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Friday, August 23, 2019

Judge upholds arbitration ruling that Orioles owed Nationals $296.8 million in MASN TV rights dispute

The Orioles lost the latest round in the long-running MASN television rights dispute Thursday when a New York judge upheld a second arbitration ruling ordering the network to pay the Washington Nationals $296.8 million in additional rights fees for the 2012 to 2016 seasons.

The Associated Press reported that judge Joel M. Cohen refused an Orioles request to reject the award based on a similar conflict-of-interest basis that led to the original award being overturned.

The new arbitration award is almost identical to the one that was thrown out and sent back to a new Major League Baseball arbitration panel, but the gross number is believed to include the reported $197.5 million the network already has paid the Nats for the five seasons covered. That would leave about $100 million still owed to the Nats if the award survives another appeal, and the amount the Nats actually would receive likely would be reduced once MASN restates its profits from that period to reflect the higher rights fee.

The ruling did not come as a surprise. The Baltimore Sun reported in May that the arbitration had made its decision in favor of the Nationals, but the ruling had been sealed until Thursday. In that article, The Sun, citing people familiar with the case, reported that the Nats would net from $60 million to $70 million when all adjustments were made.

I’ll leave this for the lawyers and experts on broadcasting here to argue for the most part, but I do wonder what long-term consequences will come from this ruling.

QLE Posted: August 23, 2019 at 02:57 AM | 9 comment(s) Login to Bookmark
  Tags: masn, nationals, orioles

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   1. Dr. Vaux Posted: August 23, 2019 at 10:16 AM (#5873712)
In that article, The Sun, citing people familiar with the case, reported that the Nats would net from $60 million to $70 million when all adjustments were made.


At that figure, this seems less catastrophic than the headline makes it sound. MASN can probably survive that.
   2. Bote Man Posted: August 23, 2019 at 10:53 AM (#5873736)
There's more happening under the hood in this MASN deal. From a 2014 Hollywood Reporter article:

The broadcaster's memo also revealed something else not commonly known about the arrangement worked out inside the sanctum of professional baseball. If the Nationals got a hefty increase in the amount of TV fees, MASN would be contractually required to pay "the same rights fees" to the Orioles. And because of MLB's revenue sharing agreement, the Orioles would then have to pay up to 34 percent of that amount to the league.

In other words, giving the Nationals more money not only represents less profit to the Orioles, but as the Orioles view it, a "tax," which explains why Angelos was willing to defy Selig's order and litigate the issue. MASN also believes it can't afford this outcome. There are less-than-subtle hints that the dispute could blow up the broadcaster's business, leaving Orioles and Nationals telecasts in some gray zone.


So it's not just about dividing a single pot of gold. It's how those different revenue streams are treated that is of paramount concern to Angelos (assuming he's even still alive). This aint over by a long shot.
   3. The Yankee Clapper Posted: August 23, 2019 at 02:25 PM (#5873793)
MASN would be contractually required to pay "the same rights fees" to the Orioles. And because of MLB's revenue sharing agreement, the Orioles would then have to pay up to 34 percent of that amount to the league.
The broadcast rights for the Orioles games aren’t likely to be as valuable as those for the Nationals, given the comparative wealth of the two areas, and the relative status of the teams at the moment, so the Orioles are the one’s getting the break here. If paying fair market value based on the agreed upon formula, along with the Orioles mark-up, bankrupts MASN, that’s on the Orioles. Any more nonsense on the 2017-2021 rights payments should be sufficient for the Nationals to bring a breach of contract claim dissolving MASN, IMHO.
   4. donlock Posted: August 23, 2019 at 07:44 PM (#5873920)
If, as noted, the final payment to the Nationals is $60 to $70 million, that would only be the equal of about three more years of Chris Davis's contract. Not a huge price for the ownership nor a huge gain for Washington.

THe history of this dispute is long and complicated. A few facts:

Baltimore drew 3 million fans in the years after Camden Yards was built but neither team has come close since the move.

The Nats have outdrawn the O's 11 out of 14 years since they moved into the Baltimore market.

The media market is also much greater in the DC area over Baltimore's ad revenue.

No city, in recent years, has seemed anywhere near as potentially suited for a baseball franchise as DC. Compare Portland, Nashville,or Charlotte as new MPB cities or for franchise shifts.


The concept that the team that is less successful financially owes money to the more successful team from their shared revenue is interesting. Hard to imagine a third team moving into LA or NY and ending up getting money from the existing teams for the privilege. At the time it seemed that Peter Angelos was shrewdly driving a hard bargain so he could continue to survive. MLB had to find a market for the Expos and DC was potentially a terrific location.
   5. Bote Man Posted: August 23, 2019 at 08:05 PM (#5873929)
The concept that the team that is less successful financially owes money to the more successful team from their shared revenue is interesting.

* regional sports network
   6. Jose Is Absurdly Chatty Posted: August 23, 2019 at 09:05 PM (#5873951)
Given the way he’s owned them this year I figured it would be the Yankee second baseman passing this ruling rather than the right fielder.
   7. The Yankee Clapper Posted: August 23, 2019 at 09:16 PM (#5873958)
The Orioles downward attendance is far more related to Angelos’ mismanagement than the presence of the Nationals. He’s gone out of his way to alienate the DC fan base and then complains they aren’t spending as much money on his sorry product. Neither are people in Baltimore.
   8. Pat Rapper's Delight (as quoted on MLB Network) Posted: August 24, 2019 at 09:54 AM (#5874048)
I do wonder what long-term consequences will come from this ruling.

Lots more mesothelioma commercials on late-night cable TV trying to drum up class action participants.
   9. Bote Man Posted: August 31, 2019 at 01:54 AM (#5875849)
This just in:

Eric Fisher @EricFisherSBG
Bit of a MASN case update. MASN/Orioles, as expected, file a memorandum of law with the court seeking to ensure the interest award in court ruling earlier this month in Nats' favor doesn't have meter running until after second MLB arbitration & not before.

MASN also wants court to certify that Nats' payments in ruling should also mean a restatement of the RSN's profits. MASN says Nats have received $41.6 million in profit distributions for 2012-16, plus $197.6M in total rights fees for that period (w/another ~$100M now due to Nats).

These financial claims are not immaterial and could have big swings in the final accounting. But to be clear, we're not talking about a wholesale appeal of the recent court award in favor of the Nats.

And the very, very rough math shows that the profit distributions in question, for example, are less than half of the additional rights fees the Nats now have coming for that 2012-16 time period.

So this is more on-the-margins stuff where MASN is trying to contain the financial hit coming.


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