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When the Guggenheim group purchased the Los Angeles Dodgers for a record $2.15 billion, many believed they overpaid for an underachieving, unattractive situation. With the help of a trade with the Boston Red Sox, a few signings of international players and a $215 million contract for a pitcher entering his prime, the Dodgers vaulted to the top of the NL West and baseball headlines.
Part of the transformation also included the Dodgers partnering with Time Warner Cable to launch their own network, SportsNet LA. By creating a network dedicated to themselves, the Dodgers will receive $8 billion over 25 years from Time Warner, which is a significant amount of additional revenue for the free-spending ownership group. However, according to Josh Kosman of the New York Post, the lucrative TV contract is going to cost the Dodgers when it comes to revenue sharing:
The team will have to fork over $1.9 billion in revenue-sharing payments to Major League Baseball over the 25-year term of its media rights deal with Time Warner Cable.
Kosman reports the Dodgers first annual payment, which is to be made in 2014 will be for $41 million and will increase annually:
The $1.9 billion in payments spelled out in the deal — $41 million in 2014; $48 million in 2015; and 4 percent annual increases after — will leave the owners about $710 million lighter.
Dodgers ownership has been relatively mum on the what concerns they have, if any, regarding the increase in their payout for revenue sharing. Even when considering the reported $1.9 billion they will need to pay over 25 years, partnering with Time Warner to launch SportsNet LA will still net them more profit than remaining with other cable networks such as, KCAL 9 or Fox Sports Prime Ticket.
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