$425 million per year? I highly doubt that, even in the last year of the contract.

But then again the Dodgers sold for about a billion more than I thought they would.

explosive increase in their local/regional TV revenues when their current deal expires in 2013 that could reach as high as $8.5 billion over the next 20 years.

$425M p.a.?!?! I'm calling BS puffery on that. Unless you're expecting inflation to average 12% over that period.

I think $200M p.a. would have to be the high end. Still, a phenomenal amount of revenue.

Wildly optimistic projections of future growth and revenues. What could possibly go wrong?

No wonder Vin's coming back. A dude wants to get paid!

These new TV deals are incredible, but one has to wonder if the current TV model will remain in effect long enough for the teams to collect all of these billions. Right now, some teams are making tens of millions of dollars every year from cable TV subscribers who don't even watch baseball. That model seems unlikely to continue for 20 more years.

EDIT: Beaten by Joey B.

I think the key word in there is "could". I wouldn't doubt the contract could be this outrageous amount but it would require a series of incentives and markers be reached that are about as likely to be reached as Vin Scully is to be broadcasting the games in 2032.

Feels like there's a tv rights bubble, no? I know these networks are starved for content, but can they really make up all the cash their laying out?

edit: cokes for all!

but it would require a series of incentives and markers be reached that are about as likely to be reached as Vin Scully is to be broadcasting the games in 2032.

Hey, bite your tongue.

Not. Gonna. Happen.

The Dodgers will use the money to create Robo-Vin, who will be able to call Dodgers games for milennia even when Vin leaves the booth.

I wonder to what extent that revenue actually depends on Vin. Not that they think he's still going to be calling games 20 years from now, but I wonder how much extra revenue he brings in per year compared to a normal broadcast team.

How fricking awesome is it that one of the guys who called Larsen's perfect game is still an active announcer?

The Dodgers will use the money to create Robo-Vin, who will be able to call Dodgers games for milennia even when Vin leaves the booth.

I have long called for the NFL on FOX to fire Joe Buck and replace him with the canned dialogue from Pat Summerall in the John Madden video games.

they are putting everything on 2013.

look at the chart at the end of the article. by 2014, almost all the money they will have in guaranteed contracts is tied up in the regulars and SP -- to me the worst-looking one is ethier at $15.5 mil. kershaw is arb eligible so that will be a big bump. but the guaranteed payroll shrinks to $150 mil. (there is an adding error if i'm not mistaken) and so by then they could be filling out the roster with youngsters at league minimum.

obviously, best case scenario is winning a pennant or WS in 2013 and sitting back and letting the dough roll in on the new tv contract and high attendance from fan goodwill.

but even with worst case, their financial commitments really are going away. they'll even be finished paying manny ramirez.

i guess they'll be throwing monopoly money at some other contract that will go bad between now and then, but the contours of what they are thinking show up in that salary chart. if they can hold the line after 2013 and avoid another juan pierre or andruw jones, and the tv contract is even moderately successful, they just might make it.

LA is a ginormous market. the guggenheim guys are probably thinking they can behave more like the yanks and red sox than the dodgers have done previous. for sure, i'm not enough of a financial analyst to say if that's going to work out for them. lot of naysayers out here though.

These deals largely include streaming, which at the moment the content providers control. So YES, for example, gets paid by the Optimum Online customers who watch it on their mobile devices. Trust me, the cable companies are extemely aware of the possible futures of the broadcasting industry, particularly as it pertains to sports.

LA is a ginormous market. the guggenheim guys are probably thinking they can behave more like the yanks and red sox than the dodgers have done previous. for sure, i'm not enough of a financial analyst to say if that's going to work out for them. lot of naysayers out here though.

Like you I'm just another dumb fan, but I've long had a feeling that the Dodgers were getting a whole lot less out of their market and their brand than they could be. They've kind of been standing still while not only the Yankees and Red Sox, but the Giants and the Angels seem to have "gotten it" much more fully over the past 10-15 years.

Like you I'm just another dumb fan, but I've long had a feeling that the Dodgers were getting a whole lot less out of their market and their brand than they could be. They've kind of been standing still while not only the Yankees and Red Sox, but the Giants and the Angels seem to have "gotten it" much more fully over the past 10-15 years.

I agree with this. But there is a veritable ocean between where they are and where they would need to be to get an $8.5 billion/20 year TV deal in 2013. There is a ton of room to improve and still be far away from that.

