Tuesday, November 27, 2012

Fox Sports BIG Attempt to Lock Up Dodgers

Currently the Los Angeles Dodgers have one year left on a contract with Fox Sports for television rights. The current contract has Fox paying the Dodgers $350 million over 12 years. The final season of the contact will be next year which the Dodgers will collect $39 million. Fox Sports and the Dodgers are looking to renew the contract. The rumored terms of the contact would pay the Dodgers at least $6 billion over the next 25 years. You did read that correctly. $6 BILLION....

Thats a lot of money.

If Fox Sports were to pay the Dodgers $6 billion over 25 years, that would be an average of $240 million per year. Next year they will make $39 million. For some comparison of television rights, the New York Yankees and Los Angeles Lakers also make quite the sum of money. The Lakers are in the first year of a 20 year deal with Time Warner Cable. They are making $120 million this year, which will be the least they make in the deal. The deal escalates, and will average $180 million per season. The New York Yankees have a deal with the YES network. They will make $85 million next season, but this contact is long term. In the year 2042, the contact will pay $300 million.

The contact between the Dodgers and Fox must be completed by Friday. If the contact is not completed, the Dodgers will have the opportunity to offer Fox a final offer by the following Friday. Fox would then have 30 days to decide if they want to accept the final offer. If a deal is not reached, which is not likely, the Dodgers could make a deal with Time Warner Cable or start their own cable channel.

When the Dodgers were recently purchased for over $2 billon last spring, the new owners were hopeful that a bidding war between Fox and Time Warner Cable would bring significant revenue for the team. They were right.

Final Thought
The purposed deal between the Dodgers and Fox involves a large amount of money. Although this contact may seem absurdly high, it is probably fair. The business of sports is huge and growing. The future values of television deals should follow the upward trends that we are seeing.


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