Author Topic: WP: Nats MASN deal renegotations will have a huge impact  (Read 99037 times)

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Offline PebbleBall

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Interesting read from Deadspin today that echoes what I've said before here on the boards regarding TV money:

http://deadspin.com/5899105/joey-vottos-new-contract-is-like-a-mortgage+backed-security

Some highlights:

We're now learning that that cable providers are tired of RSNs' bullcrap and perfectly willing to yank telecasts. Non-fans—against their will—subsidize telecasts for fans. Consider the MSG-Time Warner standoff in winter (and what's going on in San Diego now) According to reports (because none of this is transparent), Madison Square Garden wanted Time Warner customers to pay a 53 percent increase on its $4.65-a-month fee. That's $7.11 a month—or $85.32 a year, from every Time Warner subscriber in New York—for the Knicks, Rangers, Islanders and Devils. Time Warner naturally balked, and might have held out longer if not for Jeremy Lin. In San Diego, Fox Sports San Diego is reportedly seeking a 400 percent fee increase from Time Warner Cable. Time Warner wisely has said no.

[SNIP]

But the cable-riches scheme needs those unfettered giant fee increases, just like Wall Street relied on ever-increasing housing prices. Once the blips start, the whole scheme's doomed to collapse. And then this apparently good story, of the homegrown Votto getting a deserved payday from a beloved, old small-market franchise, will become the darker and more familiar one, of middle America making a financial promise it couldn't afford.

I really hope the FCC gets involved puts an end to this "bending the cable consumer over the barrel" nonsense. 


All the more reason to stick it to Angelos.  If he thinks he needs a fee increase to pay the Nats market value, that's his problem.  I wonder if the recent boom in RSN money could start a chain of events that gives the Nats freedom from MASN. 

Offline MarquisDeSade

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All the more reason to stick it to Angelos.  If he thinks he needs a fee increase to pay the Nats market value, that's his problem.  I wonder if the recent boom in RSN money could start a chain of events that gives the Nats freedom from MASN. 

That wasn't my point.  My point was - what happens when the cable networks can no collect money from the consumer by bundling these channels nobody watches together.  Most of the RSN only exist because the cable companies are bundling these channels together and collecting a fee.  If that annuity stream goes away and cable consumers can decide not to take MASN or CSN or any other channels they have to take as part of a cable package, this whole charade falls apart.

Offline JCA-CrystalCity

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Well, NESN is the single most popular station in Boston and New England, even before the stanley cup run of the B's boosted their winter revenues.  A good RSN can be a valuable property.  MASN has still not gotten its act together when Angelos has every incentive to pump it up.

Offline MarquisDeSade

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MASN has still not gotten its act together when Angelos has every incentive to pump it up.

You mean to tell me the "MASN Report" with the Oriole shills and Phil Wood isn't good programming?

Offline JCA-CrystalCity

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I'm thinking they need more dating shows.  Instead of having the couple hang out Eutaw Street before the game, send them over to goddesses with a roll of $1s. 

Offline MarquisDeSade

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I'm thinking they need more dating shows.  Instead of having the couple hang out Eutaw Street before the game, send them over to goddesses with a roll of $1s. 

I was thinking they could start doing the show at Sliders and have Hammonds as a guest host.

Offline houston-nat

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I was thinking they could start doing the show at Sliders and have Hammonds as a guest host.

Or Jim Riggleman at Caddies.

Offline MarquisDeSade

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Or Jim Riggleman at Caddies.

That'd be too DC, we need it to have a Baltimore flavor.

Offline R-Zim#11

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I'm thinking they need more dating shows.  Instead of having the couple hang out Eutaw Street before the game, send them over to goddesses with a roll of $1s. 

Better yet, send them to Baltimore Ave!

Offline Baseball is Life

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Ken Rosenthal ‏ @Ken_Rosenthal 
For those who missed it: #MLB to resolve dispute between #Orioles, #Nationals over Nats' TV rights fee. http://t.co/ZDVW0Y7S

Offline Kevrock

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Quote
Perhaps this dispute was inevitable.

