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.
Dec 18, 2014, 11:27 PM EST
It took long enough, but Matt Kemp has finally been traded to the Padres.
Dec 18, 2014, 11:00 PM EST
Get excited, I guess.
Dec 18, 2014, 9:30 PM EST
The Padres continue to overhaul their lineup while the A’s continue to unload.
Dec 18, 2014, 8:46 PM EST
Young, 29, batted .302 with seven home runs and .779 OPS (120 OPS+) over 255 plate appearances this past season.
Dec 18, 2014, 7:50 PM EST
Lowe began his career with Seattle and had his best season with the club in 2009.
Dec 18, 2014, 6:41 PM EST
Is this the beginning of the end for the Tampa Bay Rays?
Dec 18, 2014, 6:07 PM EST
Johnson missed the entire 2014 season after undergoing Tommy John surgery in late April.
Dec 18, 2014, 6:00 PM EST
Does Ichiro really have one more year left in him?
Dec 18, 2014, 5:40 PM EST
Veteran catching depth.
Dec 18, 2014, 5:17 PM EST
Giavotella is a career .315 hitter with an .835 OPS and as many walks as strikeouts in nearly 2,000 plate appearances at Triple-A.
Dec 18, 2014, 4:47 PM EST
He’s probably not the one who knocks. Indeed, this crew seemed so amateurish he probably called first to make sure it was a good time for everyone.
Dec 18, 2014, 4:17 PM EST
It started with an argument over candy.
Dec 18, 2014, 3:34 PM EST
Between Cuba and North Korea, it’s been a big couple of days for communism. Let’s see what communists thought about baseball once upon a time.
Dec 18, 2014, 3:18 PM EST
Medlen missed all of this year recovering from his second Tommy John elbow surgery.
Dec 18, 2014, 3:00 PM EST
What a difference a day makes.
Dec 18, 2014, 2:38 PM EST
Rollins is not tied to Kemp, at least not entirely.
Dec 18, 2014, 1:06 PM EST
Baseball card collecting in the post-bicycle spokes, pre-crash world of the 1980s.
Dec 18, 2014, 12:17 PM EST
And the Padres “continue to consult medical experts.”
Dec 18, 2014, 11:39 AM EST
Let’s pump the brakes a bit on the imminent MLB takeover of Cuba.
Dec 18, 2014, 10:47 AM EST
Quotes from manager Buck Showalter.
- Matt Kemp has officially been traded to the Padres 18
- Padres acquire catcher Derek Norris from Athletics 30
- St. Petersburg City Council votes down deal to allow Rays to look for new stadium site 81
- What will the future of Cuban players in MLB look like? 25
- Royals sign Edinson Volquez for two years, $20 million 29
- Rays, Padres, Nationals agree to 11-player trade 97
- Sergio Romo re-signs with the Giants for $15 million 15
- So, apparently we’re sweating the Matt Kemp physical now 46
- Baseball’s highest-ranking Hispanic woman employee sues for discrimination (163)
- The United States will seek to normalize relations with Cuba (144)
- Cubs, Red Sox, Dodgers, Padres, Rangers, and Astros interested in Phillies’ Cole Hamels (111)
- Rays, Padres, Nationals agree to 11-player trade (97)
- Chase Headley signs a four-year deal with the Yankees worth at least $52 million. (95)