Bill Shaikin has a report up today that, while dealing with the often murky and confusing world of TV revenue and media rights, suggests that the big settlement of the litigation between Frank McCourt and Major League Baseball, the new Dodgers owners have benefits no other team has. Specifically: to hold back media money from revenue sharing that no other team would get to hold on to.
The Dodgers’ new owners could reap hundreds of millions of dollars in benefits from the confidential terms of a U.S. Bankruptcy Court settlement between former owner Frank McCourt and Major League Baseball …
Guggenheim Baseball, the Dodgers’ new owners, can negotiate a new television contract as soon as this fall, with Fox Sports, Time Warner Cable and perhaps CBS expected to bid. If the Dodgers accept an annual rights fee, they would simply pay 34% of whatever money they receive into the revenue-sharing pool.
However, the Dodgers are expected to pursue a regional sports network, on their own or in partnership with Fox, TWC or another television outlet. Guggenheim could establish a media company separate from the Dodgers, then have the company pay the team in accordance with the proposed Fox contract and keep the remaining revenue.
The difference here between what the Dodgers are doing on the one hand, and what the Yankees do with YES or the Red Sox do with NESN, is that 34%. In their cases, they pay that 34% of media rights fees — plus a surcharge if the team is getting lowballed by its sister regional sports network. With the Dodgers, their new Fox deal is charged at 34%, but even if a new Dodgers cable network pays them tens of millions more a year, and that money is not touched by MLB.
Shaikin suspects that this will cause some tensions within the ownership ranks, as the Dodgers — by virtue of litigation with an irresponsible former member of their ranks — got something they didn’t. Worth watching.