My caveat in #1 still applies.

Like you I'm just another dumb fan, but I've long had a feeling that the Dodgers were getting a whole lot less out of their market and their brand than they could be. They've kind of been standing still while not only the Yankees and Red Sox, but the Giants and the Angels seem to have "gotten it" much more fully over the past 10-15 years.

No doubt about this, and it started long before McCourt. As much as it's sacrilegious to say it, the team's decline started under O'Malley in the late '80s. O'Malley ran the huge-market, no-debt Dodgers like a middle- or small-market team, which is why it's going to be very interesting to see how O'Malley & Co. operate the small-market, (presumably) big-debt* Padres.


(* I haven't seen a detailed analysis of the Padres sale, but I haven't seen anyone call it an all-cash deal.)

Even if the Dodgers have all the money in the world, bad contracts are still bad contracts.

If Crawford doesn't bounce back, they're commited to a bad player at a prime position for five years. Thats awful even if they can afford the overpay.

That's not a bad point, Joe. Accounting for collusion, they did sign Darryl Strawberry to a big deal, but Fred Claire was no Al Campanis as a GM.

You guys are focusing on the wrong number. $4.5B/20 yrs is sited as the high end of the deal; sure it's a huge number, but the "expert" (the company who negotiated the new Lakers' TV contract, so they should know what they're talking about) does see it as possible.

No, the telling number is the minimum - $175M/yr, which should be plenty to allow the Dodgers to spend like the AL East, West.

Feels like there's a tv rights bubble, no? I know these networks are starved for content, but can they really make up all the cash their laying out?

The fact that sports are one of the few forms of relatively DVR-proof programming is pretty huge in the current-and-future TV landscape.

The fact that sports are one of the few forms of relatively DVR-proof programming is pretty huge in the current-and-future TV landscape.

So is the ability to charge millions of people a monthly fee for programming they don't watch, which means Dodgers and Yankees fans are essentially subsidized by millions of non-Dodgers and Yankees fans. Live sports might be keeping a lot of people from "cutting the cord," but I wouldn't bet this same model will exist for decades to come.

I wonder what the numbers look like under the hood — e.g., for every non-Dodgers fan who would like to save the $3/mo. on his or her cable bill, is there someone else willing to pay $6/mo.?

As long as their profits are guaranteed, maybe the Dodgers can trade for the rest of Bobby Bonilla's Met contract.

As long as their profits are guaranteed, maybe the Dodgers can trade for the rest of Bobby Bonilla's Met contract.

C'mon, no one said they'd have that much money.

Trust me, the cable companies are extemely aware of the possible futures of the broadcasting industry, particularly as it pertains to sports.

school me here. is this something that gives the cable/tv/whatever people leverage against the dodgers in negotiations or is it the other way around or what?

If Crawford doesn't bounce back, they're commited to a bad player at a prime position for five years.

ugh, silly me, i overlooked that one.

I don't know who has the leverage in the negotiating room (and don't know if it's a binary, knowable thing). But I know there are departments of "strategic planners" in the content provider community that think a ton about "cord-cutters" and pore over the numbers every day. In this thread, it was kind of being characterized as "We smart Internet users can see things that the dinosaur cablers have missed", and while that's a possibility, I wouldn't gamble on it.

If I personally knew the way that this would be monetized, I wouldn't be sitting at work after 9PM watching baseball and participating in Internet discussions.

Also, just personally, I would not have gone HD if YES didn't broadcast in it. I love seeing the Yankees on my big screen and listing to them over my home theater speaker system, in which the crowd sounds like they're all around me. Sports programming is just different.

In this thread, it was kind of being characterized as "We smart Internet users can see things that the dinosaur cablers have missed", and while that's a possibility, I wouldn't gamble on it.

It's not that it doesn't make sense in absolute dollars, it's that it's such a radical departure from cable contracts as they exist now that it seems incredibly unlikely.

DTM, there are teams of smart people motivated by the most basic motivators available - preventing the slow death of their industry and their jobs. I don't know what solution they'll arrive at - if any - but my money's (literally) on their ability to do so.

DTM, there are teams of smart people motivated by the most basic motivators available - preventing the slow death of their industry and their jobs. I don't know what solution they'll arrive at - if any - but my money's (literally) on their ability to do so.

Just like the phone companies, right?

