Magazine article Variety

TV Rights Cover Financial Bases

Magazine article Variety

TV Rights Cover Financial Bases

Article excerpt

When the baseball season begins this week in Southern California for Los Angeles' Dodgers and Angels, both teams will be stepping to the plate with expensive new stars - for the Angels, on the field; for the Dodgers, in the owner's box.

The Dodgers announced last week that the team will be sold to Guggenheim Partners, a group headed by former Los Angeles Lakers haU-of-famer Magic Johnson (and including Hollywood honcho Peter Guber), for an unprecedented $2 billion, more than twice the record sum the Chicago Cubs sold for just three years ago. A few months earlier, the Angels signed slugger Albert Pujols to a 10-year, $240 million deal, $56 million more than Angels owner Artie Moreno paid Disney for the entire team, the defending World Series champs at the time, in 2003.

The pricey new players in the war for the hearts of Los Angeles baseball fans are just another sign of the extent to which the TV biz, desperate for live, timeshift-resistant programming, has been driving up the rights to sports broadcasting. A recent report by Forbes on the spike in valuation of Major League Baseball teams placed the Angels eighth at $656 million, up 18% year-to-year (compared with an average 16% perteam rise). But that was chump change compared with the Dodgers spike, up an astounding 75% year-to-year, at $1.4 billion. That Johnson and Guggenheim didn't bat an eyelash at paying a further $600,000 premium reflects the promise of the team's next TV contract.

Fox's current deal with the Dodgers runs through 2013, but the network has an exclusive 45-day period beginning in October of this year to negotiate an extension. Time Warner would love to steal the Dodgers' rights away from Fox, as it did with basketball's Los Angeles Lakers (in a reported 20-year, $3 billion deal).

Fox wouldn't comment on the negotiations, but wants to keep both baseball teams in the local programming fold, says Steve Simpson, senior VP and general manager for Fox Sports West/Prime Ticket.

Many speculate the rise in valuation is also due to the prospect of developing an owned-and-operated regional sports network, similar to the YES network owned by the Yankees, and NESN, owned by the Boston Red Sox, the No. 3-valued team on Forbes' list.

But the Pujols deal also represents a significant move in the battle for a key baseball demographic in Los Angeles: Latinos. It's a strategy Moreno has used before, signing the top free agent Latino player of an earlier generation, Vladimir Guerrero, to a $70 million, five-year deal starting in the 2004 season, while at the same time aiming to broaden the team's marketing base by changing its name from Anaheim Angels to Los Angeles Angels of Anaheiin, after a protracted legal battle with the Orange County city.

"Artie's vision was to make us a bigmarket ballclub," says vice president of marketing and communications Tim Mead, who is in his 33rd season with the Angels. "Television is certainly part of that I remember the d^ys when we showed 50, 60 games. Now every game is on TV. We have a tremendous business partner in Fox."

Indeed, Fox Sports Networks recently announced an expansion of its Spanish-language telecasts of Angels and Dodgers games (as well as those for Los Angeles Clippers basketball games).

But the Dodgers aren't exactly sitting on their monos when it comes to its own Latino following.

"We look at the Latino/Hispanic fan base as part of a general marketing plan. They're our dominant and most loyal fan base," says Michael Young, chief revenue officer of the Dodgers, who also point to the Asian market as one in which the team's popularity is growing. …

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