Chad Moriyama Dodgers, Sabermetrics, Scouting
Los Angeles Times: CBS and MSG are interesting in joining an ownership group in an effort to secure the television rights for the Los Angeles Dodgers.
CBS and MSG have each considered whether to invest in a Dodgers ownership group to secure the team’s television rights, two people familiar with the Dodgers sale process said Thursday.
The objective for both parties would be to launch a regional sports network centered on the Dodgers, the people said. It is uncertain whether CBS or MSG has committed to provide financing to one or more bidding groups.
Not a bad thing, is it?
Regional sports networks bring in a ton of money.
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Sports Illustrated: Dodgers team health report has Matt Kemp and Chad Billingsley in the green, but Clayton Kershaw in the yellow.
FanGraphs: Surprise, surprise, Vin Scully was voted the best broadcaster in baseball. Another surprise, San Francisco Giants fans complaining about Scully.
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Fox Sports: The MLB playoffs are expanding from 8 to 10 teams, which is wonderful news for the Dodgers in 2012, because it means more average teams will get in.
For baseball though? It’s just another step in reducing the importance of the regular season and putting an emphasis on luck in the playoffs.
Wonderful.
I know this much, Ned Colletti is fucking ecstatic, because if he runs into a bit of fortune this year, the Dodgers might be able to sneak into the playoffs and save his job.
Viewing those FanGraphs rankings was worth it just to see the Denis Leary rant on Mel Gibson again.
The thing about the RSN, chad, is it totally depends on the ownership structure and who they choose to partner with to launch the RSN. Because it would most likely be a another wholly or partially owned entity, not of the dodgers baseball team, but rather the ultimate parent holding company.
I’m off to a meeting but can come back to draw this out.
You mean the revenue might not be what I think?
Right. The RSN would negotiate a deal with Dodgers’ baseball as if it were another completely unrelated business (and in fact the Dodgers would be ham-strung in that it won’t be allowed to negotiate with anyone else).
All of this would mean that the Dodgers would probably sign a deal with Dodgers RSN for a deal that’s somewhere south of a maximum value if it were open to a completely open bidding process. I would probably say the Angels’ TV rights deal would be a starting point but I doubt prices would go much higher.
It is in effect shifting dollars from one pocket to another in the Dodgers’ parents. And if a PE firm (pretty much everybody other than Blackstone) ponied up some cash to become a minority owner, this is probably what would happen.
For an example, look at YES. It is a partnership between the Yankees’ parent holding company, random riff rafts, and Goldman Sachs. These random riff rafts and Goldman Sachs aren’t exposed to Yankees (the team) and its liabilities (stadium lease payments back to the city and players’ contracts).
But the revenue stream is the same, isn’t it?
As in, if they so choose, the owners have the money to spend.
Yes and no. Let me backtrack a little bit to hopefully suss it out a bit more clear.
For tax and liability reasons, holding companies are typically formed to own other business. Let’s say Magic/Kasden/Walter wins the Dodgers. They would form some kind of holding company, let’s say Holding Corp, which would then own 100% of Dodgers LLC (the actual team) and then for Dodgers RSN LLC (vehicle purchasing the media rights from Dodgers LLC). The issue comes in where the RSN would probably also have other owners, be it MSG, Cablevision, TW, some dudes from Mars. Let’s say Dodgers RSN LLC is 60% owned by Holding Corp and 40% others.
If you prefer to what I wrote above, Dodgers LLC and Dodgers RSN LLC, even though they both have the same beneficiary owner (Holding Corp), they are not related to each other, e.g. if you buy a Dodger dog at the stadium, the money from that hot dog would go to Dodgers LLC and then Holding Corp but Dodgers RSN LLC would not see the profit from that hot dog. So, when it comes to negotiating media rights, Dodgers RSN LLC would be purchasing those rights from Dodgers LLC, it would be a negotiation where both sides will try to extract maximum value (you can think of it sort of as two kids competing for their parents’ attention) at the expense of the other party.
Of course, it’s a rigged game because no party other than Dodgers RSN LLC would be allowed to negotiate for the media rights.
And, if you look at the potential ownership structure of Dodgers RSN LLC, Holding Corp only owns 60% of it. The other shareholders of Dodgers RSN LLC doesn’t care a whit about the Dodgers as a team, they are in it for the media angle, the ability to launch a new TV network and pull in tons of cash.
Coming back to answer your question. Yes, if the owners choose to spend money, they of course can take money from Dodgers RSN LLC (from commercials or other revenue generating programming). But there wouldn’t be any contractual or legal obligation for them to do so, they would do it out of largesse.
The alternative scenario is if Dodgers LLC sold the TV rights on the open market, in that scenario, every single cent from the media deal would belong to Dodgers LLC and then flow upwards to Holding Corp.
It is a fine but very significant difference. I hope that sort of makes it a bit clearer. :D
Gonna be honest here, but I skipped to the conclusion and I understand that.
The rest just sorta, well I don’t know.
:o