The extra $25 million - Will it matter?

[Leonard Zelig]

I keep seeing people bring up the $25M that teams will be receiving from TV revenue next year. Most seem to think that this will allow the Sox to go out and spend more money next off season.

 

My question is this: Since every team is getting the some amount, will it really matter to the White Sox?

 

I remember an experiment on supply & demand we did back in school where everybody was given $100 to spend on necessities & luxuries-essentially bidding for the goods.

Then everyone was given $1000 to spend in the same way. At the end nobody really had any more to show for the extra money, we all just paid more for the same stuff.

 

I’m sure some teams, probably Miami, will pocket a good chunk of that money, but if say 25 teams put it all toward payroll, will they all just pay more for the same players?

[caulfield12]

I keep seeing people bring up the $25M that teams will be receiving from TV revenue next year. Most seem to think that this will allow the Sox to go out and spend more money next off season.

 

My question is this: Since every team is getting the some amount, will it really matter to the White Sox?

 

I remember an experiment on supply & demand we did back in school where everybody was given $100 to spend on necessities & luxuries-essentially bidding for the goods.

Then everyone was given $1000 to spend in the same way. At the end nobody really had any more to show for the extra money, we all just paid more for the same stuff.

 

I’m sure some teams, probably Miami, will pocket a good chunk of that money, but if say 25 teams put it all toward payroll, will they all just pay more for the same players?

 

 

There's definitely going to be an inflationary effect in play.

 

With all those dollars chasing fewer the same amount of talent (or even less, if you look at the free agent class), it's not going to be a HUGE advantage to the Sox.

 

That money would be better spent on hiring more scouts, improving the minor leagues, upgrading our Dominican facility....building one in Venezuela, for example (there used to be almost 20 teams down there with academies and now it's back down to 6-8 with tensions increasing under the Castro regime)...or even Brazil. Or China. They need to start being more innovative and finding those niches they can get out in front of and exploit proactively.

 

If they're going to go crazy and sign 3-4 bats (like the Mariners did with Morse, Morales, Bay and Ibanez), then that's fine.

 

However, if they're only going to sign ONE guy, I'd rather they just completely sucked again next year and invested the money elsewhere.

[The Ultimate Champion]

It might inflate the value of setup men, 4th/5th starters, closers, good UT types who are borderline starters, etc. and of course it will up the value of the real superstars. In the end it will probably have a small impact on 3rd year arbitration & further pronounce the already massive gap between a quality player during his 3rd-6th season and a player of equal quality on a market rate free agent contract. Which all in all just makes it more important to be able to either develop your own players and/or use prospects to acquire players who are good and extendable or already extended to friendlier deals. So I guess it probably just makes everything riskier on a GM while it's still like $47 at the park for a couple beers & a dog.

[The Ultimate Champion]

Also the main thing the Sox can offer in the offseason (as it looks now of course, prior to any trades) is playing time, not $$$. We can give a couple vets the chance to go out & prove themselves on 1-year deals. And when/if those guys do work out, and they are playing for a contract, you can deal them over the deadline next year and pick up something decent while buying time on whoever it is in the minors who should be ticketed for the spot currently being held by a reclamation project.

[The Ultimate Champion]

It might inflate the value of setup men, 4th/5th starters, closers, good UT types who are borderline starters, etc. and of course it will up the value of the real superstars. In the end it will probably have a small impact on 3rd year arbitration & further pronounce the already massive gap between a quality player during his 3rd-6th season and a player of equal quality on a market rate free agent contract. Which all in all just makes it more important to be able to either develop your own players and/or use prospects to acquire players who are good and extendable or already extended to friendlier deals. So I guess it probably just makes everything riskier on a GM while it's still like $47 at the park for a couple beers & a dog.

Also this makes me hope Hahn can extend Q, Santiago, DeAza, and Beckham to fairly friendly deals over the season. Even if you are planning on trading a couple of these guys, the cost certainty aspect of the game seems to be gaining importance.

