WP: Nats MASN deal renegotations will have a huge impact

[DPMOmaha]

Of course, otherwise this would have been the shortest negotiation in league history.

Lerners sure seem like they have a leg to stand on, though.  Interesting to see if they have something more than "but we're good now".

[HalfSmokes]

They have a lot of comps now

[PowerBoater69]

Lerners sure seem like they have a leg to stand on, though.  Interesting to see if they have something more than "but we're good now".

Yeah, both sides must have some compelling arguments and clearly they are far far away from a compromise.  The lawyers are the only winners.

[Tyler Durden]

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."

It doesn't mention anything about market value of TV rights, which we've seen skyrocket recently.  Or maybe that falls under 'other considerations.'

[HalfSmokes]

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."

It doesn't mention anything about market value of TV rights, which we've seen skyrocket recently.  Or maybe that falls under 'other considerations.'

Other considerations, it also is a second hand quote from an Os official

[MarquisDeSade]

So, assuming there is a bump, what does MASN do - go demand higher rates from the carriers? 

[DPMOmaha]

So, assuming there is a bump, what does MASN do - go demand higher rates from the carriers? 

I'd imagine.  BTW, how's that working out for Viacom right now?

[HalfSmokes]

I'd imagine.  BTW, how's that working out for Viacom right now?

Carriage contracts expire and have to be renewed, that's what's happening with Viacom. In this case, MASN could just be screwed in the short term

[DPMOmaha]

Carriage contracts expire and have to be renewed, that's what's happening with Viacom. In this case, MASN could just be screwed in the short term

That's fine, but when the time comes, whenever that is, they're not going to go down.

[PowerBoater69]

This blogger from Balt is buying the Angelos line that the Os have won the dispute and that the results will be announced in August.

Decision Close In MASN-Nationals TV Rights Squabble
By Tim Richardson

In a two-part series on July 2 and July 6, the Sports Business Report analyzed the ongoing dispute between the Mid-Atlantic Sports Network and the Washington Nationals about the allocation of television rights fees from the regional sports network. PressBox has continued to monitor the situation and sources close to the negotiations say that the framework of a resolution has been assembled and is before the three-person ownership panel charged with ruling on the matter. That committee is composed of the owners of the New York Mets, Pittsburgh Pirates and Tampa Bay Rays.

At the Baseball Writers Association of America luncheon before the All-Star Game July 10, Major League Baseball commissioner Bud Selig said MLB employees were in the middle of intense discussions about the MASN-Nationals situation and he had sought a resolution to the situation a month ago.

Industry sources said debate between the two entities centered on the interpretation of a longstanding MLB television formula, which was part of the 2005 relocation settlement agreement between the league and the Orioles when MLB moved the Montreal Expos to Washington. That move infringed upon the Orioles' TV territory, as determined by MLB.

According to a source close to the negotiations, representatives from the Orioles, including principal owner Peter Angelos, returned from the All-Star Game feeling confident that MLB would adhere to the stipulations in the 2005 agreement. A source close to those 2005 dealings said the agreement specifically required the use of this formula, which MLB has used for more than 15 years when calculating rights fees.

The formula, which Bortz Media & Sports Group developed, factors into consideration the local market size, geography, network revenue and expenses and other relevant data to determine rights fees for clubs that have a stake in their TV partners. It has been used in determining TV rights fees for the likes of the Boston Red Sox, New York Yankees and Toronto Blue Jays.

Based on the parameters of Bortz's formula, the payment due to the Nationals is expected to fall roughly between $40 million and $42 million per year. This number includes the TV rights fees, as well as revenue from the club's equity stake in MASN. During the next five years, that number would increase to almost $60 million. The next re-set would correspond with the 2012 season, according to sources. The Nationals currently hold 13 percent equity in the regional sports network and will receive a percentage increase up to 33 percent during the next two decades.

This settlement amount would be a far cry from the number the Nationals' representatives think MASN owes the team. Chris Bevilacqua, founder and CEO of Bevilacqua Media Company, represents the Nationals in these negotiations with MASN. A message to him seeking comment about the proposed resolution was not returned.

A concern for MASN, according to sources, is whether the committee's findings about the application of the Bortz formula will now be accepted as the procedure for use in the future. If not, the network and Nationals could have to undergo another intense series of negotiations when the next re-set activates.

As part of the current TV agreement with MASN, the Nationals receive $29 million annually.  But the deal that was negotiated between MLB and the Orioles entitles the Nationals to a re-set, or increase in rights fees, from the network every five years. MASN representatives argue that the Nationals should receive $35 million per year, a 20 percent increase from their current annual payment. The Nationals are arguing for a deal that would pay them in excess of $100 million each year. Because MASN did not secure the rights to all Nationals and Orioles games until 2007, that re-set kicked in this season instead of five years from the time the team arrived in the District of Columbia in 2005.

Washington has argued that the current open-market conditions in baseball should determine the rights fee, and not the pre-existing formula. A number of teams, including the Texas Rangers, Houston Astros and Los Angeles Angels, recently entered lucrative long-term network deals. MLB recently approved a deal between the San Diego Padres and Fox Sports Net to establish a regional sports network in San Diego County. The 20-year deal is reportedly worth an estimated $1.2 billion. As part of this arrangement, the Padres' annual fee is comparable to what the Nationals will receive during the course of the next five years.

