WP: Nats MASN deal renegotations will have a huge impact

[welch]

Analysis from a guy named Power Boater (do we know him?) in TalkNats:

https://www.talknats.com/2023/12/16/the-long-running-masn-case-is-closed/

[Senatorswin]

So it seems for now on the MLB panel will set the fees and the Orioles have run out of arguments to fight it so things should go fairly smoothly from here on out. The one interesting thing in the attachment was the question if the Orioles are sold will MLB insist on ending the MASN agreement as a condition of approving the sale.

The one unfortunate thing is the Orioles have promised the state of Maryland they will not sell a majority sale of the team if they are given development rights to land around Camden Yards.

[PowerBoater69]

Analysis from a guy named Power Boater (do we know him?) in TalkNats:

https://www.talknats.com/2023/12/16/the-long-running-masn-case-is-closed/

This thread was very helpful in putting together the timeline.

[Natsinpwc]

This thread was very helpful in putting together the timeline.

Good recap. Thanks for that. Very helpful as it’s easy to forget what has happened over so many years. 

The “math error” by the Orioles is priceless. 

[PowerBoater69]

Good recap. Thanks for that. Very helpful as it’s easy to forget what has happened over so many years. 

The “math error” by the Orioles is priceless. 

A funny thing about the RSDC document was that it started out heaping praise on the experts from both sides, then was highly critical of their math and their ability to back up their claims. Both sides got torched.

[imref]

Great read PB. Lock thread.

[Senatorswin]

Yep, that article covered all the bases from where it started to where they're at now. Excellent. Thanks PB.

[Five Banners]

Great read PB. Lock thread.

This seems a logical place for more MASN related news, which I don’t think is completely wrapped up with this development, especially potential extrication at some point

[rileyn]

Fantastic job PB69.

[PowerBoater69]

Yep, that article covered all the bases from where it started to where they're at now. Excellent. Thanks PB.

Great read PB. Lock thread.

Fantastic job PB69.

Thanks guys

[GburgNatsFan]

Awesome job, PB.

This thread was very helpful in putting together the timeline.

[Natsinpwc]

A funny thing about the RSDC document was that it started out heaping praise on the experts from both sides, then was highly critical of their math and their ability to back up their claims. Both sides got torched.

Almost sounds like they use some boilerplate language at the start of their written decisions.  Before they get to the nitty gritty. 

[PowerBoater69]

Almost sounds like they use some boilerplate language at the start of their written decisions.  Before they get to the nitty gritty. 

Seemed like a message to the court that everything was fine at the MLB hearing, no need to intervene.

[nfotiu]

What is your reasoning for this statement, PB69?   

Second, the fees awarded to the Nats by the MLB panel (RSDC) are much lower than the team would have been paid on the open market.

They are pretty much in the ball park of where you'd expect them to be.

https://blogs.fangraphs.com/lets-update-the-estimated-local-tv-revenue-for-mlb-teams/

NBC sports was the only other RSN in town during most of MASN's existence.  I don't know that they would have seen value in adding the Nats for much more than MASN ended up paying.

If there wasn't all the legal nonsense and costs and they were paid when they were supposed to be, then it was a pretty fair deal.

A lot of MLB teams got backend heavy deals and they'll never see the backends as Ballys, NBC and AT&T are all leaving or bankrupting their deals.   The Nats are actually in a better spot at the moment than most other teams who don't look to have a tv contract past next year.

One other piece missing from your timeline, is that MASN offered a settlement of a 100m*20 year deal around 2012 that was structured as starting at 50 and escalating to 150 by the end.   The reason for the Os offering it and the Nats turning it down, is they both mistakenly thought the RSN business would continue to grow.   It would have been a good deal for the Nats and it should have been evident at the time that this model was going to blow itself up.   Although it would only be a good deal if MASN didn't bankrupt itself about now, which it probably would have.

It sounds from the court docs that the margin is very low at this reset payout, so the equity in MASN that was supposed to be the Os valuable property is basically worthless.   

[Natsinpwc]

I would have to think that if Monumental buys the team there are some economies of scale in having the same network as the Caps and Wizards. 

[JCA-CrystalCity]

I would have to think that if Monumental buys the team there are some economies of scale in having the same network as the Caps and Wizards. 

It also becomes just a much more attractive package for a year-round subscriber. It becomes much closer to NESN in terms of programming. No Charlie Moore

[PowerBoater69]

What is your reasoning for this statement, PB69?   

They are pretty much in the ball park of where you'd expect them to be.

https://blogs.fangraphs.com/lets-update-the-estimated-local-tv-revenue-for-mlb-teams/

NBC sports was the only other RSN in town during most of MASN's existence.  I don't know that they would have seen value in adding the Nats for much more than MASN ended up paying.

If there wasn't all the legal nonsense and costs and they were paid when they were supposed to be, then it was a pretty fair deal.

A lot of MLB teams got backend heavy deals and they'll never see the backends as Ballys, NBC and AT&T are all leaving or bankrupting their deals.   The Nats are actually in a better spot at the moment than most other teams who don't look to have a tv contract past next year.