[Dick Allen]

I think it makes more teams players for free agents, but I really don't think it will raise salaries as much. I don't know if the luxury tax is going up, and I don't think teams want middle relievers making eight figures a year. Plus, I think some teams have already dipped into that money.the Sox are in good shape to field a competitive team next year if that is their plan, as long as they don't totally gut the team. They can sign some free agents or make trades that take on cash. If they gut the team except for Sale, it is going to be a while.

[CWSpalehoseCWS]

Also the main thing the Sox can offer in the offseason (as it looks now of course, prior to any trades) is playing time, not $$$. We can give a couple vets the chance to go out & prove themselves on 1-year deals. And when/if those guys do work out, and they are playing for a contract, you can deal them over the deadline next year and pick up something decent while buying time on whoever it is in the minors who should be ticketed for the spot currently being held by a reclamation project.

 

I'd love them to do this with Granderson. He's already almost missed half the year as it is, and I don't think teams are going to be jumping at the chance to sign him long term.

[caulfield12]

I think it makes more teams players for free agents, but I really don't think it will raise salaries as much. I don't know if the luxury tax is going up, and I don't think teams want middle relievers making eight figures a year. Plus, I think some teams have already dipped into that money.the Sox are in good shape to field a competitive team next year if that is their plan, as long as they don't totally gut the team. They can sign some free agents or make trades that take on cash. If they gut the team except for Sale, it is going to be a while.

 

Define gut....Ramirez, Rios and Peavy gone?

 

Or also the likes of Beckham and Viciedo, to the point where the entire starting line-up is different for 2013?

 

[caulfield12]

In Cleveland, and other cities that have trouble drawing big crowds to the ballpark, there is an ongoing dynamic --similar to the chicken or egg conundrum-- that goes something like this: If few fans show up for games, the team doesn’t have money to sign good players, but if the team isn’t any good, many fans aren’t interested in going to games.

 

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There's some truth to that scenario, but it largely misses the point, because the real money doesn't come from tickets sales, or beer and hot dogs. The real money in baseball comes from television.

 

There are two sources of television revenue for each MLB team, the national contract and the local contract. The national contract is negotiated by MLB. It includes the rights to nationally televised games on particular afternoons and evenings, the All-Star Game, and the postseason. These are the games that are on FOX, ESPN, TBS, and the MLB Network. The money from the national TV deals is split evenly by all thirty teams, no matter how many of their games are actually shown across those national networks.

 

The local contract is negotiated by the individual team, a deal negotiated with whichever company’s offer they like the best. For the Indians, that’s SportsTime Ohio (which was created and is owned by the Dolan family). The money from each team’s local TV deal is mostly kept by the team. The Indians have been getting somewhere between $25-30 million from their local TV contract in recent years. Not long ago, that would have put them in the bottom half of all teams, but not dramatically behind many teams. Recently though, there has been a massive shift in the amount of money networks have been willing to pay.

 

In 2010, the Rangers announced a new deal with Fox Sports Southwest that will pay them ~$150 million a year. In 2011, the Angels announced an almost identical deal with Fox Sports West, they’ll also be getting ~$150 million per season. Those figures dwarf the Indians’ sum. Even accounting for the revenue sharing portion of each team’s local contract (one third of the money is pooled), the Rangers and Angels are each pocketing an extra $80 million a year, compared to the Tribe. Starting next year, the Houston Astros will be getting $85 million a year and the San Diego Padres will be getting $75 million. Up the coast, the Los Angeles Dodgers are near a new TV deal that is expected to be in the ballpark of $200 million a year. Sit back and think about that for a minute… $200 million!

 

The New York Yankees are being paid $90 million a season by the YES Network, seemingly a rare instance in which they’re not the wealthiest team in baseball. The Red Sox are paid $60 million by NESN, which seems like small potatoes compared to some of the other figures I’ve mentioned. Of course, the Yankees own over 30% of the YES Network, whose profits were reportedly ~$450 million in 2011. The Red Sox own 80% of NESN, also a very profitable corporation. Both ownership groups are bringing in far more money than the team is officially paid for television rights, money that isn’t a part of MLB’s revenue sharing pool. The Yankees could run a $400 million payroll and still turn a profit.

