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August 28, 2012 at 12:21 PM

New TV deal with ESPN shows MLB teams have plenty of cash to keep spending big

Every few months or so nowadays, it seems, something happens in baseball that makes everybody go “tisk, tisk” and wag their fingers at one team or another because they have taken on a big salary. In the case of the Dodgers last week, it was taking on three huge salaries via trade with the Boston Red Sox in first baseman Adrian Gonzaelz, pitcher Josh Beckett and outfielder Carl Crawford, along with the smaller money owed to infielder Nick Punto.
Within minutes, we were hearing about how the deals, while possibly helping the Dodgers in the near-term, would spell their long-term financial doom.
It reminded me of the sky-is-falling pronouncements last winter that greeted the Angels’ decision to sign free agents Albert Pujols and C.J. Wilson.
You’ll remember what happened right after those signings: the Angels announcing they had just completed a new regional sports network TV deal worth roughly $3 billion over 20 years. Yes, they had a way to pay for both Pujols and Wilson and absorb them into a payroll already well beyond $100 million.
Fast forward to present-day and the Dodgers.
Today, we learned that they and 29 other big league teams — including the Mariners — will receive a TV windfall of their own. No, not another regional sports network (RSN) contract, which the Dodgers will be set to announce next year and the M’s likely soon after that. Today, MLB and ESPN jointly announced a renewal of their national TV deal that will run from 2014 through the 2021 season.
The current deal is said to be worth about $360 million annually, but that jumps to $700 million with the new contract.
So, instead of roughly $12 million per year going to each team, starting in 2014, they will be getting approximately $23 million (these are all rough estimates based on reported figures, with the real numbers likely to vary). That’s a nice little pay bump, considering it’s only part of the national broadcast money each club gets and pales in comparison to what local TV generates through RSN deals.
No, that doesn’t mean you can go and pay for Prince Fielder all on your own with this new ESPN contract.
Photo Credit: AP

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But it’s just a reminder to all of those who keep predicting financial doom for teams that go after high-priced players: the revenue pile is based on more than mere ticket sales alone.
And the financial landscape of baseball is ever-changing. Just when you think you have a handle on what it will be, something new happens and the money pile gets bigger.
We’ve seen it this past year with escalating franchise values — like the San Diego Padres selling for $800 million this month.
Next year, the Dodgers will announce a new local TV deal that is expected to be worth $4 billion and up — an all-time record.
There will still be people who attempt to equate spending in baseball with something evil. And certainly, for fans of teams like the Rays and A’s — locked into quests for new, taxpayer-subsidized ballparks and with owners unwilling to spend relative to division opponents in the interim — the big-spending will indeed seem evil.
But for most teams — including the ones that continuously make the playoffs — it is seen as a necessary evil.
For all the talk of how the New York Yankees have curbed spending this year, they are listed by Cot’s contracts at $209.7 million in payroll, a boost over last year.
Those now citing the supposed downfall of the Philadelphia Phillies as proof that big spending is bad somehow have conveniently overlooked the five consecutive playoff appearaces, 2 NL titles and one World Series title by that club. How would Mariners fans like some of that action?
Yeah, the Boston Red Sox — with two World Series titles since 2004 and eight playoff appearances since 1998 — are scaling back a bit and prepared to start over. But does anybody truly believe they are going to become an $80 million club going forward? Think that fan base would stand for it? Think again.
The big trade with the Dodgers last week was done as much to clear out some locker room discord as it was to move payroll. Boston will be right back at the spending game within a couple of seasons.
Because that’s still the game that wins more often than not. Will it guarantee a playoff appearance? Of course not. The Angels are not a certainty to make it this season, nor are the Detroit Tigers. But both teams have been in the thick of a race all season long and if they don’t make it this year, they will still both be poised to do so next.
Meanwhile, in the AL — where the bulk of the bigger free agent deals are signed every year — the division leaders are still the $209 million Yankees, the $120 million Texas Rangers and a $98 million Chicago White Sox team deriving much of its success from $14-million Adam Dunn, $12.5-million Alex Rios and $17 million Jake Peavy.
The fake storyline surrounding the White Sox is that they somehow got better despite having shed payroll from $127 milllion last year to $98 million this season. In reality, they got better because the big ticket players they paid big money to in 2011 are now delivering the performances expected of them. The same free agents or big ticket trade acquisitions who drove their payroll sky-high last year are the ones reaping dividends for Chicago in 2012, along with pricey Chisox vet Paul Konerko.
Sure, they’ve had pitchers other than Peavy come up huge for them, the most notable being Chris Sale. No team can win anything with one or two highly-paid guys alone. But check out the pricetags on Peavy and the big bats driving Chicago’s offense. They certainly haven’t Moneyballed it to the top. And if they falter, the sticker-shocking Tigers will be right there to take their place.
Chicago spent big in recent years, cut a little deadwood and is now winning largely because of pricey past acquisitions.
Money still holds sway in MLB. Especially in the AL, where the M’s play.
And as we have seen today from this latest TV deal, there is still plenty of money to go around in MLB: especially for teams already playing in modern, taxpayer-funded ballparks.
The next time somebody suggests a team “can’t afford” certain players? Ask yourself whether that is really the case. Then, do some fact-checking and see whether that is true. Then, do it a third time.
Because in the case of the Dodgers, they can certainly afford the players they are taking on and then some. Just like the Angels. Just like the Yankees. Just like the Red Sox, the Tigers, the Rangers, the White Sox and anybody else willing to get aggressive.
If it doesn’t work, nobody’s going to go bankrupt. At least, not for baseball reasons. Maybe for over-expansion in other businesses, or for divorce, or trusting a crooked financial advisor. But for baseball, if the big spending doesn’t work, teams will always have the luxury of spending over their mistakes, or merely keeping their pricey stars and trying again next year. And that’s exactly what the big money teams that keep making the playoffs are willing to do year after year after year.
It’s not a reality that fans of teams like the A’s and Rays want to contemplate. But that’s because their teams have to play Moneyball. Most big-league teams don’t. And as television revenue keeps expanding both on a local and national level, the excuses for not spending on players will grow proportionately more shallow.
Yeah, it’s more fun to win on a budget. But it’s not a requirement for most teams. Never has been.



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