One other piece missing from your timeline, is that MASN offered a settlement of a 100m*20 year deal around 2012 that was structured as starting at 50 and escalating to 150 by the end.   The reason for the Os offering it and the Nats turning it down, is they both mistakenly thought the RSN business would continue to grow.   It would have been a good deal for the Nats and it should have been evident at the time that this model was going to blow itself up.   Although it would only be a good deal if MASN didn't bankrupt itself about now, which it probably would have.

It sounds from the court docs that the margin is very low at this reset payout, so the equity in MASN that was supposed to be the Os valuable property is basically worthless.   

Great question. There is no way to prove what the Nats would have been paid in an open bidding process since it never happened. For the first reset in 2012 rights fees were still sky rocketing. The Nats asked for over $100 million per year and got $60 million. Certainly the team thought that they were underpaid, but they are also biased. The Os and Nats are being paid the same fees and the Nats in the larger and wealthier media market, leading to a safe assumption that the Nats were underpaid. But you are correct, I don't have definitive proof to back up that statement.

[IanRubbish]

In other RSN news, Amazon is looking to save Bally Sports.  I question how long these things will be worth anything, but at least Amazon can bring these networks into modern times with streaming rights.

https://cordcuttersnews.com/bally-sports-has-a-savior-amazon-reportedly-looking-at-investing-in-the-troubled-sports-network/

[nfotiu]

They don't own mlb streaming rights for the most part though, so I don't see how this works?   I definitely can see the league and/or teams trying to sell local tv rights and maybe even de-regionalizing them to Amazon and the others, but I wouldn't think MLB would be willing to go through these Bally's sports nets to make it happen.

[IanRubbish]

They don't own mlb streaming rights for the most part though, so I don't see how this works?   I definitely can see the league and/or teams trying to sell local tv rights and maybe even de-regionalizing them to Amazon and the others, but I wouldn't think MLB would be willing to go through these Bally's sports nets to make it happen.

I'm guessing they would take negotiating power to a new level, and also do something about the very outdated concept of local blackouts.

[HalfSmokes]

Ballys has nba deals even if they don’t have mlb. Amazon could also force MLB to partner with them in exchange for waiving blackout rules

[JCA-CrystalCity]

I'm guessing they would take negotiating power to a new level, and also do something about the very outdated concept of local blackouts.

Yes. I can imagine MLB wanting to stay on the good side of Amazon to capture a lot of revenue streams. I can easily see a product on Amazon's website where you can buy streaming rights to your local team much like any product, and have local defined by an IP address, then maybe a second product for national streaming and cable rights for out of market like MLB.TV.  The crimp might be on NESN, YES, MASN, and SNY for out of market broadcast.

Working backwards, how many teams have strong RSN partners or ownership interest in a strong RSN?

[nfotiu]

Yes. I can imagine MLB wanting to stay on the good side of Amazon to capture a lot of revenue streams. I can easily see a product on Amazon's website where you can buy streaming rights to your local team much like any product, and have local defined by an IP address, then maybe a second product for national streaming and cable rights for out of market like MLB.TV.  The crimp might be on NESN, YES, MASN, and SNY for out of market broadcast.

Working backwards, how many teams have strong RSN partners or ownership interest in a strong RSN?

Wilpon still owns SNY and wants out, so I wouldn't call them very strong.  The fangraphs article shows who has ownership rights...
https://blogs.fangraphs.com/lets-update-the-estimated-local-tv-revenue-for-mlb-teams/

A lot of those are RSNs in trouble though.   Bally's makes up about half of them.  The teams on Root/NBC/AT&T have basically been given their RSNs back.

I'm curious about how the Dodgers partnership works.   They own half that RSN, but it is clearly losing a tonne of money a year to pay the Dodgers?   Do the Dodger owners incur any of those losses?

YES and NESN are probably the ones with the most to lose.   They are structured to pay the teams rights that are subject to 48% revenue sharing, but the team gets to keep the profits of the RSN to themselves.  They are subject to the same decline in subscribers as everyone else, so that margin has to be shrinking.

I have to think there is a lot of talk amongst owners about de-regionalizing TV broadcasts.   I don't know that Amazon wants to get involved in a complicated mess of regional games geolocked to certain areas.   Can the few owners who'd be against that be out-voted?   MLB needs a plan for the future, and expensive geo-locked direct to customer subscriptions would be a disaster.

MLB has been more vocal in accepting they have a problem with how games are viewed locally and are looking for solutions.   The ideal position for MLB would be to be able to get all in-market/out of market games packaged up and out for bid to Amazon, Apple, ESPN, etc.   Amazon wouldn't really get any leverage towards the MLB by buying into Bally's and not getting streaming rights.  It is possibly they could let the MLB rights die in bankruptcy court as planned, and just buy into Bally's for the NHL/NBA rights.   There is also the big problem of the Ballys/Diamond subsidary owing Sinclair ridiculous management fees.   

Amazon could be looking at buying certain assets or rights through the bankruptcy court and with league's blessings too.

[JCA-CrystalCity]

I imagine there's a way to a deal with buying out NESN and YES given how valuable they are still. NESN may be fading, but it's been the most watched channel in New England for a long time. Good fishing and dining content, and ties to NE colleges. Hockey East broadcasting is pretty popular. I honestly think Leonsis would rather merge MASN into his channel and try to go big rather than have MASN dissolved.

[bluestreak]

It’s Over.  Thread locked.