 

At $30 million a year, the Indians are way behind a lot of other teams. Of course, as I said, SportsTime Ohio is largely owned by the Dolan family. The network, which televises other sporting events of interest to Ohioans, certainly brings in more than $30 million a year. How much of that additional profit might be going into the ball club, no one can say. How much of it should go into the team is up for debate. In any event, STO isn’t earning what the YES Network does, because Cleveland’s TV market is far smaller than New York’s. The Indians will always lag behind in local television revenue, and the discrepancy may only get wider with time.

 

The national TV contracts, as I said, are divided evenly among all thirty teams. There’s been big, big news on that front recently, as FOX, ESPN, and TBS all signed new deals with Major League Baseball in the last few weeks, deals that substantially increase the amount of money coming into baseball. The new contracts will put an additional $740 million into baseball (annually) which works out to almost $25 million for each team (the new contracts all run through 2021).

 

On one level, this impacts every team identically, because the money going to each of them from the new contracts is identical, but on another level, this money impacts small market teams far more than large market teams, because an additional $25 million is a much bigger difference to them.

 

ESPN’s payroll data lists the Yankees as having had a $195M payroll in 2012. An extra $25M would lead to a 13% increase. The Oakland A’s payroll was $49 million, the new money would allow for a 51% increase. Now, that’s an over simplification, because teams won’t necessarily funnel all of the new money into big league payroll. It may go into improved facilities, scouting, and infrastructure. Still, it should be clear that a team like Oakland can use the money to bring about much greater change than a team like the Yankees.

 

The Indians 2012 payroll was listed at $66 million, so an extra $25M would lead to a 38% increase.

 

That money doesn’t kick in until 2014, but the time to spend is now. Eventually, player salaries will catch up with the higher revenue streams. Owners may pocket some of the money initially, perhaps to pay themselves back for prior losses (though I question if anyone is truly losing money through its ownership of an MLB team). Eventually though, players and their agents, along with fans, will push for the money to be spent on payroll. At that point, while the Indians should be able to carry a slightly higher relative payroll, the major advantage of additional money will be lost.

 

The Dodgers are one team that’s clearly already spending the money they see on the horizon, since their new ownership group took over, they’ve acquired a number of huge contracts, in hopes of making a quick turnaround. I would like to see the Indians work out a long-term deal with Jason Kipnis, see if they can buy out a couple years of his free agency, even though it’s a ways away. They should be aggressive in acquiring other players this off-season too. It isn’t the deepest free agent class, but this is a good time to sign solid players to contracts that will likely look very reasonable once salary inflation kicks in by 2015.

 

This off-season is an opportunity to get a jump on more conservative teams, the Indians should make competitive offers to the top available pitchers, make aggressive offers to teams that are looking to trade valuable players, even if it means taking on salary. Spend as though the new TV money is already here, rather than a year away, before the market corrects itself and salaries climb across the board.

 

http://www.letsgotribe.com/cleveland_india...impact-salaries

Edited July 2, 2013 by caulfield12

[Dick Allen]

Define gut....Ramirez, Rios and Peavy gone?

 

Or also the likes of Beckham and Viciedo, to the point where the entire starting line-up is different for 2013?

If Ramirez Rios and Peavy are gone with Crain, Thornton, Konerko, there is a good chance the Sox are going to be bad for quite a while unless somehow they do spectacularly well on the return. What is left and what is coming up? Who in the world is going to play SS? I have never been a vpbig Ramirez fan, but he is all the Sox have, and SS aren't easy to find unless they are bad. The Sox would be one Chris Sale elbow blowout from being a 100+ loss team.

[southsider2k5]

It is just going to increase a players worth. I would expect to see the ML average salary up a million dollars a player over the next few years.

[caulfield12]

Now, with that last article as a base or reference point, the stakes are even higher.

