WP: Nats MASN deal renegotations will have a huge impact

[tomterp]

Parity between the two franchises would be a huge win for the Nats.  It seems like that's what they're talking about, not about whether the Nats get $35m or $40m.

[HalfSmokes]

Parity between the two franchises would be a huge win for the Nats.  It seems like that's what they're talking about, not about whether the Nats get $35m or $40m.

really? how is parity with the Baltimore media market good for a team based in DC- parity ensures fair market value won't happen

[Kevrock]

O's getting an ASG before us -- yeah, right.

[RyanZimsKazoo]

So the fans are going to have to pay for that?

What else is new.

[comish4lif]

Parity between the two franchises would be a huge win for the Nats.  It seems like that's what they're talking about, not about whether the Nats get $35m or $40m.

I think you maybe misunderstood the "Parity" clause. In the MASN deal, the O's are required to get as much as the Nats get. So, the Nats reopened the deal, asked for more money based on what the Padres, Mets, Angels, etc., are getting. But, the contract with MASN says that if the Nats get $75M, well, then, so do the Orioles. It's in the contract, hon! Now, if there's not $150M to go around? What to do?

[MarquisDeSade]

I think you maybe misunderstood the "Parity" clause. In the MASN deal, the O's are required to get as much as the Nats get. So, the Nats reopened the deal, asked for more money based on what the Padres, Mets, Angels, etc., are getting. But, the contract with MASN says that if the Nats get $75M, well, then, so do the Orioles. It's in the contract, hon! Now, if there's not $150M to go around? What to do?

Figure out the ceiling and split it.  Any delusions of bankrupting MASN and the Nats joining the RSN house-of-cards hit parade are just that.

[tomterp]

I think you maybe misunderstood the "Parity" clause. In the MASN deal, the O's are required to get as much as the Nats get. So, the Nats reopened the deal, asked for more money based on what the Padres, Mets, Angels, etc., are getting. But, the contract with MASN says that if the Nats get $75M, well, then, so do the Orioles. It's in the contract, hon! Now, if there's not $150M to go around? What to do?

Parity in the rights fee, at a level that absorbs all of MASN's profit, would be a win for the Nats because currently there is a large profit residual that goes 83% to the O's and 17% to the Nats.  50-50 would be a big win from current levels, and far in excess of the Orioles' current negotiating position, though short of the Nats' position somewhat. 

But I would propose increasing the rights fees to the point of leaving zero profit to be distributed on the ownership %.  This would fully negate the ownership % injustice.

[HalfSmokes]

I would prefer fair market- if MASN can't provide it, then allow it to be competitively bid. What kind of contract has a reset, but only if the other party can afford it without providing a out in that case?

[Nats113437]

http://www.pressboxonline.com/blog.cfm?id=4989 I found the original article.  It is definitely worth reading.  There is a formula that baseball has been using. 

The article says Washington is actually a larger market than Dallas ( I can only guess that they must be factoring in cable companies outside the DC market that would carry the games). 

It also states that the Nats will receive revenue sharing through 2016.  I had thought that was ending this year.  Interesting stuff.

The future looks bright overall with increased ticket revenue, increased revenue from a new spring training facility, and whatever increase they get from the TV deal.  I just hope they don't go crazy and spend just to spend like the Redskins. Just keep doing what you are doing and save most of the money for extending the guys you already have.

[welch]

I like the idea that the Nats might justifiably bankrupt MASN and then sell their TV rights to another cable sport network. Plain disgusting that the Orioles ownership was ever allowed to claim Washington as its territory.

The Browns/Orioles paid nothing to move to Baltimore, and if the two ballparks are "only" 61 miles apart in 2012, they were not much farther apart in 1953...maybe a smidgen, since Griffith Stadium was a couple of miles north and west of Nats Park. If it is argued that what counts is "practical proximity", meaning the time to drive between Baltimore and Washington, I suspect that driving the old Baltimore-Washington Parkway in 1955 was, maybe, shorter than driving I-95 or the Parkway in today's traffic.

[tomterp]

The future looks bright overall with increased ticket revenue, increased revenue from a new spring training facility, and whatever increase they get from the TV deal. I just hope they don't go crazy and spend just to spend like the Redskins. Just keep doing what you are doing and save most of the money for extending the guys you already have.

That's going to make you unpopular in some quarters.

[Lintyfresh85]

Well since not one person on this board has ever said "I want the Nats to spend money, just to spend money"... I could see why.

[PowerBoater69]

Well since not one person on this board has ever said "I want the Nats to spend money, just to spend money"... I could see why.

Right.  Plus, the calls to build via free agency occurred when the team was terrible and in need of a jump start.  Now that we have a contender the idea that available funds should be used to keep our core together while targeting a player or two to fill the gaps is the correct course of action.

[PowerBoater69]

Parity in the rights fee, at a level that absorbs all of MASN's profit, would be a win for the Nats because currently there is a large profit residual that goes 83% to the O's and 17% to the Nats.  50-50 would be a big win from current levels, and far in excess of the Orioles' current negotiating position, though short of the Nats' position somewhat. 

But I would propose increasing the rights fees to the point of leaving zero profit to be distributed on the ownership %.  This would fully negate the ownership % injustice.

