Dodgers TV Deal Could Pitch Ballclub Into Yankees' Territory
How can they afford that? New owners -- the Guggenheim Partners -- have $160 billion in assests that they can tap to help finance moves such as this month's acquisition of a handful of Boston Red Sox stars. But the new owners also will see a windfall from licensing Dodgers' local TV rights this coming offseason.
"It looks like they are setting themselves up to be what the Yankees were over the last decade," said Keith Mendes, a senior managing consultant for Berkeley Research Group.
Mendes joined Neon Tommy as a guest in our inaugural Google+ Hangouts discussion Thursday.
Some of the highlights from the discussion:
"Something of this magnitude is not something I've seen before," he said, referring to the Red Sox trade that added $250 million in contract obligations to the Dodgers' payrolls.
"The shock value (of the trade) was almost needed because of the stain McCourt had brought, and people were staying away in droves," he said. Even the drop-off in television ratings was terrible. The Dodgers tied the Angels for the worst local television ratings in 2011, with just 1 in 100 Los Angeles households tuning in.
Los Angeles is the nation's second largest television market, yet the Dodgers have spending less on payroll than teams such as the Phillies, Rangers and Cubs in smaller markets.
The Yankees have been maintain a larger payroll because it owns the television network it games are broadcast on, meaning it controls its own fate to some degree.
"There's only a few organizations that can do that…looking back at the historical legends, getting inside the clubhouse," Mendes said about the challenge about filling a network with around-the-clock coverage about a single team. "The Yankees have, one, the passion of the fan base, two, the history to be able to do that. The Dodgers have some of that history, dating back to the Brooklyn days…and they have that passionate fan base."
So will the Dodgers try to create their own network, partner with Time Warner or Fox Sports to partially own a network, simply continue a normal television deal or join the Lakers on Time Warner's SportsNet channel, which debuts Oct. 1?
"I could very well see a potential ownership share with PrimeTicket and Fox, so as long as the Dodgers get what they feel is a guaranteed dollar amount that is worth the risk," Mendes said. "If you're guaranteed $120 million with the possibility of $250 million or $300 million, you might do that instead of strictly signing up with Fox for $200 million."
Still, he said, "$200 million guaranteed would be tough to turn down."