 

Following the logic of the argument made, now (and in the off-season) is the best time to act, taking on contracts without giving up much in terms of talent (especially prospects close to the majors, which we don't have much of anyway)...

 

So it's clear that the Indians already started on this process (Bourne, Swisher, Reynolds) and the White Sox would be well-suited to follow in their wake unless they want to be left behind.

 

 

There are some different directions they can go...

 

1) Dump everything they possibly can, that list especially includes Rios, Keppinger and Ramirez (along with Crain/Thornton), with some hesitation about dealing Danks or Dunn depending on the financial circumstances and what we would have to give up to avoid eating salary (for example, Erik Johnson, Trayce Thompson, Hawkins, etc).

 

2) Amongst the group of Viciedo/Beckham/Flowers (yikes)/Gillaspie/Santiago and Jose Quintana.....decide which ones you want to extend out into free agency 1-2 years and which ones to go year to year with.

 

Maybe you end up having to trade one of Santiago/Quintana if you're not going to spend as much (see possibility 3 below).

 

3) Keep Peavy, Rios, Dunn, Ramirez and Danks and spend spend spend in the off-season in an attempt to repair the starting line-up, both offensively and defensively.

 

4) Decide if DeAza's "fixable" or cut your losses...as he's still probably worth more to the White Sox than to another team for 2014.

Edited July 1, 2013 by caulfield12

[caulfield12]

It is just going to increase a players worth. I would expect to see the ML average salary up a million dollars a player over the next few years.

 

 

The question is how many teams will strike preemptively and perhaps even take on a little debt, versus waiting until the new market condition changes take full effect with the cash disbursements arriving in 2014.

 

The Indians are going this direction already, despite their weak attendance.

 

It will be interesting to see what, if anything, the Royals and Twins do....especially Dayton Moore, with his job on the line today more so than at any point in his long reign.

[The Ultimate Champion]

The 3 players the Indians just took on all have games where you would expect them to fall off hard once they do fall off, especially Bourn. Taking on a s***load of money on a player you don't think is all that special is never a good idea IMO. The best thing to do is to have players either pre-arb, in arb, or into deals structured during the arbitration process. Even keeping your own good players costs a lot during that 6th/7th/8th year of service time in a lot of those deals. If the goal is to be thrifty, and you end up with a good team, that payroll will climb very fast.

[The Ultimate Champion]

BTW I hope the Indians want to get ahead of the game & give Scott Feldman something like a 4 year/$55M deal in the offseason. Yeah.

[caulfield12]

The 3 players the Indians just took on all have games where you would expect them to fall off hard once they do fall off, especially Bourn. Taking on a s***load of money on a player you don't think is all that special is never a good idea IMO. The best thing to do is to have players either pre-arb, in arb, or into deals structured during the arbitration process. Even keeping your own good players costs a lot during that 6th/7th/8th year of service time in a lot of those deals. If the goal is to be thrifty, and you end up with a good team, that payroll will climb very fast.

 

 

The problem is obvious.

 

Beckham, Viciedo, Gillaspie, DeAza, Flowers, Santiago and Quintana....which ones would you extend?

 

Both pitchers? Or would you trade one?

 

What about Addison Reed? (Obviously you had been advocating a trade, but that likelihood is falling by the day with the poor results).

 

With Beckham, Viciedo and DeAza in particular, you could make 100 arguments for extending them and 100 equally valid arguments for not doing so.

 

 

With those moves, it's pretty obvious the Indians put themselves pretty squarely into "win now" mode. Does Hahn even believe that's still possible for 2014, or is he already subconsciously targeting 2015 (and even then, you might have a couple of new starters like a Thompson or Carlos Sanchez to go through growing pains with).

 

 

[caulfield12]

BTW I hope the Indians want to get ahead of the game & give Scott Feldman something like a 4 year/$55M deal in the offseason. Yeah.

 

 

I don't think anyone's going to go THAT crazy...maybe 3 years and $24-26 million, that's definitely possible.

