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Dodgers About to Get STUPID Rich

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Re: Dodgers About to Get STUPID Rich

Postby kab21 » Tue Dec 04, 2012 2:38 am

This was discussed on another forum but where is the money coming from. I fail to see how TV ratings are increasing for random midweek games. Are advertisers really paying more or is this just setting up to bankrupt a cable station?
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Re: Dodgers About to Get STUPID Rich

Postby GiantsFan14 » Tue Dec 04, 2012 4:47 am

kab21 wrote:This was discussed on another forum but where is the money coming from. I fail to see how TV ratings are increasing for random midweek games. Are advertisers really paying more or is this just setting up to bankrupt a cable station?


I found this as a comment on another site. I have no clue how accurate it is. it doesn't seem to be taking into account any other income from the deal such as subscriber fees.

The cost would be approximately $30,000 per 30-second TV spot for Fox Sports to recoup their investment of the broadcast rights. The Dodger average about 250,000 people per broadcast, and would have to charge advertisers a minimum of $120 per 1,000 (if my math is right), which is pretty high. Glee for example (one of the highest network shows for cost of advertising) is only $45 per 1,000.
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Re: Dodgers About to Get STUPID Rich

Postby Skin Blues » Tue Dec 04, 2012 9:24 am

rjforlife wrote:Magic Johnson is a businessman, but he's a winner. This guy isn't going to mess with TV people just to make himself more millions. He's in this to win, and I have to think he has a lot of weight with the group and their decision-making process.

Magic Johnson is a PR guy acting on behalf of the actual ownership group (and apparently he's doing a good job). If the people that put up the bulk of the money want something done, it'll get done.

Obviously there is some merit to putting a winning team on the field, but securing $7B is just insane, and would explain why they have made what most people would consider to be highly questionable baseball decisions since the new owners took over. You drive up the value of the team exponentially for a short period of time, and when the bubble bursts, you pare down expenses and roll in your money. Maybe I'm just too cynical, but financially it doesn't make sense to invest this much when you very little to gain financially. Creating "a brand" is all well and good, but when the primary money-making vehicle of that brand is locked up for a quarter century, 90% of the incentive in investing in a team is out the window. No matter how bad the team is, they will be endlessly marketed by Fox which will help keep butts in the seats and sell Brandon League jerseys.
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Re: Dodgers About to Get STUPID Rich

Postby Pogotheostrich » Tue Dec 04, 2012 11:24 am

kab21 wrote:This was discussed on another forum but where is the money coming from. I fail to see how TV ratings are increasing for random midweek games. Are advertisers really paying more or is this just setting up to bankrupt a cable station?


Some money is coming from advertising but most is coming from the pay TV subscribers. Every channel included in pay TV costs the subscribers something whether they use it or not. The best and most expensive example is ESPN. I'm pretty sure ESPN is standard on just about every package now and costs around $5 per month per subscriber. At some point the customers who aren't using this service are going to tire of subsidizing sports. It is going to be really interesting because these contracts are really long. The Dodgers deal is 25 years. I'd be kind of surprised if pay TV resembles anything close to what it is today. People are already ditching pay TV for movies and shows they download. If they pay TV providers don't adapt they might be the next Blockbuster.
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Re: Dodgers About to Get STUPID Rich

Postby Skin Blues » Tue Dec 04, 2012 11:34 am

I agree, in most respects TV is in big trouble because everything is available for free on the internet. They need to adapt or die. It's not the same for sports, though. Sports will always be a big pay TV moneymaker. It's not like other TV shows that can be recorded and watched whenever you want, so you can fast-forward through the commercials. Sports are watched live. People see (or hear) the commercials because they don't want to miss the game if they change channels. It might not be via cable/satellite that baseball games are available in 10+ years, but even if it's switched to the internet like MLB.tv the owners of the viewing rights will still be charging big money.
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Re: Dodgers About to Get STUPID Rich

Postby thedude » Wed Dec 05, 2012 3:00 pm

Skin Blues wrote:
rjforlife wrote:Magic Johnson is a businessman, but he's a winner. This guy isn't going to mess with TV people just to make himself more millions. He's in this to win, and I have to think he has a lot of weight with the group and their decision-making process.

Magic Johnson is a PR guy acting on behalf of the actual ownership group (and apparently he's doing a good job). If the people that put up the bulk of the money want something done, it'll get done.