Although the ownership panel reviewing the case may rule that the formula holds, an industry source said Selig could exercise creative ways to balance the equation to favor both clubs. Such items range from the allocation of the All-Star Game (the Orioles have applied to host the 2016 game) to excluding the Nationals from the list of clubs in the 15 largest markets that will no longer be allowed to receive revenue-sharing funds by the end of baseball's labor deal in 2016. Currently, the Nationals are among those 15 teams.

Ironically, the source involved with the negotiations said Angelos had always supported the idea that the Nationals not be included on that list of teams that would lose revenue.

The arrangement MLB made with Angelos regarding MASN was included in the deal when the Lerner family purchased the team from MLB, meaning the family was aware of the TV situation before agreeing to buy the team.

Selig was asked about that 2005 deal during the Baseball Writers Association of America event and voiced no regrets.

"No, that was part of a process that was really complicated," he said. "You can second-guess anything in history ... but I can't second-guess that.

"We just have to work our way through this, and disputes between clubs are not uncommon. That's frankly why you have a commissioner. So I wouldn't say that. That was a deal that had to be worked out."

Angelos did not achieve the success he has today without being a smart, strategic businessman. When MLB infringed upon the Orioles' TV territory, he could have taken a lump sum fee from the league as restitution. Instead, Angelos saw the long-term value a regional sports network would have, the source close to the 2005 negotiations with MLB said, and is now simply protecting that investment.

According to a source with knowledge of the process, a final decision about the recommended amount is likely to be handed down at the owners' meetings in August.

http://www.pressboxonline.com/blog.cfm?id=5022

[HalfSmokes]

The formula, which Bortz Media & Sports Group developed, factors into consideration the local market size, geography, network revenue and expenses and other relevant data to determine rights fees for clubs that have a stake in their TV partners. It has been used in determining TV rights fees for the likes of the Boston Red Sox, New York Yankees and Toronto Blue Jays.

Translation , it undercuts value so the Yankees and Red Sox don't have to share with other teams

[JCA-CrystalCity]

I think the opposite, halfsmokes.  I guess the issue is to prevent shifting revenue to the RSN from the entity that shares revenue with other baseball teams, as well as the less significant issue of allocating money so as to not hurt limited partners and minority shareholders in each entity.  For example, the Bruins have a 1/3 interest in NESN, so they would want an RSN-favorable baseball deal.  I forget the limiteds now in the Red Sox, but I think the NYT used to have a 17% interest and there were other limiteds too.  Those entities would want a team favorable deal, even if it made for more revenue sharing.   The league would want a formula favoring baseball and not the RSN.  The use of a set formula probably gives baseball owners cover from claims by the other interested parties.

[HalfSmokes]

Then how does the formula result in lower payments than we'd recieve on the open market- or do the Rangers, let alone the Padres, really have that much better of a media market than we do?

[JCA-CrystalCity]

I read that article as saying the formula is the same for the Padres as the Nats, but I'm wrong if SD is a smaller market.

[HalfSmokes]

I read that article as saying the formula is the same for the Padres as the Nats, but I'm wrong if SD is a smaller market.

The padres signed a deal for $70 million per that they got from Fox, the formula may allow them to kick less back (or take more) to the MLB, but it didn't seem to have much bearing in their ability to get the best deal available

[MarquisDeSade]

They also weren't tied to a shotgun marriage Selig and MLB created.

[jhuterp]

This blogger from Balt is buying the Angelos line that the Os have won the dispute and that the results will be announced in August.

Richardson is obviously a total douche and IMO editorializing a lot of what he hopes happens into this piece of "journalism".  He makes it sound like the Nats have no argument regarding the rights fees.  How even an Orioles fan can be an Angelos apologist at this point is beyond me.

[PowerBoater69]

How many years will it be before MASN makes all of the games available to be replayed on-line in a permanent archive?  I just found out from my neighbor that MASN showed me and my kids singing Take Me Out to the Ballgame at the Rockies game two weeks ago, apparently they focused on us for a while as we always enjoy singing along.  Wish I could pull that up.

[HalfSmokes]

I think MLB retains digital rights

[PowerBoater69]

I think MLB retains digital rights

So I'll have to wait for the day when on demand cable can handle the volume of games?

[DPMOmaha]

MLB.TV subscription and you should be able to go and find it.

[Kevrock]

Can you request DVDs of individual games from MLB?

[HalfSmokes]

http://mlb.mlb.com/mlb/video/mlb_productions/feature.jsp?content=faq#copies

I attended a game this year and would like a copy, how can I obtain one?
Many games from the 2011 season are available to view through a subscription to MLB.TV. Please visit the MLB.TV page for more information. Please visit the MLB.com/downloads page for more information on games prior to 2011.

[PowerBoater69]

http://mlb.mlb.com/mlb/video/mlb_productions/feature.jsp?content=faq#copies

Would this allow me to get the MASN feed or do they pick one of the two?

[HalfSmokes]

I would assume you could choose, but when I last subscribed, some games have one only had feed or the other