When Major League Baseball chose to relocate the Montreal Expos to Washington, D.C. in 2005, Baltimore Orioles owner Peter Angelos proved to be a significant thorn in their side. He vehemently opposed the move, and made it as difficult for the league as he could. A major part of his sabotage involved the broadcast rights to D.C., which he owned. He refused to permit the move without maintaining significant power over the Nationals’ broadcasts, and as such, the final deal struck for the Nationals was heavily biased in favor of the Orioles. As an exciting, winning team, the Nationals are drawing a great deal of attention, and the team feels its payment from the network should reflect the viewership and revenue it brings. However, Angelos’ hardheadedness and refusal to yield over the original deal continues to make agreement difficult, and no agreement is in sight, even with MLB’s involvement. The league has convened a committee to help reach a fair fee for the Nationals, but progress has been limited. Thanks to their original deal, the Nationals and Orioles are stuck fighting a brutal battle over their TV revenue rights, and with neither side willing to budge, it seems unlikely that a solution will be found soon without significant outside influence.
When creating a deal for the Nationals’ broadcast rights in 2005, the MLB created an untenable situation that would have lead to a dispute like the present one no matter what. Angelos was concerned that the addition of another baseball team in what had been his team’s broadcast territory would hurt the Orioles’ revenue. As such, MLB placated him by creating a broadcast deal that heavily favored the Orioles. The Nationals were given 10% ownership of the new broadcast network, called the Mid-Atlantic Sports Network (MASN). The Nats’ stake in the network will increase by 1% over each of the next 23 years, eventually topping out at 33%. The Nationals and Orioles each receive the same rights fees from the network, but the Nationals feel that these fees do not accurately reflect the money the team deserves. Although opponents of change may point to the teams’ equal payments and call the deal fair, MASN charges cable providers a lower than average fee to carry it, which diminishes the revenue it makes. This situation was bound for conflict from the beginning, mainly because it gives one team control over the broadcasting rights of another. In addition, the two teams are in starkly different TV markets. Washington, D.C. is the eighth biggest market, while Baltimore is significantly lower at 27th. MLB, by involving itself in these negotiations, recognizes that the Nationals are not being treated fairly by MASN. The league could have seen this just as easily in 2005, but chose to placate Angelos and kick the can down the road, which has led to the current ugly situation.
The rights fees the Nationals currently receive are not representative of what a team of their profile in a market of their size deserves, and the team is right to have a grievance with MASN. The current deal paid the Nationals $29 million in 2011, $34 million in 2012, and proposes to pay them $37 million in 2013. These figures do not seem extremely paltry, especially noting that the average local TV rights fee to each team was $32.8 million in 2011, but rights values are skyrocketing fast. The Los Angeles Dodgers recently signed a record-breaking, 25-year deal that will pay them at least $84 million per year, plus a huge signing bonus. The Texas Rangers and Houston Astros both signed deals that will give them $80 million a year. If the Nationals were allowed to negotiate their own deal on the open market, there is no doubt that they would fetch a similar price. The team also had the greatest percentage jump in TV ratings of any team from 2011 to 2012, and as such would be an even more attractive TV partner. Unfortunately, the Nats are bound to MASN and Angelos unless a significant change comes to the network, which it may.
Two possible outcomes exist for this fracas: either significant change comes to MASN, such as an increased ownership stake in MASN for the Nationals, or a new network is created. MASN’s revenue this year was under $200 million, which means that a payment of $100-$120 million like the Nationals are requesting is unrealistic, given that the Orioles must also be paid. However, the Nationals would likely stick on with the network if they can immediately receive a larger percentage of its ownership and perhaps enact changes, such as increasing fees from cable providers that carry it to up the network’s revenue. The other, less likely outcome would be the formation of an entirely new Nationals network. MLB has reportedly reached out to investors who could potentially buy the rights to broadcast the Nationals and Orioles from MASN. If an entity could be found to do this, potentially such as Fox Sports, they would be able to negotiate a fair-market deal with the Nationals to pay them adequately for their broadcast rights. Perhaps most fortunately, the Nationals would be free of Angelos’ and the Orioles’ influence. Herein lies the problem, however. Whatever group bought these rights would have to pry them away from Angelos, who is certainly not keen on giving them up. Regardless of its feasibility, this solution would be the best for both parties in the long run, and MLB’s interest in it seems to indicate that they agree.
Although this conflict could be seen coming since the Nationals came to D.C., its arrival remains frustrating. Greed rules the day on both sides. The only difference is that the Orioles’ greed denies the Nationals their rightful dues for the broadcast rights they were deprived of, while the Nationals simply desire to reclaim those rights or their equivalent and gargantuan value. The MLB is working hard to settle this without legal action, and will likely do so, but whether it will be with MASN or a whole new network remains to be seen. What is clear is that the league dug itself and the Nats a deep hole in 2005, one that they are only beginning to climb arduously out of.