The cable companies have never, ever, EVER been quick to react to anything. I suspect that maybe some providers are being forward-thinking in their conference rooms, but I doubt the majority have anything remotely resembling an effective plan for when cable lines go the way of analog phone lines.

If Crawford doesn't bounce back, they're commited to a bad player at a prime position for five years. Thats awful even if they can afford the overpay.

The Dodgers are only committed to pay Crawford not play him. This situation will evolve into a pop quiz for the FO: Does it understand sunk costs?

What's the MLB record for the most money eaten on a contract? Would be an interesting chart...

Let's not conflate cable providers like Cox and Comcast and content companies like E5PN and YES. It is absolutely not a good time to be in the cable providing business; they have lots of challenges from all over the place. And they're dinosaurs - massive and inflexible, presiding over a giant infrastructure with fixed costs and a fleeing audience. But it's a good time to be in the content business. Regardless of how people choose to consume it, they still want your product, and will still pay for it.

*EDIT*

The cable providers spent the last twenty years of the twentieth century and the first ten years of the 21st with a virtual monopoly. The industry was a license to print money, and they treated their customers really badly. They absolutely deserve what they're going through.

The Dodgers are only committed to pay Crawford not play him. This situation will evolve into a pop quiz for the FO: Does it understand sunk costs?

Yes there's two ways the Dodgers really lose the trade:

1) They play a bad player because they're paying him.
2) Their deal limits their spending in a future year in a way that impacts the team.

#1 is unknown.

#2 is taken for granted to be true but is unknown. If the Dodgers have approval for a payroll up to $300 million or something ridiculous, then the trade won't cost them a single win down the road. So if it gains them wins (and they don't give them back by failing on #1) then obviously it's a great trade for them, even if they fail miserably to spend efficiently.

And if they really break the salary threshold, it will of course drive up the cost of prospective free agents, which will make earlier deals look not nearly as bad.

I'll say this again. Future costs cannot be sunk costs. The Dodgers have about $500 of sunk cost in Crawford right now. It's always amusing when people question whether front offices understand sunk costs when they themselves don't understand sunk costs.

Let's not conflate cable providers like Cox and Comcast and content companies like E5PN and YES. It is absolutely not a good time to be in the cable providing business; they have lots of challenges from all over the place. And they're dinosaurs - massive and inflexible, presiding over a giant infrastructure with fixed costs and a fleeing audience. But it's a good time to be in the content business. Regardless of how people choose to consume it, they still want your product, and will still pay for it.

Fair enough, but I think eventually even ESPN and YES might be in trouble. They make money because technology is being artificially constrained (e.g. I can't watch the Cubs using MLB.TV because I'm in Chicago*). But they are middle-men. All of the networks, etc. are middle-men.

Now, they provide a lot of money to the content creators. They're not going away soon. But eventually, like so many middle-men, I think they will either disappear or radically change.

*And yes I know it's possible to fool their blocks, but that's not really a mainstream solution.

What are "incurred future fixed costs" like Crawford's deal called, Mac?

Was Crawford's contract a sunk cost for Boston? It was not since they were able to not have to pay it. Future costs are not sunk costs. Plain and simple

You can't have already incurred a future cost.

That will be something, if this ownership group decides to plug every penny back into the team. Huge payroll, state-of-the-art stadium and surroundings*, innovative media contract, beefed-up international scouting... to create THE West Coast powerhouse.

Like, all these incredibly wealthy men decided, "We're rich enough to sacrifice any money - and we could make bank - for the ego trip of good seats and ringzzzzz."

* - The planning/development executive just hired by the Dodgers, from Baltimore, cut her teeth in Boston during the good times. Cue Simmons:

Our charming, broken-down, illogically constructed museum of a baseball park was overhauled and turned into a cash cow (same for the streets surrounding it).

That's nice to hear.

They make money because technology is being artificially constrained (e.g. I can't watch the Cubs using MLB.TV because I'm in Chicago*). But they are middle-men. All of the networks, etc. are middle-men.

The entities that require and enforce these Byzantine blackout restrictions are not the content providers, but the sport bodies themselves. If given the choice, MLB.TV wouldn't black out anyone, and neither would E5PN. MLB wants to sell the Yankees, for example, as many times as they can. But they know that viewership is a zero-sum game, as do the bidders. So they sell the rights to YES, who have an interest in not seeing this valuable content get put all over the other screens in their area; people won't watch the games on YES then. So MLB requires others to whom they sell the rights to black out their coverage, so that eyeballs don't leave YES and watch the game on E5PN or MLB.TV or whatever. This makes Yankee broadcast rights more valuable and more exclusive, and allows MLB to sell the same games multiple times (they get local money from YES; national money from E5PN, FOX, and others; streaming money from MLB.TV; and international broadcast rights from E5PN again).

