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.
Feb 26, 2015, 11:02 PM EST
While Daniel Murphy would like to discuss a contract extension with the Mets, it looks like a foregone conclusion that he will test free agency after the 2015 season.
Feb 26, 2015, 9:49 PM EST
Braves outfielder Nick Markakis recently expressed frustration about how contract talks with the Orioles broke down over the winter.
Feb 26, 2015, 8:40 PM EST
Victorino gave up hitting from the left side late in 2013, but he’s ready to give it another shot.
Feb 26, 2015, 7:15 PM EST
It will be Harvey’s first game action since he underwent Tommy John surgery 16 months ago.
Feb 26, 2015, 6:06 PM EST
Santana hasn’t pitched in the majors since 2012 due to injury.
Feb 26, 2015, 5:17 PM EST
“I think hanging it up is going to be harder for guys than they realize, after being out of it for a year.”
Feb 26, 2015, 3:40 PM EST
But it’s a very different kind of battle.
Feb 26, 2015, 3:18 PM EST
Milwaukee out, Toronto in?
Feb 26, 2015, 2:06 PM EST
Shame on A-Rod for making the reporters obsess about him.
Feb 26, 2015, 1:34 PM EST
Maybe THIS is the year he finally stops swinging at everything
Feb 26, 2015, 1:19 PM EST
Wainwright has been diagnosed with an abdominal strain.
Feb 26, 2015, 12:30 PM EST
It’s been two and a half years, but it still leaves a “dirty taste” in his mouth.
Feb 26, 2015, 11:47 AM EST
Pena once looked like a potential star for the Reds and Red Sox, but then washed out by age 26.
Feb 26, 2015, 11:32 AM EST
He also (a) wants to emulate Greg Maddux; and (b) asked Sandy Koufax about his curveball.
Feb 26, 2015, 11:00 AM EST
Welcome to 2002, Ruben Amaro!
Feb 26, 2015, 10:49 AM EST
It’s still early, but …
Feb 26, 2015, 10:23 AM EST
Two weeks ago Francisco Rodriguez was said to be holding out for a two-year contract.
Feb 26, 2015, 10:04 AM EST
The Marins are protecting their investment.
Feb 26, 2015, 9:37 AM EST
Even if Mike Lupica thinks they will be soon.
Feb 26, 2015, 9:00 AM EST
Spring training is starting poorly for Toronto.
- Francisco Rodriguez re-signs with the Brewers 8
- If addiction is an illness — and it is — Josh Hamilton shouldn’t be suspended 267
- Pirates open to massive extension for Andrew McCutchen 16
- Report: Josh Hamilton had a relapse this offseason that “involved at least cocaine” 85
- Yankees don’t plan on having to pay A-Rod’s $30 million in home run milestone bonuses 49
- San Francisco — and all of California — will consider a smokeless tobacco ban that includes MLB parks 131
- Rob Manfred says a return to a 154-game season could happen one day 66
- Report: The Yankees were “fuming” at how A-Rod handled his early arrival to spring training 114
- If addiction is an illness — and it is — Josh Hamilton shouldn’t be suspended (271)
- San Francisco — and all of California — will consider a smokeless tobacco ban that includes MLB parks (131)
- Report: The Yankees were “fuming” at how A-Rod handled his early arrival to spring training (114)
- Cuban prospect Yoan Moncada reportedly signs with the Red Sox for $31.5 million, plus $31.5 million in penalties (106)
- Gregg Zaun says young players should be physically abused and hazed by veterans. So they can learn respect. (105)