 

He's only been successfully starting for 1/2 a season in the NL, and he sat in that Rangers pen as the long man for 2-3 seasons...of course, that argument would go in his favor that he has a lot less wear and tear on his arm than say, Jake Peavy.

 

 

 

The Dodgers and Blue Jays would be the other prime examples of teams following this approach (spend now, taking on contracts that are already defined instead of bidding up prices in free agency), although LA obviously has the advantage of that $200 million from their regional sports network deal already coming into their coffers...

Edited July 1, 2013 by caulfield12

[Paint it Black]

The problem is obvious.

 

Beckham, Viciedo, Gillaspie, DeAza, Flowers, Santiago and Quintana....which ones would you extend?

 

Both pitchers? Or would you trade one?

 

What about Addison Reed? (Obviously you had been advocating a trade, but that likelihood is falling by the day with the poor results).

 

With Beckham, Viciedo and DeAza in particular, you could make 100 arguments for extending them and 100 equally valid arguments for not doing so.

 

 

With those moves, it's pretty obvious the Indians put themselves pretty squarely into "win now" mode. Does Hahn even believe that's still possible for 2014, or is he already subconsciously targeting 2015 (and even then, you might have a couple of new starters like a Thompson or Carlos Sanchez to go through growing pains with).

You extend Beckham because he's the best player out of that bunch. Viciedo isn't an impact bat. Gillaspie has to show me more. DeAza has sucked this year. Ditto Flowers. I think Santiago and Quintana could be used as "super relievers" if teams didn't suck at using their pens. But if you're asking me to pick one it's Quintana without question.

[caulfield12]

You extend Beckham because he's the best player out of that bunch. Viciedo isn't an impact bat. Gillaspie has to show me more. DeAza has sucked this year. Ditto Flowers. I think Santiago and Quintana could be used as "super relievers" if teams didn't suck at using their pens. But if you're asking me to pick one it's Quintana without question.

 

 

There's no way they're going to write off Viciedo until the end of the 2014 season, at the earliest.

 

Who else on the team is capable of hitting 25-40 home runs next year?

[witesoxfan]

In Cleveland, and other cities that have trouble drawing big crowds to the ballpark, there is an ongoing dynamic --similar to the chicken or egg conundrum-- that goes something like this: If few fans show up for games, the team doesn’t have money to sign good players, but if the team isn’t any good, many fans aren’t interested in going to games.

 

et al

 

Please please please make sure you provide a link when posting online articles.

[maggsmaggs]

If Ramirez Rios and Peavy are gone with Crain, Thornton, Konerko, there is a good chance the Sox are going to be bad for quite a while unless somehow they do spectacularly well on the return. What is left and what is coming up? Who in the world is going to play SS? I have never been a vpbig Ramirez fan, but he is all the Sox have, and SS aren't easy to find unless they are bad. The Sox would be one Chris Sale elbow blowout from being a 100+ loss team.

The Sox are on pace to lose 96 games as is. So what's four more?

[Boopa1219]

There's definitely going to be an inflationary effect in play.

 

With all those dollars chasing fewer the same amount of talent (or even less, if you look at the free agent class), it's not going to be a HUGE advantage to the Sox.

 

That money would be better spent on hiring more scouts, improving the minor leagues, upgrading our Dominican facility....building one in Venezuela, for example (there used to be almost 20 teams down there with academies and now it's back down to 6-8 with tensions increasing under the Castro regime)...or even Brazil. Or China. They need to start being more innovative and finding those niches they can get out in front of and exploit proactively.

 

If they're going to go crazy and sign 3-4 bats (like the Mariners did with Morse, Morales, Bay and Ibanez), then that's fine.

 

However, if they're only going to sign ONE guy, I'd rather they just completely sucked again next year and invested the money elsewhere.

 

 

I totally agree, the Sox need to take that money and invest it in the future.

[Paint it Black]

There's no way they're going to write off Viciedo until the end of the 2014 season, at the earliest.

 

Who else on the team is capable of hitting 25-40 home runs next year?

