The Los Angeles Dodgers’ record $7 billion-plus media-rights deal with Time Warner Cable has hit a major-league snag, The Post has learned.
Guggenheim Partners and other owners of the team could lose as much as $1 billion of Time Warner Cable’s cash to Major League Baseball’s revenue-sharing plan because of the way the deal is structured, sources said.
Under the unusual 25-year deal, Time Warner Cable is guaranteeing SportsNet LA, the team’s new regional sports network, $4 a month from every eligible Los Angeles-area household — whether its pay-TV provider carries the new RSN or not, according to a source.
Because the cash is guaranteed regardless of how successful (or not) SportsNet LA becomes, MLB may treat it more like cash from a stadium naming-rights deal and force the Dodgers to share it with the other 29 MLB clubs, sources said.
In fact, the deal, hammered out in late January, has not yet been submitted to MLB for approval, sources said.
MLB teams must share revenue that flows from media-rights deals signed with RSNs. Carriage fees paid by local cable companies to the RSN — which are negotiated every three years or so — are not subject to revenue sharing.
The Dodgers deal is different because TWC is both the Los Angeles-area cable company and a minority owner of SportsNet LA. The fees it is paying SportsNet LA are not quite carriage fees because they are guaranteed for every eligible household — even if a family subscribes to DirecTV or another pay-TV service.
Guggenheim Partners, one of the new Dodgers owners, hasn’t submitted the contract to MLB’s New York office because it fears baseball will rule that part of the TWC’s cash must be shared.
Revenue sharing typically includes 34 percent of local revenue, including television rights paid to teams, concessions and ticket sales.
TWC is paying $85 million a year over 25 years to the Dodgers for rights, which is subject to revenue sharing, but much of the remaining $5 billion it is spending will go to forming the RSN. Part of that $5 billion will go to fund the minimum carriage fees.
TWC may not be interested in a media-rights deal if it cannot guarantee carriage fees, because it wants the right to keep the RSN away from competing cable services — forcing customers to choose Time Warner Cable, sources said.
Guggenheim was counting on its share of that $5 billion to help pay down debt associated with its record $2.15 billion purchase last year of the bankrupt team.
Guggenheim is funding the Dodgers purchase with $1.2 billion of insurance assets. Plans are to move the Dodgers to a separate holding company that would borrow money against the guaranteed RSN revenue, the baseball source said.
It is not known if Guggenheim is working to restructure the deal or if it will take its chances and file it soon with MLB.
The expected RSN revenue stream also may have given the new Dodgers owners the confidence to spend freely on players, giving the team what is now the highest payroll in baseball.
“This is highway robbery. Nothing from the media side is supposed to go into revenue sharing,” a Dodgers source said.
Neither Guggenheim nor TWC returned calls for comment.