Whether the content companies are middle-men is a matter of opinion. But I would say that the games would not be played without being produced/replayed/announced/graphics added in the twenty-first century. I regard the role of producing the games as essential to the sports landscape, and not particularly likely to be axed.

There has been talk for years about setting up an "a la carte" system where customers would pay for only the channels they want. The content providers balked. There is no way Disney would allow some households to just order all the ESPN channels while opting out of ABC/Disney channel.

Chances are, most of us are getting broadband through either their phone company or cable company. Its a symbiotic relationship between the content providers and cable providers because content makers can't make enough money on streaming/online/DVD sales. I wonder what the true cord-cutter numbers are.

Let's not conflate cable providers like Cox and Comcast and content companies like E5PN and YES. It is absolutely not a good time to be in the cable providing business; they have lots of challenges from all over the place. And they're dinosaurs - massive and inflexible, presiding over a giant infrastructure with fixed costs and a fleeing audience. But it's a good time to be in the content business. Regardless of how people choose to consume it, they still want your product, and will still pay for it.

Comcast is both content provider and cable company. Interestingly Comcast just bought more content (NBC/Universal) while Time Warner just spun off its cable business a couple years ago.

I wonder what the true cord-cutter numbers are.

I have not seen them in the last few weeks, but it's under 2% of households. Is it rising? Yes. Is that a concern? Yes.

I was without TV for 4 years. Only have it now because I need the internet and yet I still don't use cable tv. If I could get access to the internet for 30 or 40 dollars a month I'd do it.

What's the MLB record for the most money eaten on a contract?

At the time it was Russ Ortiz when he was released by the Dbacks in June 2006 with $22 million left on a contract that ran through 2008. This might have been surpassed since then, but I don't know by what.

Re the Dodgers and LA.
The Dodgers have been a huge grosser since the moved into Dodger stadium. Once upon a time they owned LA. The Dodgers were the first team to go over 3 million in attendance, the first team to hit 3 mil three years running, five years running and so on. From the sixties with Koufax and Drysdale through the Garvey seventies and, unless I'm wildly mistaken, even through much of the 80's the Dodgers led MLB in attendance pretty much every year. Toss in Vin, which gave them control of the airwaves and the fact the Angels were this choking team (Sorry, but for most of their history that's how the Angels were perceived)from Anaheim of all places, the Dodgers ruled LA like no other team in baseball.
Heck, despite being in different leagues,due to the 50's history and the Dodgers flight West, the Yankees/Dodgers rivalry was one of the hottest in baseball.

The Dodgers fall came slowly. First, and maybe most importantly, the Dodgers didn't play the free agent game in the O'Malley era. They've never thrown their money around like other teams do. They've traditionally been quite frugal, in part because O'Malley liked to keep salaries down and thus didn't want to set price ceilings. They ran on institutional arrogance that their seemingly endless farm systems would never run dry, and when they slowly tapered out and ran out in the late 80's the Dodgers had no plan B.

Plus O'Malley died, and the team went through a series of poor owners.
And worst of all, Arte Moreno, seeing a major market opportunity in the Dodger's decline bought up the Angels and almost immediately began battling for supremacy of LA.

But the Dodgers are the sleeping giant of MLB, no doubt about it.
Smart ownership, good marketing, tapping into the already existent fan base-yeah, the Dodgers could make Yankee level money. The NL should be very, very frightened.
(Which is good for baseball. Put a monolith in an oligopoly and all of a sudden all the other competitors have to step up their game or get squished-that's 100 level econ there)
And that's not even discussing the real estate around Dodger stadium...

Farm system tapering out in the late '80s seems an odd claim to make about a franchise that won ROY five consecutive years from 1992-96. Not to mention producing two first ballot HOFers in Pedro Martinez and Mike Piazza during that time.

Future costs are not sunk costs. Plain and simple

False.

for example

That article I believe is talking about expected sunk costs in the future. That's different and still not a "sunk cost". If you haven't spent the money it isn't a sunk cost.

Magic Johnson’s infectious passion

forgive me