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O's / Nationals MASN TV Fees (2 of 2)


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#21 BSLChrisStoner

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Posted 30 July 2014 - 09:53 AM

Some previous relevant links:

 

Washington Times: TV Deal partners O's / Nationals (4/1/05)
http://www.washingto...8027r/?page=all

 

Baltimore Sun: MASN dilemma continues to simmer (7/13/12)
http://www.baltimore...0,7131842.story

 

The gulf could hardly be wider in a dispute between the Orioles and Washington Nationals over media rights fees that has dragged on for months.

The issue of how much more money the first-place Nationals deserve in annual rights fees from the Mid-Atlantic Sports Network (MASN) — which televises both teams' games — has been unsettled since winter and remains before a committee of three Major League Baseball owners.

The matter of how MASN divides up its money is critically important to both teams.

The Orioles' majority stake in MASN — the team currently holds 87 percent — was designed to ensure the club's long-term viability after the Nationals arrived in 2005 into what was once exclusively Orioles' territory. The Orioles say MASN profits and fees enable the club to recoup money lost because of the presence of a second team in the Baltimore-Washington region...

 

Washington Post: Washington Nationals, Baltimore Orioles split over MASN cable TV rights fee  (8/14/12)

http://www.washingto...b86a_story.html

 

Extrapolated over the next 20 years, MASN and the Orioles have offered the Nationals a deal in which the rights fees would increase about 7.7 percent each year, according to the person familiar with the contract. In total, the 20-year average for their proposed deal calls for a rights fee average of approximately $71 million a year.

With the increases in their equity stake in MASN, the Nationals would receive an average of about $100 million each year, giving the overall proposal a value of more than $2 billion, according to the person familiar with the proposal.

 

105.7: MASN Negotiations w/ O's & Nats (Audio, 8/18/12)
http://baltimore.cbs...s-with-os-nats/

"James Wagner of the Washington Post joined The Norris & Davis Show to talk about how the MASN deals affect area teams."

 

PressBox: Nationals Seek Larger Share Of MASN's Baseball Money (10/11/12)

http://www.pressboxo...m/story/id/9426

 

Washington Post: Nationals, Orioles split over MASN rights fees continues (10/18/12)
http://www.washingto...fees-continues/

 

Sports Business Daily: Fox Sports goes hard for rights, additional RSNs  (12/312)
http://www.sportsbus...Fox-Sports.aspx

 

Fox’s efforts to land the Mid-Atlantic Sports Network, where Orioles owner Peter Angelos serves as majority owner, are not moving as smoothly. Sources say Fox has spent the past several months in on-again, off-again talks to acquire all or part of MASN, which holds the rights to the Orioles and Nationals. Fox currently is not in that market and this would fit with its strategy to build on its RSN business.

Comcast, which operates Comcast SportsNet Mid-Atlantic, also had preliminary talks, which sources say did not progress far.

Several sources described those negotiations as currently off, saying that Angelos opted not to sell the RSN.

Fox’s involvement in talks with MASN came at MLB’s urging, sources said. MASN still is involved in a rights fee dispute with the Nationals. That dispute hasn’t been resolved, though both parties met at MLB’s New York offices last week. MLB hoped that a deal with Fox would solve the dispute. MASN and Fox have not met for several weeks, and no further talks are scheduled.

 

Baltimore Sun: O's deny possible MASN sale  (12/3/12)

http://www.baltimore...0,7176324.story

 

Washington Post: MLB seeks creative solution to MASN rights fees dispute  (12/13/12)
http://www.washingto...91d6_story.html

 

PressBox: MASN, Nationals Still Locked In Dispute About Rights Fees  (6/4/13)
http://www.pressboxo...out-Rights-Fees

 

NBC Sports / Hardball TalkMLB kicks money to the Nationals to keep them from suing over the MASN deal (2/5/14)

 

BSL: Ownership Economics (2/6/14)
http://baltimorespor...ship-economics/


Camden Depot: Comparing The Nationals/Orioles Media Deal To Other Teams' Media Deals (3/4/14)
http://camdendepot.b...media-deal.html

Camden Depot: Explaining the Nationals / MASN dispute  (3/11/14)
http://camdendepot.b...sn-dispute.html

 

Camden Depot: Possible Solutions to MASN conflict and a Summary  (3/18/14)
http://camdendepot.b...nflict-and.html

 

Washington Post: Selig says MASN negotiations could be resolved by January 2015  (7/15/14)

http://www.washingto...y-january-2015/


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#22 Domenic

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Posted 30 July 2014 - 09:55 AM

Wow... so this thing really has legs now. I can't imagine Selig or the next comish pulling an Adam Silver over this though. 100% bluff, IMO.

