• by David Goetzl  @dgoetzl, July 12, 2011

Think News Corp. regrets its decision to sell the Los Angeles Dodgers?

Had its Fox group held onto the team it bought in 1998, the company would simply be moving money from one pocket to the other, not thrust in the middle of a nasty divorce proceeding, while facing sudden competition from Time Warner Cable.

Now, the problems have it eager to pay the Dodgers $3 billion. And, if it doesn't get the pleasure of paying the fortune, the outcome could be big trouble for a hugely valuable asset.

News Corp. purchased the storied Dodgers in 1998 for $311 million from the long-time owners, the O'Malley family. Then in 2004, it flipped the team to a Boston real estate magnate for $430 million.

A Fox regional sports network (RSN) carried the team's games - still does - and the company figured it would be smarter to pay the Dodgers a fee for TV rights, rather than keep operating the team at a loss, where it was reportedly losing $40 million a year.

Now, consider how short-sighted the decision appears. Fox has a reported $3 billion, 17-year deal on the table that would keep the Dodgers on its Prime Ticket network in SoCal starting in 2014. That would cost it an average of $176 million a year.

Even assuming the Dodgers lose $100 million a year -- a very high number -- that's still $76 million saved a year.

Maybe more importantly, Fox wouldn't have to worry about keeping the Dodgers' local broadcast rights or getting into a bidding war to hold onto them.

But now, Time Warner Cable (TWC) is entering the L.A. market with its own RSN next year and has already pried the rights for the Los Angeles Lakers away from Fox. With deep pockets, TWC could make a play for the Dodgers' games, which would give its RSN rights to SoCal's two most-popular franchises and  severely hurt Fox's sports business in the region. (TWC is launching a companion RSN in Spanish.)

In 2003, the Los Angeles Times reported Fox purchased the Dodgers in order to maintain rights to the team's games and thwart ESPN from perhaps launching an RSN. That may have worked, but now TWC has arrived.

This season, Fox also is suffering from its decision to sell the Dodgers because owner Frank McCourt has the team in dire straits. An acrimonious divorce proceeding with his wife and financial issues have the Dodgers in bankruptcy, and fans throughout SoCal have turned on McCourt and abandoned the team.

With the distatse for McCourt and the team at 41-51, Fox has paid the price with ratings on Prime Ticket down 27% this year. And even with L.A. the country's second-largest market, 27 teams have higher local ratings, according to Sports Business Journal. (In fairness, when Fox ran the team, it didn't do particularly well on the field either and fans were frustrated.)

With the specter of a TWC challenge, Fox has waded into the McCourt divorce matter by offering the $3 billion over 17 years and to help McCourt out immediately reportedly offering to payabout 10% of it upfront. Yet, MLB Commissioner Bud Selig vetoed the deal.

More food for thought on Fox holding onto the team: it sold it for $430 million, Forbes now pegs its worth at $800 million.

One potential result of the McCourt imbroglio is he might be forced to sell the team. Would Fox get back in the game?