Tuesday, November 13, 2012

TV Revenues Soaring; Will Attendance Matter Anymore?

A recent column by ESPN's Darren Rovell didn't mention the Tampa Bay Rays, but it sure means a lot to the team's future.  Rovell writes why the Dodgers sold for an astronomical $2 billion price tag: future TV earnings.
Sure, $2.15 billion seems like a stunning sum for a team with a huge mountain of debt and a mediocre recent record. But it may not be for a team about to negotiate a local TV deal that could be the largest in sports history, making the new Dodgers ownership the first of perhaps many to come that based a bid for a team, then the team's payroll, almost entirely on local TV money.
As I wrote in 2010 about the Rays, Rovell suggests the Dodgers are due a huge financial windfall ($225M/yr) if and when they re-negotiate their television contract.
But since MLB mandates 1/3 of television revenue gets shared UNLESS you own your own network, Rovell speculates the Dodgers may just start up their own network (or two).  Which may once again throw the league's balance of power off as more big-market teams will be able to spend like the Red Sox and Yankees, while more small-market teams, like the Rays, will see their spending dwarfed.

Forget the fact that the Padres just quadrupled their annual TV revenues from $12 million to $50 million and the Rays may do the same in a few years.

The biggest takeaway from Rovell's article is how little attendance and ticket sales will matter in the future MLB model.  Television revenues will dwarf stadium revenues and even teams like Milwaukee, Minnesota, and Colorado (11th, 12th, and 13th, respectively, in attendance last year) will struggle to keep up with poor-drawing large market-teams like Houston.

It seems to echo the notion I wrote about here a couple months ago: "Filling the Stadium isn't Nearly as Critical for Teams as it Used to Be." And it's one of the many reasons that will make it extremely hard for the Rays to get a new stadium anytime soon.

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