Local TV contracts for major-league teams are rising dramatically. The Baltimore Orioles and Washington Nationals share ownership of the Mid-Atlantic Sports Network (MASN), but the Orioles hold by far the larger stake.

Now, according to sources, a panel of baseball officials will decide what the two teams could not resolve in negotiations — the annual rights fee that the Nationals will receive from MASN.

The matter went to arbitration after talks between the Orioles and Nationals sputtered. While there is no known deadline for a decision, the panel is meeting regularly due to the urgency of the situation, sources say.

The decision of the panel will be binding, and could double or even triple the reported $29 million annually that the Nationals currently receive, sources say.

The fee, according to the agreement that created the network, is re-set to market rates every five years. Still, the teams disagree over what the new terms should be.

Washington D.C. is the ninth largest television market, according to Nielsen. The San Diego Padres, who play in the 28th-ranked market, recently completed a deal with FOX Sports San Diego that will pay them a $200 million upfront bonus and $50 million annually for 20 years.

The Texas Rangers, who play in the fifth-ranked market, will receive $150 million per year under a 20-year extension with FOX Sports Southwest, according to USA Today. That deal begins in 2015.

Local TV money is the Nationals’ second-largest source of revenue after ticket sales, and is growing even more critical to the team’s future.

The Nationals, because they play in one of the sport’s 15 largest markets, will be ineligible to receive revenue sharing by 2016, according to the new collective-bargaining agreement.

And the Nats already are at a severe disadvantage in their co-ownership of MASN.

Baseball helped create the network in 2004 as part of a deal in which the Orioles allowed the new Washington franchise to move into their territory.

The Nationals’ share will increase from its original 10 percent over the 25-year agreement, but max out at 33 percent. The Nats currently hold about a 13 percent stake, compared with about 87 percent for the Orioles.

Offline Lintyfresh85

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Nice.

Though, when MLB is involved, you never know how much they might screw over the Nats... also, I bet we never get to hear the true amount the Nats get per year... just so we can continue to wonder just how much money the team is taking in.

Offline Kevrock

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I'm curious how MLB is a neutral party when they stuck the Nats with the deal in the first place, after making all of the back-room deals with Angelos to get him to "allow" us to have a team.

It sure seems the Nats have a strong case.

Offline HalfSmokes

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The MLB is on record in the dodgers case arguing about what constitutes a fair contract - adjust for market size and give us that deal

Offline Lintyfresh85

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The MLB is on record in the dodgers case arguing about what constitutes a fair contract - adjust for market size and give us that deal

Thing is, Selig isn't afraid to play favorites with the owners.

See how he loaned money to the Wilpons but ran McCord out on a rail.

Offline HalfSmokes

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McCord made the largest profit ever on a sports investment - he ended up far better off than he would have been holding onto the team . Besides MLB hates Angelos- the only question is whether or not they're afraid of him

Offline JCA-CrystalCity

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I wonder if the deal will involve an increased equity stake for the Lerner in MASN, in lieu of an even higher rights fee. 

Angelos will argue worst ratings in sports for the Nats. 

I could see a deal where the Nats get an extra 10% of MASN and maybe closer to $40MM in rights fees over the next 5 years.  If the ratings then go up, the fee goes up in the next round.  This would make MASN more valuable and give the ownership a larger chunk of that value, at the expense of direct team revenues. 

Offline HalfSmokes

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The carriage fees MASN gets should matter as much as the ratings

Offline Kevrock

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Couldn't the Nats argue that the ratings are partly MASNs fault? If they were on CSN with the rest of the DC sports teams, they might get higher viewership.

Offline Tyler Durden

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Couldn't the Nats argue that the ratings are partly MASNs fault? If they were on CSN with the rest of the DC sports teams, they might get higher viewership.

Just bring in pictures of Debbie and Amber Theoharis and have the arbiter determine the fairness of that setup.

Offline PowerBoater69

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Quote
The Lerners tend to be phobic about imprecise budget projections, and uncertainty could set them dithering about whether or not to make a July 31 deadline trade that would increase payroll.

