WP: Nats MASN deal renegotations will have a huge impact

[HalfSmokes]

No, if they jack up the rights fees to what they're talking about, MASN will likely run losses instead of profits, and the Nats would pick up 40% of those instead of the mere 15% or wherever they are now.

From the article,  taking the Nats to 40% puts them in the $100 million per range- a figure angelos  claimed would bankrupt MASN if they had to match it for the Os -  it seems to me like this is a creative way to avoid having MASN match the fee

[PowerBoater69]

No, if they jack up the rights fees to what they're talking about, MASN will likely run losses instead of profits, and the Nats would pick up 40% of those instead of the mere 15% or wherever they are now.

There is clearly a lot of information we aren't seeing, there's no chance that MASN ends up operating at a loss, effectively flipping the burden on to Angelos to subsidize the Nats. Sounds nice but it's not realistic. Most likely the Nats will get a marginal increase in rights fees and a bigger share of the ownership, which would result in a reasonably fair deal. Angelos would still receive the majority of the profits but he'd also be taking on greater risk if revenues drop.

[tomterp]

There is clearly a lot of information we aren't seeing, there's no chance that MASN ends up operating at a loss, effectively flipping the burden on to Angelos to subsidize the Nats. Sounds nice but it's not realistic. Most likely the Nats will get a marginal increase in rights fees and a bigger share of the ownership, which would result in a reasonably fair deal. Angelos would still receive the majority of the profits but he'd also be taking on greater risk if revenues drop.

One thing is certain, the higher the rights fees paid, the lower the profits incurred by MASN and thus attributable to shareholders, so the % of ownership change is mitigated completely as Net income approaches zero.

[PowerBoater69]

One thing is certain, the higher the rights fees paid, the lower the profits incurred by MASN and thus attributable to shareholders, so the % of ownership change is mitigated completely as Net income approaches zero.

Gross income is variable and the rights fees are fixed, so I'm sure that Angelos will insist on keeping the fees low so that he's guaranteed not to end up operating anywhere close to a loss.

[tomterp]

Gross income is variable and the rights fees are fixed, so I'm sure that Angelos will insist on keeping the fees low so that he's guaranteed not to end up operating anywhere close to a loss.

Well sure.  Rights fees are to be split 50-50, while ownership profits go in accordance with the ownership %, heavily tilted towards the angelO's.

[deeznatz]

This MASN deal has got to be illegal on some fronts.  How can one business entity be permitted to own the business rights of another, completely separate, entity.  It's like Target being allowed to limit Walmart's business practices.  Ultimately at some point, and regardless of what happens in this particular instance, I think this whole deal gets shot down and the Nats either gain the ability to negotiate with MASN and Comcast as a free agent (like it should be), or start their own network.  If the Lerners wanted to I think they could use this to stong arm the league to give them their freedom lest they take this to court and it threatens the anit-trust exemption.

[OldChelsea]

This MASN deal has got to be illegal on some fronts.  How can one business entity be permitted to own the business rights of another, completely separate, entity.  It's like Target being allowed to limit Walmart's business practices.  Ultimately at some point, and regardless of what happens in this particular instance, I think this whole deal gets shot down and the Nats either gain the ability to negotiate with MASN and Comcast as a free agent (like it should be), or start their own network.  If the Lerners wanted to I think they could use this to stong arm the league to give them their freedom lest they take this to court and it threatens the anit-trust exemption.

No chance. When you're a legal eagle like Angelos you can do this...all perfectly legal. He was able to extract this deal from the Lords of Baseball - he had a unilaterally declared exclusive zone which included DC and Virginia, and he was threatening litigation to enforce that self-declared exclusivity. Not only was it a matter of the mortal dread that sports leagues generally have of the law courts, but (1) they knew there is no way Angelos can lose in a Maryland court, and (2) there was the threat to force the owners to open their books (something the Orioles don't have to do since lawyers don't have to open their books to anyone) - so they acceeded.

Doesn't mean it doesn't suck though...in an earlier era we used to call this 'blackmail'.

[blue911]

This MASN deal has got to be illegal on some fronts.  How can one business entity be permitted to own the business rights of another, completely separate, entity.  It's like Target being allowed to limit Walmart's business practices.  Ultimately at some point, and regardless of what happens in this particular instance, I think this whole deal gets shot down and the Nats either gain the ability to negotiate with MASN and Comcast as a free agent (like it should be), or start their own network.  If the Lerners wanted to I think they could use this to stong arm the league to give them their freedom lest they take this to court and it threatens the anit-trust exemption.

