When rumors about the Dodgers gargantuan new TV deal started floating around the internet yesterday, most people classified the reaction to the rumors as a "shockwave." It's true that the numbers are staggering: the deal's not finalized, but it will pay the Dodgers somewhere in the ballpark of $6-$7 billion over 25 years. That puts the annual figure in the $240-280 million ballpark, which is insane.
Over in our modest little Pittsburgh Pirate corner of the internet, the link that got passed around yesterday was Wendy Thrum's great FanGraphs article where she outlines the TV deals of every single MLB team. The Dodgers will make a quarter of a billion dollars a year from their TV deal for the next quarter century. The Pirates' TV deal will barely cover Andrew McCutchen's extension every year by the time his deal is up. That's not to say that the Pirates are making $65.5 million a year between now and 2018, that's to say that they're only pulling about $121 million total between 2013 and 2019.
That disparity itself was causing despair amongst Pirate fans yesterday, but honestly the huge revenue numbers isn't the source of the biggest problem. As currently constructed, baseball's revenue sharing system isn't perfect, but it forces teams like the Dodgers, with huge sources of revenue, to put money back into the pot so that teams like the Pirates (in theory, at least, we can use the Brewers in practice) can afford a roster that allows them to be competitive. That is, the Pirates can never have a $200 million payroll for an indefinite period of time, but they could probably support an $80-100 million payroll for a year or two as McCutchen and Alvarez get late into their arbitration and the team pushes for a final playoff run with this roster. It's not a perfect system by any means (the Pirates are generally screwed in free agency, which means they have to assemble their competitive rosters through other, more difficult paths), but it keeps teams like the Pirates from being completely hopeless.
In theory, that revenue sharing system means that while the Dodgers will see a huge, huge windfall from their new TV deal that could elevate them to the Yankees' level in terms of big league payroll, they should also have to put more money back into the revenue sharing pot for the small market teams. That's not exactly balanced, but it is Baseball Balance and that's the best we can do. But what if even that doesn't apply? When the Guggenheim Group bought the Dodgers last year, they immediately went on a spending spree in August and that sparked some rumors that MLB had made some under-the-table concessisons to the GG that were hushed up and that one of them was that if the Dodgers started their own regional sports network, that they could cap revenue that had to be shared from the network at $84 million per year, even though revenues would likely be much higher.
That doesn't necessarily apply here, since the Dodgers will be on FOX and not on the Dodger Sports Network, but it's pretty telling that Baseball hushed things up at the end of the sale to make sure the uneven treatment of teams didn't become public. I'm guessing that there's a good chance that the Dodgers and FOX could finagle this deal to somehow take advantage of the revenue sharing cap and that we might not even have any way of publicly finding out. Certainly, the Lerners got a whole host of favorable things shoved their way for buying the Nationals (in the way of the publicly funded stadium and their constantly re-negotiable deal with MASN) that's set the Nats up very nicely for a long run of NL dominance.
The long and short of it is this: the future of baseball is going to be closely tied to the contracts being handed out by these regional sports networks. The Pirates can never, ever hope to get the kind of money out of a TV deal that the big market teams can get, which means that this is already a rich-get-richer proposition. What's even more dangerous is that Major League Baseball doesn't have any problem tipping the already tilted table in the direction of it's bigger markets. Don't forget to keep that in mind along with the ridiculous dollar figures as these TV deals get hammered out.
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