Dodgers TV deal may be worth $8.5 billion

[RS12]

08:15 AM ET 08.27 | If Los Angeles' shopping spree seemed extravagant by taking on Boston's salary shedding, consider the money that will soon flow to the Dodgers. [When] Dodgers chairman Mark Walter said [last week] that the team could still take on significant money, his inspiration not only stemmed from a combination of his deep pockets, Magic Johnson's infectious passion for success, and Stan Kasten's savvy baseball acumen. Mr. Walter's penchant for spending is also being fueled by the comfort of knowing that the Dodgers will soon see an explosive increase in their local/regional TV revenues when their current deal expires in 2013 that could reach as high as $8.5 billion over the next 20 years.

Forbes

 

[RS12]

Welp, guess overpaying by 500 mill in the first place doesnt look like such a big deal now. As the old saying goes, takes money to make money.

 

[YosemiteSam]

Of course if they keep on this spending spree they will need all that money to pay the luxury taxes that were recently heightened.

When the luxury tax goes up so much that the Yankees stop spending so they can get beneath it, you know it's high.

The luxury taxes changes in 2013 and is as follows:

• First-time offenders: 17.5 percent
• Second-time offenders: 30 percent
• Third-time offenders: 40 percent
• Four-time or more offenders: 50 percent

As a side note, once you go under the cap for a season, the offenders *times* also gets reset.

To get an idea. In 2010 the Yankees payroll was $206M. ($36M over the cap) The luxury tax was set at $170M. The Yankees are over the luxury tax every year. (they have contributed I believe 85-90% of all luxury tax payments in baseball) If the 2013 luxury tax was in effect then, they would be about $18.5M in taxes alone. That is on top of the $206M salary. They would have officially paid $224.5M in salary in 2010 or $54.5M over the luxury tax limit. The tax on the overage alone would have been like paying another superstar player.

The Yankees are still over the cap ($198M in salary), so I expect the Yankees to again cut salary next season. They have to get under the cap before the 2013 season or risk paying 50% in taxes. If they can get under it for just 2013, they will reset back to the 17.5% rate.