TV Money Loopholes

There's an interesting article on the NY Times regarding what would happen to the national TV broadcast fees. Baseball would owe Fox Sports for not broadcasting the playoff games and it would also be assessed a penalty. The total damages would be about $520 million but doesn't have to be paid at once.

First the playoff games' money, about $300 million, would be paid thusly:

[B]aseball.. can keep all of Fox's money (which is paid at midseason and after the season) even if there is a strike, for up to a year, and accrue interest in a money-market fund. But then a check for the full amount must be sent to Fox - whose six-year baseball deal is worth $2.5 billion - to compensate for the lost games.

Fox would create a catalog of losses associated with the impact of not broadcasting the playoffs and World Series: fixed production costs; talent and studio costs that cannot be recouped if games are not played; the value of advertising that is not booked in 2003 because sponsors are skittish about buying time on a poststrike league championship or World Series; and the effect on Fox advertising if the 2003 postseason garners significantly lower ratings and harms its prime-time shows.

That pool of objective and subjective costs would then be presented to an arbitrator, who would have the leeway to award Fox as much as $220 million in damages. The full amount would most likely be spread out over the remaining three years of Fox's contract with baseball.