HHP: MASN/Nats/Orioles case (Inside the Courtroom)

[mdbdotcom]

Baltimore couldn't support the Bullets, which is why they ended up in DC and then Landover and then back in DC.

As for the NHL, like you said, if the town would have been able to support them, they would have already been there.

The Chicago Zephyrs moved to Baltimore because there was no suitable place to play in the DC area. They were always intended to be a Washington team.

[Nigel Tufnel]

Doesn't the contract read something like "after X amount of time the Nats' fee amount will be reset to a rate set by prevailing market conditions"? And didn't an independent arbitration panel the O's and Nats agreed to then set that rate? And now that they got what they see as an unfavorable result MASN/Orioles/Angelos are saying that it's all screwed up and they're not abiding by the process they agreed to?

I think it says that the MLB TV committee is supposed to set the price, using its established methodology. The committee has a formula that its used to set TV prices for other teams, and Angelos is arguing that the formula is their established methodology. So the question is, does the committee just get to name the price, or do they have to use the formula. The O's are currently paying the Nats exactly what the formula says.

[Stotle]

My understanding; some of this may be off as it's been a while since I was stepped through the details:

One element is Baltimore's claim that the proposed "fair market value" of the Nats' television rights would render MASN unprofitable. Part of the reason Baltimore can make this claim is that MASN appears to be fairly poorly run, drawing less in advertising deals and cable distribution deals than it should. Were MASN bringing in the money most expect it to, there would be an easier solution to this.

The Nats want to receive what would be typical in a comparable situation. Baltimore wants to pay based on a formula that utilizes actual money coming into the network.

[DrungoHazewood]

Part of the reason that the Orioles are challenging the process is because prior to the arbitration hearing, The Nats went to MLB to complain that they weren't getting enough money and MLB gave them an additional $30 million to tide them over until the arbitration decision was reached. Shockingly MLB's arbitration panel sided with the team that they had just given a lump sum of money to. Hence the Orioles complaint that the arbitration panel's finding was invalid because MLB had a fiduciary interest in the Nationals receiving more money. Setting aside the $30 million, MLB has a fiduciary interest in claiming that local television rights values are higher than they actually are because it increases franchise values, so they cannot be truly impartial.

It's a mess. They've set up this convoluted system, with teams trying to hide revenues in related companies like MASN to avoid revenue sharing, while MLB wants to maximize franchise values, and they have all of these territorial rights that they set up themselves but then need to work around when it's in the best interest of the league as a whole.

[TonySoprano]

No, I believe you have it backwards. The Nats get $40 million a year plus currently 15% market share, that goes up 1% each year up to a max of 33%. That's what the Nats agreed to, and its why Angelos signed off on the Nats going to DC. Its the Nats who are now trying to get more out of the agreed upon deal.

And like others have said, screw the Expos! Had it not been a beneficial deal for the Orioles, the Expos would be playing somewhere else right now.

Since you enjoy having me correct you, this has to deal with the annual rights fees which is different than the ownership percentage you're talking about.

P.S. If it wasn't for Washington, you'd be rooting for the Phillies probably because there would be no team in Baltimore.

[gmelson26]

This is a lot bigger than an All Star Game.

Absolutely, that's why I suggested additional leverage. If I'm Selig, I use everything I have to try and stop this.. which is to say I cannot stop it.

[Nigel Tufnel]

My back-of-the-envelope calculations say that, for each additional $10 million in rights fees paid to the Nats in 2014, the Nats get about a third of the money, and MLB gets the other two-thirds, to be split between the other 28 teams. The O's foot the entire bill - they lose $10 million even considering that they also get an extra $10 million in rights fees.

And I'm too lazy to show my work - besides, what is this, Common Core?

[gmelson26]

Of course MLB has interest in giving more rights fees to the Nats. More money in their pocket. The formula might seem to heavily favor the O's but look at ratings..

"Through the first week of July the Nats games are getting a 1.90 rating and the O’s are getting a 5.58. Both are down from last year, but the Nats are down much more of the two.

(Source: http://www.bizjournals.com/washington/blog/2014/07/the-nationals-areexperiencing-local-television.html)"

[DrungoHazewood]

P.S. If it wasn't for Washington, you'd be rooting for the Phillies probably because there would be no team in Baltimore.

I think there's an excellent chance that Baltimore would still have an International League team and 11,000-seat OPACY would be right up there with Pilot Field, the Brickyard Ballpark and Victory Field as the nicest in AAA.

[MurphDogg]

I think there's an excellent chance that Baltimore would still have an International League team and 11,000-seat OPACY would be right up there with Pilot Field, the Brickyard Ballpark and Victory Field as the nicest in AAA.

22nd largest metropolitan area with the 4th highest median household income. My guess is that Baltimore would still have a team.

[weams]

My understanding of the reset was that the formula in place for calculating television rights fees would be used at each and any reset. Forever.

[Nigel Tufnel]

22nd largest metropolitan area with the 4th highest median household income. My guess is that Baltimore would still have a team.

But how much of that metropolitan area exists because of its commuting distance to DC?

[mdbdotcom]

But how much of that metropolitan area exists because of its commuting distance to DC?

If it hadn't been for Baltimore, they never would have put the nation's capital on that swampland. And what if we hadn't won the Battle of North Point?

[Frobby]

:wedge:

Part of the agreement between the Nats, Orioles, and MLB was a reset of the telecast rights fees paid to the Nats in 2012 to whatever "fair market value" is. The Nats and O's couldn't agree on that number, so the process outlined in the agreement was to go to arbitration. That's what happened. The O's/MASN didn't like the outcome, so that's where we are, with the O's/MASN challenging the process they signed up for.

My understanding of the reset was that the formula in place for calculating television rights fees would be used at each and any reset. Forever.

It would be nice to see what the contract actually says, instead of relying on the spin put on it by both sides' lawyers in court documents and public statements. The Petition I posted a link of yesterday redacts that key information. So, it is impossible to judge whether the interpretation by the MLB panel is reasonable or not.

I will comment this much, though: I doubt the contract provides for the rigid application of some rote formula that has no discretion in it. If it did, there would be no need for resetting every five years, no need for an arbitration panel, and no need to take 2.5 years to decide the issue. I seriously doubt that the MLB panel is simply ignoring some formula that is stipulated in the contract. Rather, the contract probably leaves some things open to interpretation, and MASN doesn't like the panel's interpretation.

I really hope more details leak out in the coming days and weeks.

[TonySoprano]

22nd largest metropolitan area with the 4th highest median household income. My guess is that Baltimore would still have a team.

But how much of that metropolitan area exists because of its commuting distance to DC?

D.C. by itself is 4th in size. However, when talking about the "4th highest median household income" that includes Washington which significantly changes the argument as to what Baltimore can do on its own. D.C. has six of the top ten richest counties in the entire country. Baltimore's median household income alone would be much lower than 4th. Back to metropolitan area size, Riverside, CA (12th), Portland (19th), Orlando (20th) are all larger than Baltimore but don't have a team. Sacramento (24th) and Charlotte (25th), Salt Lake City (27th) are also large areas without a team.