Come on, baseball. Get a move on, Commissioner. It’s way past time to get MASN to fork over the hundreds of millions of dollars in future cable TV fees to which the Washington Nationals have every contractual right.
The stakes are huge. The Nats get $29 million this year from MASN, a regional sports network owned by Peter Angelos. The Nationals argue that their “reset” fee for the next five years, based on comparable markets that have signed vast new deals, should be almost $110 million a year, according to three reliable sources with knowledge of the discussions.
MASN didn’t agree, so a three-team MLB committee on revenue-fairness issues has heard arguments from the two sides for months. This internal MLB group is due to give its opinion on a fair market price for the Nats’ regional television rights June 1.
That date, just two weeks away, should be circled in red with stars and exclamation points all around it. What those MLB representatives (from the Rays, Pirates and Mets) endorse — whether it is $60 million or $100 million or likely a number in between — should be the figure that carries the day.
For a Nats franchise with the lowest payroll in the National League East — $81 million compared with an average of $117 million for its four division rivals and less than half that of the Phillies — the MASN reset will be transformational.
This weekend, the spring surprise Baltimore Orioles (26-14) and Nats (23-16) are meeting at Nationals Park and should make for unprecedented Beltway Battle TV viewing for MASN. However, those games are of tiny long-term importance compared with the far larger stakes involved in this backroom baseball brawl.
One man with a motive to delay, or lowball the Nats, is Angelos, who owns MASN and the Orioles. Some in baseball believe, as I do, that MASN delay tactics already have ripped off the Nats. This issue should have been decided by last November, so the Nats could have incorporated accurate info on new revenue in pursuit of free agents such as Prince Fielder.
In 2004, Angelos blustered and bullied MLB and Commissioner Bud Selig into giving MASN 90 percent of the Nats’ TV rights as compensation for mythical “territorial rights” to Washington, a metropolitan area twice the size of Baltimore. Will Angelos push baseball into another craven sellout? In the era of Stephen Strasburg and Bryce Harper, those days should be long past.
“When we have an internal dispute between clubs, I can’t comment on it substantively,” Selig said Wednesday after an owners meeting at which the MASN-Nats arm-wrestling was discussed.
Will the June 1 date for a “fairness” valuation actually precipitate a resolution? “In cases like this, I never hold people to a specific date,” said Selig, famous for flexible, infuriating but generally functional timetables.
Are there creative options for the Nats and MASN? Sure. For example, the Nats’ equity in MASN is scheduled to rise from the original 10 percent to 33 percent over many years — it’s currently at 13 percent — so could that timetable be accelerated? After all, teams have two cable-TV revenue streams: their rights fee and their equity in the entire regional sports network, which broadcasts many teams in several sports.
“I’m not being facetious when I say, ‘All that is to be determined,’” Selig said.
When the Nats receive fair payment from MASN, the odds increase on fielding a contender, which, in turn, helps attendance and promotes growth of the Southeast waterfront district. Remember, urban revitalization was a central justification for this whole endeavor. As a recent Post A1 story outlined, it’s succeeding. MASN has a right to haggle. But Selig and baseball have a much greater responsibility to expedite.
Any visit to Nats Park reveals the progress: safe streets, plenty of parking lots, a six-acre public sculpture garden on the water, removal of industrial eyesores so the park now affords 180-degree panoramas of the Anacostia and Potomac rivers.
But the next five years are crucial as the talented Nats attempt to win more games, grow their fan base and catalyze the growth of neighborhood infrastructure, including restaurants and entertainment. When that happens, an all-star game, a plum lusted after by cities, always follows. Also, postseason play pulls money into any town.
MASN and Angelos claim they’re now partners who love the Nats and wish them well and are just negotiating prudently. May their Pinocchio noses grow until they wrap entirely around their heads.
What’s the right price? Recent average annual rights fees for regional sports networks have ranged from more than $60 million for the Houston Astros and $75 million for the Texas Rangers — in metro areas usually used as rough comparables to the Washington area — to $150 million for the Angels. The Astros and Rangers fees skew high because they are based on multi-decade deals that grow over time — an argument that favors MASN. Conversely, every new RSN deal blows away the previous one. The Astros and Rangers comparables are already, to a degree, obsolete.
Most likely, the Nats’ deal will fall in the $70 million-$90 million range, though all such MLB debates are state secrets. One hidden factor is key: The interests of almost everyone in baseball (except MASN and Angelos) are aligned with the Nats’ getting a rational price. Why? Each new monster regional sports network deal (some contracts now top $1.5 billion) set “comparable” prices for the next team’s negotiation with its TV providers.
If the Nats got shafted, many owners would scream. What’s the point of having a legal monopoly if you don’t band together to drive up prices for your product?
This entire MASN-Nats tussle is about “when” and “how much,” not “if.” A deal has to get finished to set 2013’s MASN price. But you can bet that Angelos and MASN want to string out the Nats as long as possible in hopes of extracting a better deal. The Lerners tend to be phobic about imprecise budget projections, and uncertainty could set them dithering about whether or not to make a July 31 deadline trade that would increase payroll.
The essential unfairness of further delay is bore entirely by the Nats, which is all the more reason for Selig to use his influence, and “best interests” authority, to speed a process that has already damaged the Nats.
This isn’t astrophysics. The Nats are represented by Chris Bevilacqua, who has done more of these big regional sports network deals than anybody in the industry. The template is in place. MLB’s own internal committee is more than qualified to render a sensible valuation in two weeks.
The Lerners may not like that number. MASN and Angelos may not like it. Or they both might hate it. But there’s no reason to believe that MLB’s own committee on revenue fairness would come up with a bizarre valuation in an industry with a vested interest in healthy rights fees for regional sports networks.
Baseball and Selig need to push both parties in this “internal baseball dispute” — which, in fact, has broad public impact in D.C. — to reach a conclusion. Now.
For Thomas Boswell’s previous columns, go to washingtonpost.