Jan 23, 2013, 12:52 PM EST
We talk a lot about the skyrocketing TV deals baseball teams are getting from cable operators these days. One wonders, though, whether or not we’re witnessing a bubble that’s going to soon burst. If it does, we may look at the Dodgers’ new TV deal as the beginning of the end.
The Dodgers TV deal with Time Warner is reported to be upwards of $8 billion. To pay for that, Time Warner is going to charge other carriers (Direct TV, Dish Network, other cable systems) $4 or $5 per subscriber for the right to carry the new Los Angeles Dodgers network they’re operating, with those costs passed on to the other carriers’ customers. This is how all sports TV rights deals go. It’s just way bigger with the Dodgers and Time Warner.
Many — probably most — of the customers who are seeing their cable bill go up are not Dodgers fans. They just want to watch Nick Jr. or History Channel or BBC America or any number of other channels. But, because you can’t (for the most part anyway) pick and choose which channels you get, the non-sports watchers are helping subsidize the sports watchers. Again, this is how it always works, but this time the rate hikes in question are going to be quite large.
Joe Flint and Bill Shaikin of the L.A. Times write about this today, and they talk to one former TV executive who thinks that such a pattern is unsustainable:
But non-sports fans and pay TV companies are increasingly frustrated at having to pick up the tab for big sports deals. There have been calls to sell sports channels “a la carte,” or separately from other programming.
The Dodger agreement with Time Warner Cable may be a tipping point.
“That is the solution everyone should be looking at seriously,” said Derek Chang, a former senior executive at satellite broadcaster DirecTV. Such a move, he added, may be the only way to lower the cost of TV sports. “Ultimately the market for fees would then reset.”
All it takes is a political groundswell — and someone talking about how we should think of the children who just want to watch “Spongebob” is a great way to get that going — for Congress to wade in and either begin legislating or begin threatening to legislate with respect to cable TV in such a way that a la carte pricing becomes available. If it does, companies in Time Warner’s position won’t be able to demand across-the-board rights fees like they are now and, in turn, they won’t be able to offer sports teams like the Dodgers the billions of dollars in rights fees like they’re currently doing.
If that bubble bursts, down with it comes the TV money. Then down go the franchise values, which are escalating due to the TV money sports teams are attracting. If team values go down, team payrolls will eventually come down too. No aspect of baseball finances would be untouched by it.
Will it happen? I don’t know. And if it does, I don’t know when. But I also know that no bubble in history has ever failed to burst, and that when they do burst, the bubbles tend to take down just about everyone.
Nov 22, 2014, 11:14 AM EST
Yang won the Korean equivalent of the Cy Young award this season and the 26-year-old tops out at 92-95 miles per hour.
Nov 22, 2014, 10:15 AM EST
He figures to get a look as a backup outfielder for the Angels.
Nov 22, 2014, 9:10 AM EST
Boston is competing with San Francisco and San Diego for Sandoval.
Nov 21, 2014, 10:55 PM EST
The Mariners get an extra year to do whatever they want with Danny Hultzen.
Nov 21, 2014, 9:45 PM EST
If the Yankees can’t bring back David Robertson, Jason Grilli could be one option the club could look at.
Nov 21, 2014, 8:40 PM EST
The Orioles bolstered their organizational depth by signing Paul Janish on Friday.
Nov 21, 2014, 7:35 PM EST
The White Sox have signed first baseman Adam LaRoche to a two-year, $25 million deal.
Nov 21, 2014, 7:05 PM EST
The interest in free agent outfielder Torii Hunter has been lukewarm, but he represents a decent Plan B or C for a handful of teams.
Nov 21, 2014, 6:15 PM EST
Andrew Miller is drawing significant interest in the free agent market, and he could even fetch a four-year deal.
Nov 21, 2014, 5:21 PM EST
Wakamatsu, Cash and Ibanez are the finalists.
Nov 21, 2014, 3:45 PM EST
Can you see that happening? I have a hard time seeing that happen.
Nov 21, 2014, 3:10 PM EST
Joyce has been a productive regular for the Rays since 2010.
Nov 21, 2014, 2:34 PM EST
It was attached to a motion filed in court yesterday. Let us gawk at it, shall we?
Nov 21, 2014, 12:30 PM EST
She’s just the third woman at the level of vice president or above in baseball operations in major league baseball.
Nov 21, 2014, 11:49 AM EST
And they want a lot for him.
Nov 21, 2014, 11:32 AM EST
Talks haven’t really heated up yet, but catching is scarce so someone will likely go in on Montero.
Nov 21, 2014, 11:20 AM EST
Throwing problems forced a move away from third base.
Nov 21, 2014, 11:03 AM EST
It’s his fourth straight year helping homeless charities.
Nov 21, 2014, 10:47 AM EST
Pittsburgh has done great work recently turning around the careers of pitchers.
Nov 21, 2014, 10:30 AM EST
Not that that necessarily means anything.
- Report: Red Sox make $95 million offer to Pablo Sandoval 21
- White Sox sign Adam LaRoche to two-year, $25 million deal 28
- Report: Red Sox offer Jon Lester six years, $110-120 million 71
- Report: “There is a 90 percent chance that Pablo Sandoval will sign with the Red Sox” 130
- A’s sign Billy Butler to three-year, $30 million contract 84
- Cardinals reportedly joining pursuit of Jon Lester 65
- Giancarlo Stanton’s contract is backloaded. REALLY backloaded. 148
- Braves and Cardinals swap Jason Heyward and Shelby Miller in blockbuster deal 157
- Braves and Cardinals swap Jason Heyward and Shelby Miller in blockbuster deal (157)
- Giancarlo Stanton’s contract is backloaded. REALLY backloaded. (148)
- Blue Jays sign Russell Martin to five-year, $82 million deal (135)
- Report: “There is a 90 percent chance that Pablo Sandoval will sign with the Red Sox” (130)
- Sexual assualt charges reinstated against Tigers pitcher Evan Reed (125)