I would tend to agree. But when all of the stuff with Sterling went down I thought that it was setting a bad precedent. Granted owners (in baseball at that) have been removed before, but if we're starting to be in the business of removing owners due to conduct or stuff along those lines I think it sets a bad precedent. My personal opinion is that this must not be possible in the NFL because I think if it were they would have done it a long time ago with Al Davis. But let's say it is possible; what would stop Goodell from removing Jimmy Irsay as the owner of the Colts for drunk driving? 


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#23 Domenic

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Posted 30 July 2014 - 10:00 AM

Most of the media attention outside of Baltimore seems to be slanted towards the Nats. And in fact they probably were getting screwed under the agreement. But my point has long been that they agreed to this. You could argue that MASN agreed to the fact that the arbitrators' ruling is binding as well, and that's certainly true. However as I've said before you'd also be hard pressed to say that those other owners didn't stand to benefit from the Orioles having higher TV rights. So there's a perception of collusion there. The courts will ultimately decide this now, however MASN might well have a solid case. The Nationals seem like they argued the rules should be changed mid-stream, and somehow they've succeeded. IF Angelos loses this in the long run, I would say that he's probably the victim of A) being universally disliked by the Lerners and his fellow owners, and B ) outsmarting himself with his own legalese.


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#24 Matt_P

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Posted 30 July 2014 - 10:03 AM

MASN agreed that the arbitrators ruling is binding UNLESS there's corruption, fraud or miscalculation of figures. They put that in the contract for a reason.



#25 Domenic

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Posted 30 July 2014 - 10:05 AM

Exactly, and it seems that all three could well apply here. 


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#26 Nigel Tufnel

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Posted 30 July 2014 - 10:31 AM

Exactly, and it seems that all three could well apply here. 

 

Well, on the one hand, it seems pretty clear that the Nats could get higher rights fees on the open market and the contract calls for a "fair" price, so it would be pretty easy for MLB to rule in the Nats' favor without corruption, fraud, or miscalculation coming into play; the Nats are pretty clearly getting shortchanged.

 

On the other hand, the contract that Matt_P posted set out three very specific criteria for determining the "fair" price, and it all seemed to boil down to MLB using the formula it had used in the past.  In that case, the Nats current fees are clearly "fair" under the terms of the contract, even if they're low in the real world.

 

But, right, I've already forgotten those numbers I posted last time, but the majority of the increased rights fees would go to MLB, not to the Nats.  So you could certainly argue corruption because of that, or miscalculation since they're not using the formula.



#27 Matt_P

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Posted 30 July 2014 - 10:44 AM

Well, on the one hand, it seems pretty clear that the Nats could get higher rights fees on the open market and the contract calls for a "fair" price, so it would be pretty easy for MLB to rule in the Nats' favor without corruption, fraud, or miscalculation coming into play; the Nats are pretty clearly getting shortchanged.

 

On the other hand, the contract that Matt_P posted set out three very specific criteria for determining the "fair" price, and it all seemed to boil down to MLB using the formula it had used in the past.  In that case, the Nats current fees are clearly "fair" under the terms of the contract, even if they're low in the real world.

 

I find it highly unlikely they could get $2.3 billion from 2012 to 2031. That's just a ridiculous amount. That's $900 million more then the Phillies and the Phillies are locked into their rate. The Nats can ask for an increase in 2016 so they could beat them by a billion. The Phillies are getting other perks but so are the Nationals.

 

They may be able to get more then they were currently getting. They probably could get a higher payment this year with a lower interest rate. But $2.25 billion from 2014 to 2031? Ridiculous.

 

The Phillies did get screwed because they're located in a monopoly but the Nats aren't in much better position.



#28 JeffLong

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Posted 30 July 2014 - 11:08 AM

The fact of the matter is that there's nobody to blame here except for Bud Selig and MLB.

 

Bud's shoot first, ask ?s later attitude caused this.

 

Now both teams are acting in their own best interest and we're supposed to villify one or the other? I don't think so.

 

I know it's not that simple for people who don't know the background (i.e., anyone outside DELMARVA) but that's the reality of it.


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#29 Nigel Tufnel

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Posted 30 July 2014 - 11:44 AM

Here was my math.  For each additional $10 million MASN pays to the Nats in rights fees:

 

Nats get $10 million, less 34% to MLB for revenue sharing, so a net of $6.6 million

 

O's also get $6.6 million

 

MLB gets $3.4 million each from O's and Nats, so $6.8 million in total

 

That $6.8 million is distributed to each of the 30 MLB teams evenly, so each team gets about $200,000

 

In 2014, the Nats 15% share of MASN would need to pay $3 million of the additional rights fees.

 

In 2014, the O's 85% share of MASN would need to pay $17 million of the additional rights fees.

 

So if you lump each team and its share of MASN together:

 

Nats get $6.6M - $3.0M + $0.2M = $3.8M

 

O's get $6.6M - $17.0M + $0.2M = -$10.2M

 

The other 28 MLB teams get $6.4M to share

 

There may be some revenue sharing nuances that I'm ignoring, but a $10 million increase in rights fees basically ends up with the O's giving 1/3 of it to the Nats and 2/3 to the other 28 MLB teams.



