Though many were amazed when the Los Angeles Dodgers and Dodger Stadium sold for $2 billion, an analysis of the team’s potential media-rights bonanza indicates the sale price may have been a real bargain.
This isn’t necessarily news to baseball insiders who know a key to the future of the sport lies in media rights, but the public may not be aware of the big money involved. The Hollywood Reporter took a look at what the Dodgers could do on the rights front: simply sell the rights (which could yield between $175 million and $225 million annually), form its own cable network (which could yield betweem $125 million and $425 million annually), and partner with an existing broadcaster (Fox, Time-Warner) on a new network (which could yield between $225 million to $375 million annually). Over 20 years, these deals could bring the team between $4.5 billion and $8.5 billion.
The key to any good business purchase is unlocking upside. In the case of the Dodgers, there was a lot of potential upside both in terms of operations and media rights. The new owners are starting to address both: the operations side will surely benefit by the hiring of Janet Marie Smith, and the ledger will surely benefit from a smartly negotiated media deal. In a decade, we may look back and see the purchase price of $2 billion as a bargain.
RELATED STORIES: LA brings in Janet Marie Smith to oversee Dodger Stadium renovations; Kasten: Dodger Stadium renovations could hit nine figures; New Dodgers owners: We need to upgrade fan experience; New owners take control of Los Angeles Dodgers; Court approves Dodgers sale
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