The Los Angeles Dodgers have a key advantage over other MLB teams because of a tax exemption included in their TV deal.
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The Dodgers are able to keep an additional $66 million every year because of how their TV deal is structured with MLB. When the organization filed for bankruptcy in 2011, the league agreed to lock in a fair market value for the rights of Dodgers baseball.
Therefore, a significant portion of the $334 million the Dodgers earn annually from the deal is exempt from MLB’s revenue sharing due to the bankruptcy settlement.
“The first big turning point came when the Dodgers partnered with Time Warner Cable to launch SportsNet LA, but because the Dodgers had just gone bankrupt and MLB wanted to help one of their historic franchises get better, there was an exception in the contract,” independent sports journalist Joon Lee reported.
“Under MLB rules, teams are supposed to share a big chunk of their local TV money with the rest of the league. Think of it like a tax system. Big market teams help smaller teams so everyone has a chance to compete. That taxes roughly one-third of the teams’ local TV money, but when the Dodgers signed their TV deal, it completely shattered expectations.
“The deal was roughly $8 billion over the next five years, far more than MLB had projected. If MLB applied its typical formula, the Dodgers would have owed about $95.2 million a year into revenue share. But here’s the twist: Because the Dodgers had just gone bankrupt, MLB agreed in federal court to lock in a fair market value for the rights of Dodgers baseball games on television.”
When Did the Dodgers’ TV Deal With Spectrum Begin?
In 2013, the Dodgers partnered with Time Warner Cable (now known as Spectrum) on a 25-year, $8.35 billion deal. The partnership was the genesis of SportsNet LA, the regional sports network which the Dodgers own.
The Dodgers will be exempt from paying the full 34 percent of MLB’s revenue sharing until 2039, which in turn, has helped the organization build its current baseball dynasty.
Now all that’s left is for the back-to-back World Series champions to three-peat in 2026. Will the Dodgers once again win it all?
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