It's owned by Guggenheim Partners, who have 160 billion dollars under their management. They are arguably the richest owners in sports. The Dodgers were an investment for a financial return, so everything they do will be about the dollar. This is not an old fashioned family ownership situation, where one rich family is willing to lose money or not maximize profits to put a winning team on the field.
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Re: Dodgers About to Get STUPID Rich

Postby Skin Blues » Wed Dec 05, 2012 3:31 pm

Exactly. Magic Johnson is not some happy-go-lucky part-owner that is going to win at all cost. He's a PR guy working for a bunch of money grubbers. Once they secure the TV deal, they can cut pull a Loria. Or do a more subtle version of a Loria that falls within the terms of their TV deal. This kind of crazy spending is clearly not financially viable for any other team, and the Dodgers are no different than the other large markets. If anything they have less to gain than other large markets that either own their own TV Network or have year-to-year/expiring TV contracts.
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Re: Dodgers About to Get STUPID Rich

Postby kab21 » Wed Dec 05, 2012 9:37 pm

Pogotheostrich wrote:
kab21 wrote:This was discussed on another forum but where is the money coming from. I fail to see how TV ratings are increasing for random midweek games. Are advertisers really paying more or is this just setting up to bankrupt a cable station?


Some money is coming from advertising but most is coming from the pay TV subscribers. Every channel included in pay TV costs the subscribers something whether they use it or not. The best and most expensive example is ESPN. I'm pretty sure ESPN is standard on just about every package now and costs around $5 per month per subscriber. At some point the customers who aren't using this service are going to tire of subsidizing sports. It is going to be really interesting because these contracts are really long. The Dodgers deal is 25 years. I'd be kind of surprised if pay TV resembles anything close to what it is today. People are already ditching pay TV for movies and shows they download. If they pay TV providers don't adapt they might be the next Blockbuster.


I'm well aware of that but I don't see how they are going to be able to charge more in the cable TV package. All I see is their cost increasing while their revenues (advertising and subscriptions) stay the same (or decrease as we enter a new multimedia age). I agree with you on the rest though.
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Re: Dodgers About to Get STUPID Rich

Postby thedude » Wed Dec 05, 2012 10:50 pm

Skin Blues wrote:Exactly. Magic Johnson is not some happy-go-lucky part-owner that is going to win at all cost. He's a PR guy working for a bunch of money grubbers. Once they secure the TV deal, they can cut pull a Loria. Or do a more subtle version of a Loria that falls within the terms of their TV deal. This kind of crazy spending is clearly not financially viable for any other team, and the Dodgers are no different than the other large markets. If anything they have less to gain than other large markets that either own their own TV Network or have year-to-year/expiring TV contracts.



Yes. I do not see them cutting payroll like the Marlins--that would damage the imagine of the team too much and thereby decrease the value of the asset-- but they will likely scale back spending to levels similar to other large markets.
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Re: Dodgers About to Get STUPID Rich

Postby Pogotheostrich » Thu Dec 06, 2012 12:58 pm

kab21 wrote:
Pogotheostrich wrote:
kab21 wrote:This was discussed on another forum but where is the money coming from. I fail to see how TV ratings are increasing for random midweek games. Are advertisers really paying more or is this just setting up to bankrupt a cable station?


Some money is coming from advertising but most is coming from the pay TV subscribers. Every channel included in pay TV costs the subscribers something whether they use it or not. The best and most expensive example is ESPN. I'm pretty sure ESPN is standard on just about every package now and costs around $5 per month per subscriber. At some point the customers who aren't using this service are going to tire of subsidizing sports. It is going to be really interesting because these contracts are really long. The Dodgers deal is 25 years. I'd be kind of surprised if pay TV resembles anything close to what it is today. People are already ditching pay TV for movies and shows they download. If they pay TV providers don't adapt they might be the next Blockbuster.


I'm well aware of that but I don't see how they are going to be able to charge more in the cable TV package. All I see is their cost increasing while their revenues (advertising and subscriptions) stay the same (or decrease as we enter a new multimedia age). I agree with you on the rest though.


The TV stations will try to negotiate a larger monthly fee. If things don't go well they will make a PR campaign that you won't be able to watch the Dodgers on XYZ cable/satellite provider. It happens all the time.
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