The arbitrators (reps from three MLB teams) are expected to decide on the new MASN fees by June 1 but Boz suspects that Angelos will continue to use stall tactics.  A few points of interest:  1) the Nats have asked for $110 million per year, 2) in addition to the annual fees the teams are negotiating for a possible increase in the Nats ownership equity in MASN, and 3) whatever fees the Nats receive the Os will extract the same amount from MASN so that if the arbitrators select a high enough number it is possible that they could bankrupt the network.

Quote
Washington Nationals are due a bigger check from MASN for TV rights
By Thomas Boswell

Come on, baseball. Get a move on, Commissioner. It’s way past time to get MASN to fork over the hundreds of millions of dollars in future cable TV fees to which the Washington Nationals have every contractual right.

The stakes are huge. The Nats get $29 million this year from MASN, a regional sports network owned by Peter Angelos. The Nationals argue that their “reset” fee for the next five years, based on comparable markets that have signed vast new deals, should be almost $110 million a year, according to three reliable sources with knowledge of the discussions.

MASN didn’t agree, so a three-team MLB committee on revenue-fairness issues has heard arguments from the two sides for months. This internal MLB group is due to give its opinion on a fair market price for the Nats’ regional television rights June 1.

That date, just two weeks away, should be circled in red with stars and exclamation points all around it. What those MLB representatives (from the Rays, Pirates and Mets) endorse — whether it is $60 million or $100 million or likely a number in between — should be the figure that carries the day.

For a Nats franchise with the lowest payroll in the National League East — $81 million compared with an average of $117 million for its four division rivals and less than half that of the Phillies — the MASN reset will be transformational.

This weekend, the spring surprise Baltimore Orioles (26-14) and Nats (23-16) are meeting at Nationals Park and should make for unprecedented Beltway Battle TV viewing for MASN. However, those games are of tiny long-term importance compared with the far larger stakes involved in this backroom baseball brawl.

One man with a motive to delay, or lowball the Nats, is Angelos, who owns MASN and the Orioles. Some in baseball believe, as I do, that MASN delay tactics already have ripped off the Nats. This issue should have been decided by last November, so the Nats could have incorporated accurate info on new revenue in pursuit of free agents such as Prince Fielder.

In 2004, Angelos blustered and bullied MLB and Commissioner Bud Selig into giving MASN 90 percent of the Nats’ TV rights as compensation for mythical “territorial rights” to Washington, a metropolitan area twice the size of Baltimore. Will Angelos push baseball into another craven sellout? In the era of Stephen Strasburg and Bryce Harper, those days should be long past.

“When we have an internal dispute between clubs, I can’t comment on it substantively,” Selig said Wednesday after an owners meeting at which the MASN-Nats arm-wrestling was discussed.

Will the June 1 date for a “fairness” valuation actually precipitate a resolution? “In cases like this, I never hold people to a specific date,” said Selig, famous for flexible, infuriating but generally functional timetables.

Are there creative options for the Nats and MASN? Sure. For example, the Nats’ equity in MASN is scheduled to rise from the original 10 percent to 33 percent over many years — it’s currently at 13 percent — so could that timetable be accelerated? After all, teams have two cable-TV revenue streams: their rights fee and their equity in the entire regional sports network, which broadcasts many teams in several sports.

“I’m not being facetious when I say, ‘All that is to be determined,’” Selig said.

When the Nats receive fair payment from MASN, the odds increase on fielding a contender, which, in turn, helps attendance and promotes growth of the Southeast waterfront district. Remember, urban revitalization was a central justification for this whole endeavor. As a recent Post A1 story outlined, it’s succeeding. MASN has a right to haggle. But Selig and baseball have a much greater responsibility to expedite.

Any visit to Nats Park reveals the progress: safe streets, plenty of parking lots, a six-acre public sculpture garden on the water, removal of industrial eyesores so the park now affords 180-degree panoramas of the Anacostia and Potomac rivers.

