Per their 20-year TV deal that's still awaiting approval from MLB, the Padres will have an approximately 20-percent stake in the newly created Fox regional sports network, this blog has learned from a major-league source.
An upfront payment to the Padres is still being negotiated, although in place are yearly rights fees that start at $30 million in 2012 -- nearly double last year's total -- and grow to $65 million to $70 million in the final year. The percentage increase in rights fees will not be the same each year.
Because the equity position doesn't establish fixed dividends or how much the Padres would receive for selling their shares, it's largely guesswork as to what the total economic value of the deal will be. At the high end, I've confirmed, the entire deal could pay the Padres $1.5 billion, which jibes with the $75 million average reported by USA Today's Bob Nightengale on Thursday. But that number assumes strong cash flow for Fox that, in the end, would mean cable subscribers in San Diego pay considerably higher rates over the life of the deal than they do now. Put another way, $1.5 billion represents an extreme best-case scenario for the Padres, or close to it.
All the same, the deal negotiated by Jeff Moorad represents a remarkable surge in actual revenue and potential revenue for the Padres, especially in light of their plunging TV ratings. Games on Channel 4 drew a 7.0 rating in 2007, followed by 4.2 in 2008, 3.8 in 2009, 5.5 in 2010 and 3.4 last year.
The deal also represents a selective jump in relative spending power, as the Padres get their infusion of TV money now, at a time when sports content is king in TV Land, while some rivals such as the Diamondbacks must wait a few years to broker a deal. In the end, however, the limitations of San Diego's TV market -- which ranks among MLB's bottom-five no matter how you slice it -- are likely to keep the Padres from moving far up the sport's revenue tree. Another day soon, I'll write more about how San Diego's TV market compares to the other 29 in MLB.
With the Padres planning to air spring training games on Fox by St. Patrick's Day, MLB's approval can't come too soon.