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Thomas Boswell

Angelos May Have Won, But Nationals Can't Lose

By Thomas Boswell
Friday, April 1, 2005; Page D01

Follow the money. It takes a while. But, in the end, you find out who won and by how much.

Peter Angelos certainly won. In terms of bragging rights, he ran the table. He can crow all he wants and he'll be correct. There's going to be a new regional sports network that will carry the games of his Orioles as well as the Washington Nationals. And Angelos will, at the beginning, get to keep 90 percent of the profits, if there are any. Over the next 20 years, the Nats' share of this TV network -- its equity in the business -- will gradually increase to a maximum of 33 percent.

But even in 2025, the Orioles can still chirp that they get twice as much of that network's profit as the Nats.

That sounds like a stunning victory at the bargaining table. This coup must put the Orioles in a commanding competitive position over the Nationals for all eternity. Right?

Actually, wrong.

With his ferocious negotiating, Angelos has certainly done his franchise and his city a service. But, before Washingtonians get too worked up, it's useful to see how much money per season Angelos has actually wrangled away from the Nationals. Probably about $2 million dollars extra per season will go from the Nationals' pockets to the Orioles'. And then only if the network is a hit.

That kind of money will buy you a utility infielder. But it's not the Brinks Robbery.

The Red Sox have spent 20 years building the New England Sports Network. Their equity in the network -- if it was sold -- is probably worth about $200 million. If you work backwards from that number, it implies that NESN makes about $12 to $15 million a year in free cash flow. That's a guesstimate, but it's certainly in the right ballpark. Only the Yanks have truly astronomical TV revenue streams. Everybody else plays in a smaller park.

If the new Mid-Atlantic Sports Network is someday a truly big success -- like NESN -- the Orioles would get two-thirds of the profits instead of, say, a 50-50 split with Washington. So how much is that? Do the arithmetic. The Orioles might get $8 to $10 million of the $12 to $15 million in profit instead of just half of it, which would be $6 to $7.5 million. So, this whole fight may get the Orioles a couple of million dollars extra a year someday.

If the infant network someday fills a zillion hours with popular sports programming in addition to baseball, then, in theory, the Orioles might someday cash in to a greater degree. Angelos hopes. But the Nats profit in that scenario, too.

If the network is a flop, like the one the Twins tried to start last year, Angelos is obligated for all of the losses. The Orioles have greater profit potential. But the Nats can't lose.

The deal was structured this way to encourage high bids for the Nationals from potential owners who can envision, someday, owning as much as a third of a healthy RSN, but taking on no risk when they buy the franchise.

Much can be made of Angelos's ability to browbeat Commissioner Bud Selig into such an embarrassing 90-10 split. Even the eventual two-to-one ratio is a ludicrous imbalance. Come on, Bud, Washington is the big market, Baltimore the small one.

How did Angelos get such leverage? Come on, this is baseball. Use your imagination. What baseball really feared was that, in a complex lawsuit about TV territorial rights, Angelos would use the "discovery" stage of the proceedings to expose the sport's dirty laundry on who knows how many touchy subjects.

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