Write off is different than extend. I was simply stating that I believe Beckham is actually a good candidate to extend.

[caulfield12]

Write off is different than extend. I was simply stating that I believe Beckham is actually a good candidate to extend.

 

 

Except we need a lot more than 4 weeks of good hitting before he earns it. Otherwise, it runs the risk of being like the Teahen or Keppinger type deals.

 

If he's going to be a 700-725-750 OPS ceiling guy, okay. I think we've all given up on the 850-900 OPS Gordon Beckham at this point. But not in the low 600's.

 

 

 

And there's another interesting issue, teams like the Yankees "officially" only bring in $90 million for broadcast rights, but the really numbers are exponentially higher because of their owning their own network, just like the Red Sox/NESN. You can even argue that the White are undervaluing their overall numbers (in terms of local media) due to the Reinsdorf ownership of the Bulls/Sox and 40% controlling stake in Comcast (the 60% to NBCUniversal, Wirtz and Ricketts).

 

Not to mention the WGN situation, which complicates things even further....as the White Sox make less money per game for the actual broadcast rights for WGN telecasts, but they have a much bigger national outreach and total numbers of viewers/advertisers, for example.

 

 

 

 

Edited July 2, 2013 by caulfield12

[caulfield12]

ROYALS

Baseball TV deals growing more lucrative

January 24

BY PETE GRATHOFF

The Kansas City Star

 

It’s tempting to call the Dodgers’ megadeal with Time Warner just another case of a big-market baseball team striking it rich.

 

Ranked by expected revenue per year:

• Dodgers: $250 million*

• Angels: $147 million

• Yankees: $90 million

• Astros: $80 million

• Rangers: $80 million

• Mets: $65 million

• Red Sox: $60 million

• Cubs: $50 million

• Padres: $50 million

• Tigers: $50 million

• White Sox: $45.5 million

• Mariners: $45 million

• Indians: $40 million

• Blue Jays: $36 million

• Phillies: $35 million

• Diamondbacks: $31 million

• Reds: $30 million

• Nationals: $29 million

• Orioles: $29 million

• Twins: $29 million

• Brewers: $21 million

• Braves: $20 million

• Rays: $20 million

• Rockies: $20 million

• Royals: $20 million

• Marlins: $18 million

• Pirates: $18 million

• Cardinals: $14 million

• A’s: N/A

• Giants: N/A**

*estimation of reported agreement that would start in 2014; expected to receive $39 million in 2013

**believed to make 30 to 33 percent of total revenue produced by Comcast Sports Net Bay Area

SOURCES: FanGraphs, Atlanta Journal-Constitution, Crain’s Detroit Business, ESPNChicago.com, the Cleveland Plain Dealer, 1500ESPN.com, Milwaukee Journal Sentinel, Forbes

 

The numbers are eye-popping: The reported agreement could fetch as much as $7 billion over 25 years.

 

Sure, the Los Angeles TV market is among the largest, but a quick scan of recent local cable television deals in baseball shows some smaller teams have hit paydirt, too.

 

“It’s not simply a matter of small market, big market — it’s also a matter of when contracts expire,” said Andrew Zimbalist, the Robert A. Woods professor of economics at Smith College who has written extensively about baseball economics. “Teams that are re-upping and signing a new deal now, or if they signed last year or even two years (ago) or maybe one year at the most into the future, are in very good shape.

 

“Teams that signed their contracts three years ago or four years ago (SEE CHICAGO WHITE SOX), or teams that sign their contracts in another couple of years are not going to benefit from this bubble. This is true whether they are in large markets or small markets.”

 

And that’s the bad news for Royals fans. The team’s TV deal with Fox Sports Kansas City, which launched in 2008, pays the team $20 million a year and runs through 2019, Kevin Uhlich, the Royals’ senior vice president of business, confirmed. They don’t have an opt-out clause.

 

So the Royals are forced to watch as the bubble continues to grow. Here are four teams that struck it rich, according to Forbes.

