Media & Broadcasting Rights

Think of a sports broadcast as a form of property.  Usually a league or a team owns the rights of the game and how it is disseminated to the public.  That property right to distribute the game is central because the dissemination of sporting events through any one of various media outlets constitutes one of the most important source of revenue for professional and amateur organizations. 

Sports programming involves more than just broadcasting the game. It involves news programs, features, and sports talk shows. Fees earned from media rights bring in billions of dollars per year. 

On Wednesday, November 16, the Los Angeles Dodgers, currently under a shield of bankruptcy, sued Fox Sports in bankruptcy court Wednesday for allegedly interfering with the team's bid to sell its valuable broadcast rights.  The team and media rights for the 2014 season and beyond are going up for sale under a settlement the team recently reached with Major League Baseball (“MLB”).  However, according to Fox Sports, its Prime Ticket regional sports network holds the exclusive right through November 2012 to renegotiate a new local-media deal with the baseball team.

In order to settle disputes over how the bankruptcy would be resolved, Frank McCourt, the owner of the Dodgers’, (currently going through a divorce), agreed to sell the franchise as part of a deal with MLB, but before the settlement was reached, Fox Sports, a unit of News Corp, which also owns the Wall Street Journal, sued the Dodgers in bankruptcy to block the proposed sale of its media rights.

"DIVORCE, INTRIGUE &, OH YEAH, BASEBALL"

“What’s the big deal?” Well, according to a 2003 survey by Broadcasting & Cable magazine, MLB teams received $692 million from local TV and radio broadcasts.  Approximately $493 million was derived from rights fees from regional cable networks, TV stations, and radio stations, and approximately $198.3 million was received from the sale of advertising time. (Conrad, M. 2008)

It is alleged that McCourt is attempting to sell the Dodgers' future broadcast rights in order to payoff creditors.  Fox Sports stands to lose a large chunk of revenue if the Dodgers’ owner is allowed to avoid honoring his current contractual obligations.

"DODGERS UNABLE TO DODGE BANKRUPTCY"

On a side note, among other lucrative deals, FOX Sports Media Group has reached a multi-year, multi-media rights agreement with Zuffa, LLC, owner of the Ultimate Fighting Championship (UFC) brand, and also signed a new multi-year agreement with Conference USA for national television rights to a variety of marquee Conference USA events, including football, basketball, and Olympic sports.
 

SOURCES 

 

VIDEOS

DODGERS SUE FOX SPORTS

Conrad, Mark (2008). The Business of Sports: A Primer for Journalists. Routledge.

PLAYERS UNION ~ "TO BE OR NOT TO BE?"

Although impasse issues have previously occurred in labor disputes in both Major League Baseball and the National Football League, the biggest recent controversy is the National Basketball Association (“NBA”) and National Basketball Players Association (“NBPA” or “Union”) role in the NBA lockout.   The role of the Union is to represent the players in negotiation with the owners.

The current 2011 NBA lockout is the fourth lockout in the history of the NBA, which began at 12:01 am on July 1, 2011.  The lockout will remain in effect until the Union reaches a deal with the NBA owners.  The union generally negotiates on the player’s behalf for improvement in wages, however, in more recent negotiations involving major sports leagues, many unions have been seeking to maintain the current situation, also known as the status quo.

It is important to note that this is not a strike.  Although the effect is the same, the strategic difference between a strike and a lockout is the leverage assumed by each party. When it is timely implemented, a strike, or threat of a strike, is initiated by the union and becomes the chief weapon for the union.  It can be very effective if implemented prior to playoff or championship games, which is a great source of team revenue.

A lockout, or threat of a lockout, is initiated by the management and is leverage for the management.  It serves as the leagues’ and owners’ strategy. The optimal time to implement a lockout is prior to the start of the season, and before the players receive the majority of their salaries.  According to Mark Conrad, “The owners can save money, put pressure on the union for settlement, and not pay out any salaries as the weeks go by.” This is a tactic intended to force the players hands to salvage the season and their paychecks.

As of this date, David Stern, NBA Commissioner, and the owners have delivered an offer that most players feel is unacceptable.  According to CBS Sports’ Ken Berger, the Union could acquire half of the leagues needed signatures from the Players and deliver a petition for a vote to decertify the Union as early as Monday, November 14. “The union needs signatures from a third of its membership to order a vote, which would then be decided on a majority ballot. Delivering a petition with half of the union's Hancock could send chills through the NBA and signify the end of the 2011-12 season.” (Ziller, 2011)

What does it mean to decertify?  Charlie Zegers with about.com explained,

“"Decertification" of the NBAPA would mean the union would no longer have the authority to negotiate on behalf of the players -- essentially making every NBA player an independent contractor. Such a move would give the players some flexibility; they could challenge the salary cap as an anti-competitive measure under anti-trust law, for example. But they'd also be giving up any collectively-bargained benefits (pensions, minimum salaries, etc.) It's an option for the players, but it's probably a last resort.”

For more information about the implications of an NBPA decertification, watch this video!

SOURCES:   

Washington Post.com

SBNation.com

NBA.com

Basketball.about.com

ESPN.go.com