I'm no bean counter but by my reading this method of maintaining equity in the MASN deal would require MASN to operate at a loss in order to counter any gains in equity, which of course means that Angelos and Lerner would actually have to put money back into the network, certainly not a viable long term option.  But of course long term viability of MASN as a business is not a high priority for Nats fans.

[Nats113437]

All I am saying is don't say  " We could spend $150 million, so we have to get to that number."  Be intelligent.  If the best thing for the team is to be at $100 million next year (planning for eventual raises for Stras and company) then do that.  If you can, and want to add Greinke, and it makes sense, do that.  Just build the team the right way, and don't try to get to a number just because you can afford it.

[Nats113437]

I'm no bean counter but by my reading this method of maintaining equity in the MASN deal would require MASN to operate at a loss in order to counter any gains in equity, which of course means that Angelos and Lerner would actually have to put money back into the network, certainly not a viable long term option.  But of course long term viability of MASN as a business is not a high priority for Nats fans.

My understanding is the same(without having seen the actual wording).  Lerner would be responsible for his share of the losses (13%).  It's usually not that pretty though. 

[PowerBoater69]

Industry sources say it's unclear as to which direction the committee is leaning, but agree that the fees paid for increasing media rights deals will eventually find their way to the bills of cable and satellite subscribers, according to Richardson.....

I don't know who this guy Richardson is but I don't buy his analysis about cable fees going up, more likely MASN is already extracting every penny available from the cable companies. 

[HalfSmokes]

I'm no bean counter but by my reading this method of maintaining equity in the MASN deal would require MASN to operate at a loss in order to counter any gains in equity, which of course means that Angelos and Lerner would actually have to put money back into the network, certainly not a viable long term option.  But of course long term viability of MASN as a business is not a high priority for Nats fans.

would he have to contribute, or could he just say no?

[PowerBoater69]

would he have to contribute, or could he just say no?

If the Nats and Os were guaranteed $100 million each in revenue and MASN only brings in $180 million, someone would have to come up with the extra cash, either Angelos and Lerner at their current level of ownership, or some other contribution which would alter the ownership stakes.  The alternatives are complete liquidation of the network or allowing the Nats to break from the deal.  With hundreds of millions of dollars at stake it's no wonder that the negotiations are getting messy.  One question I have is whether the Lerner family had this figured out before signing the deal to purchase the team.

[Nats113437]

would he have to contribute, or could he just say no?

If he's an owner he has to contribute.  All owners contribute to the debt at the percentage of the equity.  I believe it is 13%.  There are ways around that though.  In reality, this will never happen anyway.  Both Angelos and the Lerners are way to experienced to let themselves get in a situation where they lose money.  There will be a deal worked out.  My hope is that deal involves the Nats getting their freedom.

[Nats113437]

One question I have is whether the Lerner family had this figured out before signing the deal to purchase the team.

i would bet that not only did the Lerners, but Bud Selig probably saw this coming as well.  I bet the possibility was at least discussed.

[HalfSmokes]

If he's an owner he has to contribute.  All owners contribute to the debt at the percentage of the equity.  I believe it is 13%.  There are ways around hat though.  In reality, this will never happen anyway.  Both Angelos and the Lerners are way to experienced to let themselves get in a situation where they lose money.  There will be a deal worked out.  My hope is that deal involves the Nats getting their freedom.

Some companies, the owners have the options of just letting the company fail or letting themselves be bought out- I would think requiring owners to contribute to keep a company afloat would totally contravene the point of a limited liability company

[Nats113437]

Are they an LLC?  If so, then that answers that.  I don't recall seeing a title for the actual ownership group, or any type of LLC.

[welch]

I don't know who this guy Richardson is but I don't buy his analysis about cable fees going up, more likely MASN is already extracting every penny available from the cable companies. 

The direction is toward more sports and no customer fees.

I live in NYC, where the MSG Network helped convince people to buy cable just to get Knicks and Ranger games back in the early '70s. Then MSG signed a mega deal with the Yankees in the late '80s...at least it seemed like a mega deal at the time. MSG was part of "basic cable". The Islanders, the Nets, the Devils, and then the Mets all went to an extra-fee cable channel. Didn't work, although some people bought the Mets package in '86-88. They are now more or less part of the basic package, while the Yankees have their own network.

Call me vengeful, or a grudge-holder, or mean-spirited, but I enjoy anything that takes money or pleasure from Angelos.

[comish4lif]

If the Nats and Os were guaranteed $100 million each in revenue and MASN only brings in $180 million, someone would have to come up with the extra cash, either Angelos and Lerner at their current level of ownership, or some other contribution which would alter the ownership stakes.  The alternatives are complete liquidation of the network or allowing the Nats to break from the deal.  With hundreds of millions of dollars at stake it's no wonder that the negotiations are getting messy.  One question I have is whether the Lerner family had this figured out before signing the deal to purchase the team.

That would be an interesting twist to the parity clause and escalating ownership stake. In that example, where both teams get $100M in rights fees, but MASN loses $20M, they'd split the losses based on ownership, with the Orioles kicking in ~$17M and then Nats ~$3M. It would even out the bottom line with the Nats netting $97M and the O's getting $83. I think I could live with something like that.