sox and Cubs also broadcast some games on local Chicago station WGN. I was not able to track down information on those broadcast agreements.

Chicago White Sox	Owner Jerry Reinsdorf owns 40% of Comcast SportsNet Chicago	$450,000 per game broadcast on Comcast SportsNet Chicago.Fee for games broadcast on WGN: N/A	N/A
Chicago Cubs	Owner (Ricketts Family) owns 20% of Comcast SportsNet Chicago	$450,000 per game broadcast on Comcast.Fee for games broadcast on WGN:N/ATotal local TV revenue approximately $50m per year	Contract with Comcast expires after 2019 season.Contract with WGN expires after 2014 season.
San Francisco Giants	Team owns 30-33% equity in Comcast SportsNet Bay Area	Giants receive percentage of CSNBA revenues; contract believed to have escalators. Actual revenue received: N/A	Began before 2008 seasonExpires after 2032 season

 

The Soon-to-Expire Deals

The teams on this chart have broadcast agreements set to expire over the next five years. All will be looking to cash in on the new market dynamics. Market size and ratings will drive the terms of their next deals.

Philadelphia Phillies	$35m per year	Comcast SportsNet Philadelphia	Expires after 2014 season
Colorado Rockies	$20m per year	ROOT Sports	Expires after 2014 season
Arizona Diamondbacks	$31m per year	Fox Sports Arizona	Expires after 2015 season
Seattle Mariners	$45m per year	ROOT Sports	Opt out after 2015 season; contract expires after 2021 season
Tampa Bay Rays	$20m per year	SunSports & Fox Sports Florida	Expires after 2016 season
Cincinnati Reds	$30m per year	Fox Sports Ohio	Expires after 2016 season

 

The Mid-Markets

Four teams with decent deals under old market conditions. Now all are outpaced significantly by the deals struck in the last two years. But all these teams reside in small to medium-sized media markets and are unlikely to command the kind of dollars thrown at the Dodgers, Angels, Rangers and Astros when their deals eventually expire. That’s particularly true for the Blue Jays, which are owned by the same company (Rogers Communications) that owns the broadcaster (Rogers SportsNet).

Detroit Tigers	$40m per year	Fox Sports Detroit	Expires after 2017 season
Toronto Blue Jays	$36m in 2012; adjusted year to year	Rogers SportsNetRogers Communications owns the Blue Jays and Rogers SportsNet	Year to year; no expiration
Minnesota Twins	$29m per year	Fox Sports North	Began before 2011 season; expiration date unknown
Cleveland Indians	$30m per year	SportsTimeOhioThe Dolan family owns both the Indians and SportsTimeOhio	Year to year; no expiration

 

The Have-Nots

Last and very much least, the local TV have-nots.  The Royals, Pirates, Brewers and Cardinals are located in small media markets. Even the Cardinals’ traditionally strong ratings just cannot command the kind of local TV revenue that bigger market teams enjoy. The A’s, of course, play in the San Francisco Bay Area, a big media market, but their consistently low TV ratings have kept the A’s from the kind of money the rival Giants enjoy.

The Braves — well, the Braves are a victim of bad deals and bad timing. Liberty Media bought the Braves from Turner Broadcasting in 2007 and inherited 25-year local TV contracts negotiated by Turner at below-market rates. We weren’t able to track down the Braves yearly rights fees but we do know that the contracts significantly hamper the Braves’ payroll decisions.

Kansas City Royals	Less than $20m per year (exact figure not known)	Fox Sports Kansas City	Expires after 2019 season
Pittsburgh Pirates	$18m per year	ROOT Sports	Expires after 2019 season
Miami Marlins	$18m per year	Fox Sports Florida	Began before 2006; expiration date unknown
St. Louis Cardinals	$14m per year	Fox Sports Midwest	Expires after 2017 season
MilwaukeeBrewers	$12m per year (Some information suggests thus figure will rise to $30m before 2013 season).	Fox Sports Wisconsin	Expires after 2019 season
Oakland A’s	N/A	Comcast SportsNet BayArea	Began before 2009 seasonOpt-out after 15 years
Atlanta Braves	N/A	Fox Sports South/Sports South/Peachtree TV	Began before 2007 seasonExpire after 2031

There you have it. Thirty teams. Thirty different local TV agreements. From the Dodgers at the very high end to the Brewers, A’s and Braves on the very low end. For some teams, the dynamics are fluid and will change in their favor soon. Others are looking at years of climbing up a steep hill in an effort to compete. The new local broadcast reality. The new revenue inequity.

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Update: December 3, 2012

Since this post published on November 27, I’ve received information suggesting some of the local TV contracts differ from the information I obtained from publicly available sources. For example, as noted in the comments, the New York Times reported in September, 2011, in an article about Brewers’ owner Mark Attanasio, that Milwaukee’s $10 million per year local TV rights fee “would triple” starting in 2013. I have not been able to independently verify that number. Similarly, I reported that the Reds receive $30 million through their local TV contract, but an article cited in the comments suggests that fee is closer to $10 million.

I’ve also received information from a source suggesting that the Rays’ make less than $20 million per year in local TV money and that their contract will expire later than 2016.

I will continue to update the post as new information becomes available.

Update: December 6, 2012

The Milwaukee Journal-Sentinel has reported that the Brewers’ local TV rights fees will go up to “around $21 million” in 2013, according to GM Doug Melvin.