For a glimpse of how out of control sports bidding wars have become, look no further than your cable television bill.
Time Warner Cable subscribers in Southern California will eventually see their monthly bills increase thanks to an impending $7 billion deal with the Los Angeles Dodgers, believed to be the most lucrative for any sports team in history. DirecTV, the country's most popular satellite service, and Verizon FiOS have started adding a monthly surcharge of $2 to $3 in markets such as New York and Los Angeles to pay for regional sports networks.
Per-subscriber fees for sports networks keep going up. ESPN, the granddaddy of them all, passed the $5-a-month mark last year.
The eye-popping price tags have restarted debate about a topic near and dear to sports fans fairness. Many TV customers never watch the expensive channels at all, yet almost all must pay.
There was a shudder in the industry when John Malone, the business tycoon who helped create the modern-day cable system, said in November that "runaway sports rights" costs amounted to "a high tax on a lot of households that don't have a lot of interest in sports." The only short-term fix, he said, is government intervention.
Price hikes reflect the leverage big sports leagues have as distributors such as Time Warner Cable and programmers like ESPN desperately try to hang onto live programming in the age of the digital video recorder and the Internet. Sports are the television industry's bulwark against rapid technological change. Companies fear cord-cutting by customers who can cobble together a diet of TV on the Internet, but rest a little easier knowing that former customers would be hard-pressed to find favorite teams live online. Pretty much everybody in the business agrees that the overall costs are outrageous. Nobody has an easy solution.
The latest example of this is likely to come Monday when the Dodgers' owners are expected to announce a 20- to 25-year deal to create a regional sports network with Time Warner Cable. The cost per subscriber in Southern California is likely to be between $4 and $5 a month, though Time Warner Cable will swallow some of the amount itself.
In assessing the Dodgers deal, Michael Nathanson, a media analyst at Nomura Securities, wondered this week "if we have reached the top of the sports rights bubble."
But while the price is steep, the alternative might have been worse; the other bidder, Fox Sports, could have charged Time Warner Cable even more per subscriber.
"When a team sees their rights fees, and therefore the costs to consumers, rise more than sixfold, as is rumored, for the exact same games that they got last season, that's an unsustainable model," said Dan York, who oversees DirecTV's decisions to carry and not carry networks. Yet he said DirecTV hopes to continue to carry Dodgers games.
As both he and his counterparts at Time Warner Cable know, the games are popular with a segment of its customer base.
News Corp., knowing the same thing, acquired a 49 percent stake in the Yankees-branded YES Network for nearly $2 billion two months ago. It's planning a national rival to ESPN, tentatively named Fox Sports 1, joining competitors such as Comcast, which has the year-old NBC Sports Network, and CBS, which has the CBS Sports Network. The National Football League has its own network, which clawed its way into all the major distributors' channel lineups despite costing nearly $1 per subscriber per month. An increasing number of college conferences have their own television homes, as well.
For the most part, all of these networks are requirements, not options, for cable customers. Some distributors charge extra for special packages of sports channels for die-hard fans, but the big networks remain in the basic packages that most customers get.
Some games are hugely popular. On the high end of the ratings, NBC's "Sunday Night Football" averaged 21.4 million viewers this season. Dodgers games, like those of many local teams, were lucky to garner 100,000 viewers on any given day.
Analysts and industry critics say that if anything ever causes distributors to try more of an "a la carte" model of pricing, it will be sports programming.
"The cable industry has done everything it can to bundle programming and force consumers to buy things they don't want," said Gene Kimmelman, a former Justice Department antitrust lawyer. "Finally, one piece of their bundle has become so expensive that it may finally force the cable industry to shift gears and split the bundle out of fear of pricing its own customers out of the market."
Along with regional sports networks and the ESPNs of the world, sports costs are baked into the TV industry through deals made by distributors to carry local broadcasters' television signals. If a distributor isn't willing to pay what a CBS-affiliated station wants, for instance, its customers may miss the Super Bowl, to be televised Feb. 3 by CBS.
There is nothing like a sports blackout to provoke the public. Time Warner Cable's blackout of MSG Networks, which carries the Knicks, rankled thousands of customers last year; Gov. Andrew Cuomo eventually put pressure on both companies to make the deal that ended the blackout.
David Goodfriend, chairman of the Sports Fan Coalition, said sports leagues are the root of the problem, because they "get exemptions from federal antitrust laws so they can legally collude and drive up prices for television coverage of the games."
The coalition wants reductions to what it calls "vast public subsidies."
Washington regulators have not shown a special interest in the subject. When Malone, speaking to the Los Angeles Times, brought up government intervention in sports rights costs, he said, "Usually markets have a way of correcting themselves."