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

[BradyBunch]

Which will hurt the DC economy for business' working there. Nats should have saved up and built a stadium, IE Gillette Stadium, AT&T Park, etc. The ball team makes more money in the long run, so they don't have to give up sponsor money that could help put a competitive team on the field.

Hurt who in DC?

Go more in depth on second part so I understand what you mean.

[Frobby]

Lerner prices things to what the market can bear with the express purpose of winning a championship. Angelos has managed the Orioles differently.

Angelos' market won't bear the prices that Lerner is able to charge. That's an indisputable fact. The metro DC area is much wealthier than the metro Baltimore area.

[BradyBunch]

Angelos' market won't bear the prices that Lerner is able to charge. That's an indisputable fact. The metro DC area is much wealthier than the metro Baltimore area.

Yep. People forget this. O's had price flexibility when there was no DC team. Also consider the fact that DC political money (Lobbyist, Congressional and Federal employees) in the area has stayed in DC. When before that K street (lobbyist), Congressional members and so on would be at Camden Yards. You know buying suites for the year or box seats to do business when the Redskins weren't playing during the summer.

[weams]

Wouldn't you think with the Nationals blowing their chance to make a mark on MLB, that they would now be more willing to sit down and make a good resolution for both clubs? Or at least focus back on putting forth a good product rather than advancing a supposed back room deal?

[weams]

Angelos' market won't bear the prices that Lerner is able to charge. That's an indisputable fact. The metro DC area is much wealthier than the metro Baltimore area.

So very, very true. The Nationals have a very good situation without reaching for unrealistic money from MASN.

[weams]

My opinion? Reach an agreement for the next decade and accelerate the equity timetable. I can see that as a win for both clubs. Unless the only acceptable resolution for DC is to bankrupt the RSN.

[Frobby]

My opinion? Reach an agreement for the next decade and accelerate the equity timetable. I can see that as a win for both clubs. Unless the only acceptable resolution for DC is to bankrupt the RSN.

The decision of the RSDC doesn't bankrupt the RSN, it leaves it with a 5% profit, based on conservative revenue projections. Actual profits are likely to be higher. It's MASN that is appealing that, not the Nats, so there's no real risk of the Nats bankrupting MASN. The Nats' initial position in the arbitration, rejected by the RSDC, quite likely could have bankrupted MASN, but the RSDC didn't buy that argument and the Nats can't press it at this point.

[weams]

The decision of the RSDC doesn't bankrupt the RSN, it leaves it with a 5% profit, based on conservative revenue projections. Actual profits are likely to be higher. It's MASN that is appealing that, not the Nats, so there's no real risk of the Nats bankrupting MASN. The Nats' initial position in the arbitration, rejected by the RSDC, quite likely could have bankrupted MASN, but the RSDC didn't buy that argument and the Nats can't press it at this point.

Unless they get a favorable ruling next reset?

[Frobby]

Unless they get a favorable ruling next reset?

I don't think the RSDC can depart from the logic of the first ruling without losing any shred of credibility. The only thing they can do is make different rulings about what revenues are likely to be and what percentage profit is reasonable for the period.

[MDtransplant757]

I think the O's are gonna drag this out big time in court. Gonna be interesting to see where this goes, and make sure the judges aren't baseball fans.

[Frobby]

I think the O's are gonna drag this out big time in court.

Mission accomplished. The court case has been pending for more than a year, with no decision yet. An appeal will take another year or more. Then there will be a further appeal, which will take anywhere from three months (if the New York Court of Appeals decides not to hear the appeal) to 12-18 months (if they decide to hear it. So, this case probably has another 15-33 months before a decision is final. Meanwhile, the next reset period begins with the 2017 season. I'm sure MLB would like to have a decision from the court it can rely upon before deciding what procedures to follow and how to make a substantive ruling that won't take another four years to resolve.

I have to say, with every day that passes by, the odds that the trial court's Devision will favor MASN improve. It doesn't take this long unless the court is really wrestling with the arbitrator's decision.