 

• In 2010, the Rangers received a 20-year deal from Fox Sports that starts in 2015. Texas got $100 million, will receive $80 million annually and gets a 10 percent equity stake in Fox Sports Southwest.

 

• The Houston Astros’ deal gives them $80 million a year and a 45 percent stake in Comcast SportsNet Houston.

 

• In 2011, the Los Angeles Angels got a 17-year, $2.5 billion deal that pays an average $95 million rights fee with a 25 percent equity stake in Fox Sports West.

• Last year, the small-market Padres received a $1.2 billion, 20-year deal with Fox Sports San Diego. The Padres also have a 20 percent equity stake in the network. (Hence, the Jake Peavy back to SD rumors, and the acquisition of Quentin, etc.)

 

The Indians, the Royals’ rival in the AL Central, sold SportsTime Ohio to Fox Sports in December for an estimated $230 million. The deal gives Fox the rights to broadcast Indians games for at least the next 10 years, during which time the team will receive at least $400 million in rights fees, beginning with $40 million this season.

 

The Royals will see an increase in revenue, thanks to the $12.4 billion deals with national broadcasters. Those deals run through 2021, but the money is shared evenly among each team. So there is no advantage there.

 

The good news for the Royals is that the Dodgers, and any other team that signs a monster local TV deal, send 34 percent of that annual revenue to Major League Baseball, according to Uhlich.

 

MLB then distributes the money evenly among all 30 teams. However, teams are finding a loophole. Money made off a team’s equity stake is not shared.

 

Chris Bevilacqua, the founder and CEO of Bevilacqua Media Company, explained last year on Forbes’ “SportsMoney” program:

 

“What you really are seeing is teams that are becoming media companies, they’re taking equity ownership properties,” Bevilacqua said. “So once you get into owning the actual media and having the intellectual property rights, the economics just become greater and greater.”

 

But there is risk, too. The Dodgers’ deal is expected to call for a network dedicated to the team (a la The Longhorn Network). If advertisers don’t pay as expected, that could cut into a team’s profits.

 

And there is a chance for viewer backlash. The Dodgers’ deal means another channel for cable companies to pay for, and that cost is passed along to the viewer, whether or not they are fans.

 

It’s not hard to imagine that some people in Kansas City would balk at an arrangement with the Royals. But sports have become cable television’s lifeline.

 

Nielsen reported that last year, $13.3 billion was spent on advertising within sports programs, which accounted for 23 percent of national TV ad spending. Nielsen also noted that 99 percent of people ages 18 to 49 watched sports programming live or that day.

 

“DVRs make it possible to tape their programming and watch it some other time and when they watch it, they can skip their advertising, so that lessens the interest of companies to advertise on normal programming,” Zimbalist said.

 

“But sports fans want to see their games live, so the DVR effect doesn’t really influence them, and companies tend to migrate their advertising from the traditional programming — soap operas, comedies, serials — toward sports, and that’s been a strong influence over the last several years, but it’s pretty much played itself out.”

 

That’s one of the reasons why Zimbalist believes the bubble is about to burst for baseball TV contracts.

However, the 140 regular-season games on Fox Sports Kansas City last season were the best ever, averaging a 3.8 household rating, according to Nielsen, up 13 percent from 2011.

 

Sounds like a good time to strike a deal, but the Royals likely have to wait a few more years. And, unlike LA, there likely won’t be a bidding war to drive up the cost.

 

“The situation in Los Angeles is sui generis,” Zimbalist said. “It’s unique, because of competition between Fox and Time Warner and a variety of other factors. It’s inflating those rights way out of proportion. There’s a bubble. Whether that continues is another question.

 

“I think the exuberance in the market right now is likely to abate or disappear in the next couple of years, so I don’t anticipate that kind of frenzied buying and upping the ante on rights fees will be present.”

 

To reach Pete Grathoff, call 816-234-4330 or send email to [email protected]. Follow him at twitter.com/pgrathoff

 

Read more here: http://www.kansascity.com/2013/01/24/40297...l#storylink=cpy