After I posted this article Tuesday citing a Joon Lee report on the Dodgers supposedly not paying their fair share of TV revenue sharing, my attention was called to this Los Angeles Times article by Bill Shaikin, in which Lee’s claims are, well, basically refuted:
It also revived a strange chapter in team history, with frenzied online commentary that the signing of Tucker was made possible in large part because Major League Baseball long ago rewarded the Dodgers’ owners with preferential financial treatment that continues to this day.
Is that true?
Yes and no.
This situation stems from the Dodgers’ bankruptcy under former owner Frank McCourt and the settlement and TV deal that followed:
In a settlement with McCourt — and to avoid the risk of the judge imposing a deal less favorable to the league — MLB agreed the fair-market value of a Dodgers TV deal would be based on the very Fox deal that Selig had rejected.
Why did that matter?
That value was $84 million for the first year and would increase thereafter, with the league taking its standard 34% cut and sharing that among all its teams.
But indeed, that value was not set at $84 million when all was said and done. Instead:
After negotiations, MLB and Guggenheim made a modest adjustment, setting the “fair-market value” of the Time Warner deal at about $130 million for the first year rather than $84 million. That figure is used to determine the league’s cut, which for all local TV deals has since increased from 34% to 48%.
Thus, what the Dodgers pay to MLB from this TV revenue is also increasing as the years go by, based on the increas in that “fair-market value” amount. The Dodgers’ very lucrative TV deal does go through 2039, and they are making a tremendous amount of money every year from it. That has more to do with the Dodgers’ negotiating skill and some luck, as L.A.‘s 25-year RSN deal was signed just before the RSN bubble started to burst. I’m sure you, the Cubs fan, are familiar with that because the Cubs created Marquee Sports Network just as the RSN bubble was bursting, and the Cubs aren’t getting the “wheelbarrows of cash” that President of Business Operations Crane Kenney promised. This isn’t Kenney’s fault; it’s just the way the TV marketplace has gone over the last several years.
It’s my understanding that the $130 million baseline number quoted above has increased by a small amount each year, and thus so has the revenue sharing amount the Dodgers have paid. It’s important to remember that revenue sharing of this type — from TV — is shared equally among all the MLB teams, so the Yankees (for example) get the same amount as (for example) the Brewers, unlike luxury tax payments, which are supposed to be used by lower-revenue teams for player payroll. The Dodgers paid $169 million into that pot for their 2025 payroll, which was more than the entire payrolls of 12 MLB teams for last year. Further, it doesn’t seem as if the teams receiving this money are using it for player payroll. That’s another issue entirely, one that hopefully will be dealt with in the next CBA.
There’s more on this situation in this Forbes article by Maury Brown:
MLB never gave the Dodgers a sweetheart deal. If Frank McCourt hadn’t driven the Dodgers into a court-controlled sale, this messy loophole that the Dodgers benefit from never happens. So, how much of the local media rights do the Dodgers ultimately shelter from revenue sharing over the life of the 25-year deal? It’s somewhere around $6 billion. That advantage is likely to stay with the Dodgers, even if somehow the owners were able to strongarm the players into a cap system when the latest labor deal expires on December 1st of this year.
Bottom line: It appears Joon Lee was incorrect in his report cited in Awful Announcing and that I wrote an entire article yesterday based on that. It’s not the first time I’ve been wrong and it likely won’t be the last. Hopefully, this article sets the record straight.
Read the full article here