But the next five years are crucial as the talented Nats attempt to win more games, grow their fan base and catalyze the growth of neighborhood infrastructure, including restaurants and entertainment. When that happens, an all-star game, a plum lusted after by cities, always follows. Also, postseason play pulls money into any town.

MASN and Angelos claim they’re now partners who love the Nats and wish them well and are just negotiating prudently. May their Pinocchio noses grow until they wrap entirely around their heads.

What’s the right price? Recent average annual rights fees for regional sports networks have ranged from more than $60 million for the Houston Astros and $75 million for the Texas Rangers — in metro areas usually used as rough comparables to the Washington area — to $150 million for the Angels. The Astros and Rangers fees skew high because they are based on multi-decade deals that grow over time — an argument that favors MASN. Conversely, every new RSN deal blows away the previous one. The Astros and Rangers comparables are already, to a degree, obsolete.

Most likely, the Nats’ deal will fall in the $70 million-$90 million range, though all such MLB debates are state secrets. One hidden factor is key: The interests of almost everyone in baseball (except MASN and Angelos) are aligned with the Nats’ getting a rational price. Why? Each new monster regional sports network deal (some contracts now top $1.5 billion) set “comparable” prices for the next team’s negotiation with its TV providers.

If the Nats got shafted, many owners would scream. What’s the point of having a legal monopoly if you don’t band together to drive up prices for your product?

This entire MASN-Nats tussle is about “when” and “how much,” not “if.” A deal has to get finished to set 2013’s MASN price. But you can bet that Angelos and MASN want to string out the Nats as long as possible in hopes of extracting a better deal. The Lerners tend to be phobic about imprecise budget projections, and uncertainty could set them dithering about whether or not to make a July 31 deadline trade that would increase payroll.

The essential unfairness of further delay is bore entirely by the Nats, which is all the more reason for Selig to use his influence, and “best interests” authority, to speed a process that has already damaged the Nats.

This isn’t astrophysics. The Nats are represented by Chris Bevilacqua, who has done more of these big regional sports network deals than anybody in the industry. The template is in place. MLB’s own internal committee is more than qualified to render a sensible valuation in two weeks.

The Lerners may not like that number. MASN and Angelos may not like it. Or they both might hate it. But there’s no reason to believe that MLB’s own committee on revenue fairness would come up with a bizarre valuation in an industry with a vested interest in healthy rights fees for regional sports networks.

Baseball and Selig need to push both parties in this “internal baseball dispute” — which, in fact, has broad public impact in D.C. — to reach a conclusion. Now.

http://www.washingtonpost.com/sports/nationals/washington-nationals-are-due-a-bigger-check-from-masn-for-tv-rights/2012/05/18/gIQA6wbOZU_print.html

Offline HalfSmokes

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I hate the mets being involved

Offline PowerBoater69

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I hate the mets being involved

Good point, it does seem that division teams should not be part of the decision making process.

Offline comish4lif

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The arbitrators (reps from three MLB teams) are expected to decide on the new MASN fees by June 1 but Boz suspects that Angelos will continue to use stall tactics.  A few points of interest:  1) the Nats have asked for $110 million per year, 2) in addition to the annual fees the teams are negotiating for a possible increase in the Nats ownership equity in MASN, and 3) whatever fees the Nats receive the Os will extract the same amount from MASN so that if the arbitrators select a high enough number it is possible that they could bankrupt the network.

http://www.washingtonpost.com/sports/nationals/washington-nationals-are-due-a-bigger-check-from-masn-for-tv-rights/2012/05/18/gIQA6wbOZU_print.html
Why should the O's get the same as the Nats? Bawlmer is a smaller market with less income. It should be more like 65/35 if you ask me...

Offline PowerBoater69

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Why should the O's get the same as the Nats? Bawlmer is a smaller market with less income. It should be more like 65/35 if you ask me...

Right, the Os get league revenue sharing because they are a small market team, they get an equal share of the annual rights fees, and they get the majority share of equity in MASN.  Who the hell represented DC in this deal?