#30 aurelius

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Posted 01 August 2014 - 10:35 AM

While I am by no means privy to all the legalese involved, this sounds like someone who has signed up for a bad investment (like a time-share for example), something that locks you in forever, and you suddenly you realize you're getting screwed, so you want to change it. Again, I'm no legal authority, but it would seem to me that when all parties agreed to this deal, and signed the papers... that's it. There's no changing it, which is essentially what one side wants. Am I wrong?

 

Hey, it's not a great deal for the Nats, but the way I see it, that's because of the equity arrangemnt, where the Orioles will always own much more of the RSN. But the Nats agreed to that.



#31 Domenic

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Posted 01 August 2014 - 10:49 AM

While I am by no means privy to all the legalese involved, this sounds like someone who has signed up for a bad investment (like a time-share for example), something that locks you in forever, and you suddenly you realize you're getting screwed, so you want to change it. Again, I'm no legal authority, but it would seem to me that when all parties agreed to this deal, and signed the papers... that's it. There's no changing it, which is essentially what one side wants. Am I wrong?

 

Hey, it's not a great deal for the Nats, but the way I see it, that's because of the equity arrangemnt, where the Orioles will always own much more of the RSN. But the Nats agreed to that.

Pretty much hit the nail right on the head. And the worst part is that the "independent board of arbitrators" agreed with their sob story. Granted they certainly had something to gain by the Nationals winning this, but that's why they couldn't be considered "independent." 


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#32 BSLChrisStoner

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Posted 07 August 2014 - 02:17 PM

Camden Chat: MASN Fee Dispute: Orioles get initial court victory, injunction on MLB arbitration panel's ruling

http://www.camdencha...los-selig-court



#33 Matt_P

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Posted 07 August 2014 - 03:00 PM

According to Eric Fisher, Bortz has come out on the side of the Orioles. Said it completely corrupts industry norms. That's interesting.

 

Good old Hal Singer is back. Interesting.



#34 BSLChrisStoner

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Posted 07 August 2014 - 03:03 PM

NBC Sports / Hardball Talk: Read the documents filed in the Orioles-Nationals-MASN lawsuit



#35 Matt_P

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Posted 07 August 2014 - 03:34 PM

NBC Sports / Hardball Talk: Read the documents filed in the Orioles-Nationals-MASN lawsuit

 

$2.4 Billion over 20 years would put the Os equity on average at about 4.8%. My numbers had the Os equity at 24% if MASNs offer was accepted.



#36 Matt_P

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Posted 07 August 2014 - 04:19 PM

http://www.hollywood...ar-a-800-723984

 

The $118 million a year from 2012 to 2016 is clearly wrong but aside from that.



#37 dude

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Posted 07 August 2014 - 07:53 PM

$2.4 Billion over 20 years would put the Os equity on average at about 4.8%. My numbers had the Os equity at 24% if MASNs offer was accepted.

 

....but that's the Orioles numbers assessment.  If they are suggesting they are 'only' at a 5% profit......that will be a hyper-conservative estimate.

 

Crazy....but could it be the justification for limiting their own success to this point?



#38 Matt_P

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Posted 07 August 2014 - 08:26 PM

....but that's the Orioles numbers.  If they are suggesting they are 'only' at a 5% profit......that will be a hyper-conservative estimate.

 

Crazy....but could it be the justification for limiting their own success to this point?

 

Actually, $2.4 billion over 20 years put them at 4.8% profit only if you paste the numbers into the wrong cells. Closer to 8%. Whoops.

 

They claimed in court that they'd have under a 5% profit if the MLB deal was sustained. They said they'd have a 20%+ profit if MASNs offer was accepted.

 

Edit: I'm wrong about the 5% part also. It's a 5% profit margin from baseball programming. Tough day for me. Guess it's to be expected when you try and read 200 pages in two hours.

 

Edit 2: I'm not sure it's legal to link to their website even though I can quote from it because I'm not doing it for money. Not sure why that would be the case but...



#39 dude

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Posted 07 August 2014 - 11:47 PM

They claimed in court that they'd have under a 5% profit if the MLB deal was sustained. They said they'd have a 20%+ profit if MASNs offer was accepted.

 

I was referring to the Orioles assessment of the Nationals numbers.  

 

Maybe I should have used 'assessment' instead of 'numbers' above. (corrected)



#40 Matt_P

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Posted 08 August 2014 - 07:26 AM

I was referring to the Orioles assessment of the Nationals numbers.  

 

Maybe I should have used 'assessment' instead of 'numbers' above. (corrected)

 

No. That's my assessment of the Orioles situation based on court and newspaper information.






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