MLB teams looking to bolster rosters with television cash at winter meetings

There is unprecedented wealth among the clubs of Major League Baseball.  Gone are the days when only the largest markets could compete for high-priced talent.  The recent bounty of national and regional television deals means that even relatively small markets will be able to become players in free agency and candidates to take on salary through trade.  Let's have a look around the league to see the deals that have been struck recently.

First, we need to establish that Major League Baseball has signed an 8-year agreement worth $12.4 billion with Fox and TBS for the national broadcast rights.  This money is split evenly among all 30 teams. Some quick division tells us that each team will get approximately $50 million per year from this national rights contract.  This will of course be supplemented handsomely by the various local broadcast rights deals that are exclusively negotiated by the clubs and not shared to any great extent with the other clubs.  Let's have a look at some of the local broadcast deals in the news: 

In San Diego, the O'Malley family which formerly owned the LA Dodgers, in partnership with professional golfer Phil Mickelson, purchased the Padres this summer for around $800 million.  The deal was struck with the full knowledge that the club was negotiating a long term broadcast deal with Fox Sports San Diego.  The 20-year deal is worth $1.2 billon USD.  This makes the average annual yield $60 million.  Add this to the national TV revenue and the Padres will have $110 million per year from Television before they sell a single ticket or piece of merchandise.  In 2012, the Padres player payroll was only $55 million.  With this fresh bounty of cash, the Padres are surely set to spend on players and increase their payroll.

The LA Dodgers, would never be confused with a small market.  They are the second largest market in the country and are currently negotiating a deal with Fox Sports that would yield approximately $240 million per year in a deal that may last 25 years.  The Dodgers' recent sale to the Magic Johnson-lead group has already started spending some of this massive impending  TV money by trading with the Boston Redsox for the contracts of Adrian Gonzalez, Carl Crawford and Josh Beckett whose own salaries are valued in excess of $250 million through 2018. 

Recently the Texas Rangers and Los Angeles Angels of Anaheim both recently signed local broadcast deals that yield approximately $150 million per year each.  Last year the Angels splashed out on Albert Pujols and his 10 year $240 million contract while the Rangers splurged on Yu Darvish with a transfer fee and salary commitment totaling $111 million.  It is expected that the Rangers are still expected to be heavily involved with number one free agent Josh Hamilton.  Resigning Hamilton appears to be a priority and Hamilton's history of injury and addiction appears to hinder any deal as opposed to the cost of his contract.

In Toronto, it is difficult to tell exactly what the local television rights are worth.  The team is owned by Rogers Communications, a cable company that also runs its own sports network called Sportsnet.  All 162 games are broadcast on Sportsnet and it is thought that even with the difficult and injury filled year in 2012, the Bluejays ratings were quite good.   Recently the Bluejays made a trade with the Miami Marlins to acquire more than $150 million in salary commitments.  Clearly the benefits from television revenues must be significant because the attendance while better than in 2011, was not enough to expect such an investment in new players.

Clearly Television rights are key to improving an MLB roster.   It is likely that teams that are the beneficiary of rich local television deals will be the most active teams at the winter meetings in Nashville.  There is no doubt that top free agents Josh Hamilton, Zack Grienke and Anibal Sanchez will likely land in these newly rich markets.