[hoosiers]

The decision of the RSDC doesn't bankrupt the RSN, it leaves it with a 5% profit, based on conservative revenue projections. Actual profits are likely to be higher. It's MASN that is appealing that, not the Nats, so there's no real risk of the Nats bankrupting MASN. The Nats' initial position in the arbitration, rejected by the RSDC, quite likely could have bankrupted MASN, but the RSDC didn't buy that argument and the Nats can't press it at this point.

MASN would not be bankrupted, but I expect that profits from the early (and perhaps all) years of the reset have already been distributed to the MASN owners (which is disproportionately Orioles owners). If MASN were ordered to pay additional $ to the Nats and Orioles based on the RSDC decision, MASN would need a large loan, a return of the previously distributed, now inflated profits or a capital infusion from partners. I am sure a ballpark figure can be estimated fairly quickly, but I expect it's a big number ($50M-$100+M) that would dent MASN profits and cash flow tremendously - which is why we have heard of some initial negotiating and these legal proceedings. It could take several years of cash flow and profits at the reduced 5% margin to pay off such a loan - severely altering the distributions from what was thought to be a cash cow a few years ago.

I understand above that Weams has some new religion and realizes that there could be an acceleration of the equity timetable. This is a very possible solution, but given the acrimony in these negotiations, I think a clean split of local TV rights between the Os and Nats is best case for the long term with each team selling and marketing their TV rights. Even in that case, I would like to see the Os/Os ownership retain some annual dividend ($10+M) from the Nats to offset the difference in fees. So, perhaps not entirely a clean split, but it gives the Os the $ from our territory as well as a portion of the DC territory the Os once owned.

[mcgraw238]

MASN would not be bankrupted, but I expect that profits from the early (and perhaps all) years of the reset have already been distributed to the MASN owners (which is disproportionately Orioles owners). If MASN were ordered to pay additional $ to the Nats and Orioles based on the RSDC decision, MASN would need a large loan, a return of the previously distributed, now inflated profits or a capital infusion from partners. I am sure a ballpark figure can be estimated fairly quickly, but I expect it's a big number ($50M-$100+M) that would dent MASN profits and cash flow tremendously - which is why we have heard of some initial negotiating and these legal proceedings. It could take several years of cash flow and profits at the reduced 5% margin to pay off such a loan - severely altering the distributions from what was thought to be a cash cow a few years ago.

I understand above that Weams has some new religion and realizes that there could be an acceleration of the equity timetable. This is a very possible solution, but given the acrimony in these negotiations, I think a clean split of local TV rights between the Os and Nats is best case for the long term with each team selling and marketing their TV rights. Even in that case, I would like to see the Os/Os ownership retain some annual dividend ($10+M) from the Nats to offset the difference in fees. So, perhaps not entirely a clean split, but it gives the Os the $ from our territory as well as a portion of the DC territory the Os once owned.

I doubt that MASN distributed substantial profits from the reset years with the dispute going on. I can actually see the case where no profits were distributed. There was likely some profit distribution with a reserve account established to accrue funds for the resolution of the right fees. If I were advising MASN, I would have established a reserve account on the larger side given the demands made by the Nats, which leaves less to distribute in profits. Your suggesting that MASN distributed profits while have a potentially giant unfunded liability on the books. That would be insane on any level of financial accounting. I really doubt the scenario you outlined would come to fruition.

[spiritof66]

Some time ago, I estimated the net difference to the two teams between MASN's position and the amount set by MLB at about $14 million per year. There will soon be four seasons that have passed without a final determination of reset rights fees, 2012 through 2015. If my $14 million estimate is in the ballpark, the difference in the amount due to the Nats (from MASN, or from the Orioles if MASN distributed its profits each year), should the Nats and MLB prevail, would be $50 million to $60 million, plus some interest.

I don't know how they've handled this, but I assume the Orioles' spending has been curtailed for the last few years because of the lingering possibility that MASN (or the Orioles, as MASN's majority owner, insofar as MASN made distributions to the Orioles and the Nats) would have to write a big check to the Nats, without knowing when that payment would have to be paid.

[brooksfrankjim]

The real issue with MASN is that the fees being generated from cable providers are significantly below market. The Nationals want to compare the rights fees they are getting with what they could get on the open market. If MASN was generating the fees it should be getting it could pay the Orioles and the Nats market rates and still distribute significant profits. This is essentially a court case of MASN mismanagement by Angelos.