You would think the prospect of the Orioles getting $75 million or more annually via TV rights fees would make the ballclub happy.
It might also make them better.
But that’s not the case.
It’s not the case because the same guy who owns the Orioles also happens to own the TV network that pays that rights fee to the team. Confused? Conflict-of-interest, you say? Perhaps it is, but that’s what the story involving MASN and the Washington Nationals has become — one giant conflict of interest.
Sadly, it’s the Orioles on-field product that could suffer the most during this time of uncertainty.
THE REALITY OF WHAT’S GOING ON
The short version of the story is this: The Washington Nationals currently receive $29 million a year from MASN for a rights fee. They are allowed to “challenge” that rights fee figure every 5 years. The Nationals believe they should receive somewhere in the neighborhood of $100 million per-year in exchange for MASN televising their home and away games. MASN feels like $35 million is a fair number. Therein lies the conflict, one that has remained unresolved for so long that Major League Baseball had to step in to arbitrate the situation and award a new rights fee figure to the Nationals.
Oh, yeah, the Orioles also receive $29 million annually from MASN.
Peter Angelos owns MASN.
And he also is the majority stockholder of the Orioles.
You get it, now?
MASN receives roughly $14 million a month (yes, a MONTH) from Xfinity (nee Comcast) according to a source familiar with the financial agreement between those two. That $168 million alone would be more than enough for MASN to generate nearly a $70 million profit according to the source. Add in payments from Verizon, DirectTV and other cable carriers in the Mid-Atlantic and the sports network could be pocketing more than $100 million in annual profits.
So what’s the issue at hand?
The Nationals - currently receiving $29 million – think their fair value is more like $100 million a year.
MASN doesn’t want to give it to them. In fact, they’d rather just hand over $35 million annually to the DC franchise.
Wrapping this up and making it into a real barnburner is the added situation involving the Orioles and their rights fee. When Peter Angelos (MASN) negotiated with Peter Angelos (Orioles), Peter made Peter agree to a clause that stipulates the Orioles will always receive the same amount of annual rights money as the Nationals receive from MASN. Pretty tricky, huh?
Now, though, Peter doesn’t want to pay the Nationals $50 million or $75 million or $100 million because…yep…he’d also have to pay the Orioles the same amount.
It’s not quite as intriguing as “50 Shades of Grey” but it’s a helluva story.
MORE MONEY MEANS SPENDING MORE ON PLAYERS
When the TV network originated back in 2006, it was done so almost purely to provide the Orioles with enough additional revenue to compete with big market teams like the Yankees and Red Sox. There’s the still-legendary story that Angelos handed to then-fledgling “Press Box” in which the owner claimed the only way to compete with the beasts of the AL East would be to spend with them for free agents using a RSN (Regional Sports Network) as the catalyst for such spending.
Interestingly enough, it’s the Nationals – not the Orioles – who have become players in the free agent market over the last few years. Whether or not you like Jayson Werth as a player, one thing is for sure: the Nationals weren’t afraid to put money on the table for him a few years ago. They made a legitimate effort for Mark Teixeira in 2009 and reportedly made overtures to Prince Fielder before he signed on in Detroit.
That Washington is in first place right now isn’t really part of this story. That the Nationals aren’t afraid to spend money – lots of it – on baseball players most certainly is, though.
Therein lies another reason that MASN (Angelos) doesn’t want to inflate the rights fee paid out to the Nationals. He knows the Nats will spend it on players. He knows, in stark contrast to what his club has done since MASN hit the scene in 2006, the Nationals will improve their team with his money.
And if Washington spends their (just for for argument sake) $70 million on players and ups their annual payroll to the $125 million or so mark, what will the Orioles do with the $70 million THEY receive from MASN? Will they spend that extra money (roughly $45 million more than they receive right now) on players, too?
(Please see next page)