Executives from Fox Sports have had preliminary discussions with suitors for the Los Angeles Clippers regarding the team's television contract, according to a person familiar with the matter.
Fox-owned Prime Ticket is the current rights holder for Clippers games. Whoever ends up acquiring the team from embattled owner Donald Sterling will likely want to renegotiate the television deal, which still has two seasons to run.
On Thursday, The Times reported that former Microsoft chief executive Steve Ballmer had bid $2 billion for the NBA franchise. If he ends up with the team at that price, it would be record figure for a basketball team and the second-highest price tag ever for a North American sports team behind Guggenheim's $2.1-billion purchase of the Dodgers.
Prime Ticket pays about $25 million per season for the Clippers, people with knowledge of the deal said. That pales in comparison to what the Lakers get from Time Warner Cable for their rights, which is $3 billion over 20 years, or an average of $150 million a season.
The Lakers are far more popular than the Clippers. Last season, the Lakers averaged a 2.15 household rating or 122,000 households per game despite a horrible year. The Clippers had a very strong season and only averaged a 1.25 rating or 71,000 households per game.
The Boston Celtics recently signed a new TV deal with Comcast for an average of $65 million a year, which may be a figure closer to what the Clippers could hope to achieve.
What the new owners of the Clippers will want to avoid is the mess that the Dodgers are in with their new TV deal. The team launched its own channel -- SportsNet LA -- earlier this year and sold distribution rights to the service to Time Warner Cable in a contract worth $8.35 billion over 25 years, according to a valuation by the Dodgers and Major League Baseball.
But Time Warner Cable has yet to close deals with other major distributors in the area for the channel, including with DirecTV, Cox and Charter. That means the majority of the Los Angeles market is without access to the games. Other distributors have said the more than $4.00 per-subscriber, per-month price Time Warner Cable wants for the channel is too high.
Keeping the Clippers is important to Prime Ticket. It already lost the Dodgers, and its sister service Fox Sports West lost the Lakers to Time Warner Cable. If the Clippers went away too, distributors might pressure Fox to merge Prime Ticket with Fox Sports West.
At the same time, Fox has shown it will walk away if the price tag gets too high, as it did with the Dodgers last year.
Earlier this week, James Murdoch, the co-chief operating officer of 21st Century Fox, told analysts that when it comes to sports rights, "this is not something where you just write any size check."