 In the past 60 odd years, the courts have ruled that 1) MLB's anti-trust exemption is legit and 2) Congress has the power to change or abolish said exemption and 3)If Congress doesn't act than the court system has no basis to rule MLB's anti-trust exemption invalid, either in part or in it's entirety.

[OldChelsea]

In the past 60 odd years, the courts have ruled that 1) MLB's anti-trust exemption is legit and 2) Congress has the power to change or abolish said exemption and 3)If Congress doesn't act than the court system has no basis to rule MLB's anti-trust exemption invalid, either in part or in it's entirety.

In addition, Angelos would not have brought his legal action under the antitrust laws - the suit would have been over infringement on his (unilaterally declared) territory in DC and Virginia, essentially an alleged breach of contract.

[NatsDad14]

The territory concept is so absurd. How the freak does he own the territory? You don't own crap. We live in a free market so he needs to compete for that.

[HalfSmokes]

The territory concept is so absurd. How the freak does he own the territory? You don't own crap. We live in a free market so he needs to compete for that.

Except there is no free market here,  there was an agreement in place- it's no different than if burger King promises an exclusive territory to a franchisee then allows another franchise to be built across the street

[Tyler Durden]

So does this thing get resolved before the winter meetings?  The resolution is supposed to have a big impact on payroll and spending plans. 

[PowerBoater69]

So does this thing get resolved before the winter meetings?  The resolution is supposed to have a big impact on payroll and spending plans. 

That's a big part of why Angelos is dragging this thing out.

[welch]

The territory concept is so absurd. How the freak does he own the territory? You don't own crap. We live in a free market so he needs to compete for that.

Baltimore is DC territory. The Baltimore Orioles were a minor league town for 40 years or more...from the minute the AL moved them to NY to become the Highlanders.

Orioles, go home to St Louis!!

[welch]

Also: the job of a good lawyer is to find holes in any contract if the hole helps the team with the most expensive lawyers.

If MASN went bankrupt?

[Tyler Durden]

The latest (non)update on the MASN dispute -

http://www.washingtonpost.com/blogs/nationals-journal/wp/2012/10/18/nationals-orioles-split-over-masn-rights-fees-continues/

[HalfSmokes]

The latest (non)update on the MASN dispute -

http://www.washingtonpost.com/blogs/nationals-journal/wp/2012/10/18/nationals-orioles-split-over-masn-rights-fees-continues/

well something changed

Their case hinges mainly on the rise in rights fees in comparable markets.

vs

The article says this about the factors going into the recalculation -

"MASN points to language in the 2005 agreement under which the former Montreal Expos relocated to Washington. The agreement says the rights fees — which are to be equal for both clubs — should be reset every five years using a formula developed by Bortz Media & Sports Group, a Colorado consulting firm. The formula takes into account network revenues, expenses, ratings and other considerations."

[Hogie]

My media and sports group is also named Bortz

[welch]

What if MASN pays such high fees to the Nats that it goes bankrupt? Would that free the Lerners to make their own deal?

[PowerBoater69]

What if MASN pays such high fees to the Nats that it goes bankrupt? Would that free the Lerners to make their own deal?

Sounds nice but there is no chance that MLB allows MASN to become insolvent.

[HalfSmokes]

even if it did, the nationals rights are probably an asset to be auctioned

[jhuterp]

They'll cut a deal everyone can live with to keep this out of court.  IMO Nats get more than the 33% ownership they're currently slated to get, probably 40-45% and they get it faster than the current 1% per year.  They'll also get an increase in rights fees, but not the $110 M they were asking for.

[zimm_da_kid]

freak masn.  freak the oreos.  freak angelos

[PebbleBall]

well something changed

I don't think that's a change, I think that's what the arguments have been all along - the Nats think deals in other markets put them in line for a huge increase, the O's/MASN are using their interpretation of the original agreement.

Who knows where it's leading, but it's a least satisfying to see it become such a fiasco. 

They'll cut a deal everyone can live with to keep this out of court. 

I wouldn't count on that, I don't think either the Lerners or Angelos are kings of compromise, and they disagree by a massive amount of money.  I keep wondering if it's possible this leads to the Nats getting their own TV deal.  It's probably impossible, but this arrangement seems completely untenable. 

[Tyler Durden]

They'll cut a deal everyone can live with to keep this out of court.  IMO Nats get more than the 33% ownership they're currently slated to get, probably 40-45% and they get it faster than the current 1% per year.  They'll also get an increase in rights fees, but not the $110 M they were asking for.

This sounds about right and a reasonable compromise on the crappy deal the Nats were forced to take in order to move to DC.  A greater ownership stake for the Lerners rather than fees paid to the Nats might mean more money to the Lerners, right?

Wonder what the holdup is.