The Los Angeles Dodgers’ signing of Kyle Tucker to a four-year, $240 million deal caused a stir in baseball last week. Overpaying has caused many in the game to say enough is enough. With the upcoming expiration of the current Collective Bargaining Agreement between MLB and the MLBPA, negotiations for a new agreement will likely begin this spring. It has become a heated and public debate between all teams with MLB Commissioner Rob Manfred and MLBPA head Tony Clark both dropping exploratory balloons to the media.
Anger about the Dodgers’ ability to spend unlimited amounts on payroll has been building ever since the Shohei Ohtani deal. But Tucker’s contract appears to have been the final draft for many. While almost all parts of the game agree that a shutout is inevitable on Dec. 1 this year, how long that takes and what the new contract looks like almost no one agrees.
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With the end of the season drawing to a close and Spring Training just around the corner, baseball managers and players will soon begin meeting to lay the groundwork for what will include their demands and strategies. With baseball enjoying a huge rise in popularity over the past few years, it remains to be seen whether the two sides can look past their differences and find common ground to keep their game on the field.
Sports journalist Joon Lee took this opportunity to talk about the same topic that was discussed before the interviews. Are the Dodgers responsible for breaking baseball?
Here’s a video of his report on the unique advantage he believes the Dodgers have in their media money and how that took them from being bankrupt and traded in 2012 to becoming an organization that can have any payout they want today.
When this story first broke in 2012, Bill Shaikin of the Los Angeles Times posted an article (taken from a Bloomberg piece) explaining the deal as he understood it (subscription required). There were many other outlets that reported on the story with the synopsis that the negotiated settlement with the franchise allowed the organization to pay less in the money sharing of its media deal than the other 29 teams. The goal was to allow them more money so they could recover from bankruptcy. It was negotiated before the media deal and the length of any deal they signed was taken.
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According to a recent article published in EssentiallySports by Disita Sikdar, the deal means the team will not have to report more than $84 million in media revenue, a four percent annual increase. In the deal the team eventually signed with Spectrum, the Dodgers’ deal is worth $8.35 billion over a 25-year contract. It works out to $334 million a year.
The MLB Vice President at the time was Manfred. He pointed out that the information is incorrect and the Dodgers will pay the same amount in revenue sharing as all other teams. The direct conflict was discussed at length by Maury Brown in his article for Baseball Prospectus in October of 2012.
Focus on this in the Bloomberg piece: the Dodgers will pay revenue sharing on every penny that comes into their coffers for media rights. They will not, however, pay profit sharing in any equity if they start an RSN with a partner like FOX or TWC. Think of this as a “surge” – another large-market, multi-tiered franchise that can move money from one hand to another. After all, the Yankees and Red Sox have been doing it for years.
The Dodgers formed a partnership with Spectrum and are co-owners of their regional sports network. This makes the situation more complicated than I can understand with my limited partnership and finance. Brown admits the Dodgers may have an unfair advantage. This article was written before the media agreement was terminated.
If any of Lee’s reports are true, it only adds more fuel to the fire that many in baseball are already burning. The system is definitely broken, and the Dodgers have more resources than any other team, and they flaunt it. Can the league and the players find common ground to begin making adjustments that should be addressed?
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Will there be a salary cap and salary floor? Does revenue sharing need to be reformed to reflect the inequality of media rights and revenue from media contracts or the lack thereof?
The future of the Padres depends not only on these problems but also on the sale of the team. It seems reasonable that we may not have a new owner until some of these questions are answered.
The big brother of the north does not seem to care about the fines he has to pay for violating the rules regarding the use of money and their payment. They lose money, draft picks and international signing bonus money because of their salary. The current estimate for 2026 sits at $413-$429 million. No one else even comes close.
The bigger picture is about sports life. Something has to be done.
