MASN dispute update

[Frobby]

25 minutes ago, TGO said:

I believe the lowest the O's ownership of MASN will ever go is 67%.

Correct.   They own 80% this year and it reduces 1% a year until it hits 67% in 2032, then stays flat from there.   

[Satyr3206]

2 hours ago, Frobby said:

Correct.   They own 80% this year and it reduces 1% a year until it hits 67% in 2032, then stays flat from there.   

And some said the deal was stupid and not negotiated well.

[AnythingO's]

Thanks to Frobby for the math but I believe years ago Frobby also determined that the Orioles MLB franchise and the MASN operation were owned or at least managed by separate Partnerships, each owned largely by the Angelos family. The Orioles, if my memory is correct, do not own MASN and MASN profits do not accrue to the Orioles. PA would have to agree to spend those profits on the Orioles MLB franchise.

[Can_of_corn]

1 minute ago, AnythingO's said:

Thanks to Frobby for the math but I believe years ago Frobby also determined that the Orioles MLB franchise and the MASN operation were owned or at least managed by separate Partnerships, each owned largely by the Angelos family. The Orioles, if my memory is correct, do not own MASN and MASN profits do not accrue to the Orioles. PA would have to agree to spend those profits on the Orioles MLB franchise.

I think that if the Orioles owned MASN that all profits would be subject to revenue sharing.

[AnythingO's]

2 minutes ago, Can_of_corn said:

I think that if the Orioles owned MASN that all profits would be subject to revenue sharing.

Oh no doubt considerations like that went into the Partnership setup, that is assuming my memory of Frobby,s research is accurate. I just wanted to dispel the idea that MASN profits go directly to the Orioles. If I remembered correctly, it's PA's decision either way as he would be majority owner in both Partnerships. But PA would have to choose to rob Peter to pay Paul.

[Can_of_corn]

2 minutes ago, AnythingO's said:

Oh no doubt considerations like that went into the Partnership setup, that is assuming my memory of Frobby,s research is accurate. I just wanted to dispel the idea that MASN profits go directly to the Orioles. If I remembered correctly, it's PA's decision either way as he would be majority owner in both Partnerships. But PA would have to choose to rob Peter to pay Paul.

On at least one occasion he lent the team money.

[spiritof66]

Just now, Can_of_corn said:

I think that if the Orioles owned MASN that all profits would be subject to revenue sharing.

As a general matter, a regional sports network's revenues are not subject to revenue  sharing. However, MLB recognizes that where a team controls the RSN, the amount of the cable rights fees paid by that RSN to the team are not determined by arm's-length bargaining, and that the amount may be set so low that a large portion of the value of the team's cable rights (which ordinarily would lead to revenues subject to sharing) are parked in the RSN, whose revenues are not subject to sharing. 

The purpose of the Revenue Sharing Definitions Committee (the rotating committee of three MLB owners or owner-designates that arbitrated the MASN-Nats dispute) is to review the cable rights fees in those related-party transactions to determine -- as I would put it -- the extent to which teams that control RSNs will be permitted to set rights fees in a way that diverts some of the value of those fees to their RSNs and reduces revenues subject to sharing. 

[spiritof66]

6 minutes ago, AnythingO's said:

Oh no doubt considerations like that went into the Partnership setup, that is assuming my memory of Frobby,s research is accurate. I just wanted to dispel the idea that MASN profits go directly to the Orioles. If I remembered correctly, it's PA's decision either way as he would be majority owner in both Partnerships. But PA would have to choose to rob Peter to pay Paul.

The Orioles, as the controlling partner in MASN, get to decide what to do with MASN's profits. They can distribute those profits to the partners; if they do that, the distribution is in the ratio of the partnership interests (currently 80 percent Orioles, 20 percent Nats). Or the Orioles can leave some or all of the profits in MASN for MASN's use. As controlling partner, the Orioles have an obligation to protect MASN's interests and to treat the Nats fairly by permitting MASN to retain enough of its profits to meet its ongoing needs and by not leaving the profits in MASN just because, hypothetically, the Nats need the money and the Orioles don't. There may be further limitations or requirements about distributing profits in the portions of the 2005 MASN agreement that have been blacked out.

But basically the Orioles call the shots. 

[TradeAngelos]

7 hours ago, Frobby said:

The MASN dispute.   Here’s something relevant: last week MASN filed a brief seeking to clarify a small point about how to calculate the overdue sum on which interest is now due.     In the course of making the argument, MASN disclosed that it paid the Nats $41.8 mm in profit distributions during 2012-16.     It went on to say that it couldn’t have made these payments if rights fees were set at the levels awarded by the panel.    

This figure is interesting because the Nats only owned 13-17% of MASN from 2012-16, so this implies that the Orioles share of the profits (if the O’s had won the arbitration) would have been about  $236.9 mm, in addition to the $197.6 mm in rights fees they received.    So, a total of $434.5 mm over 5 years.    Instead, they’ll receive $296.8 mm in rights fees (equal to the Nats) and about $68.3 mm in profits, for a total of about $365.1 mm.    Still a nice chunk of change from their TV network.    

Yeah I would say this is interesting, especially for all the people that have said the MASN makes no money and isn't profitable. They make and insane amount of money every year off MASN and always have. Just remember that when they tell you they are a "small market team" who can't afford guys like Manny Machado because it would "cripple" their business. Thank you for posting this, might have about 47 threads to bump now. 

[weams]

14 hours ago, Frobby said:

The MASN dispute.   Here’s something relevant: last week MASN filed a brief seeking to clarify a small point about how to calculate the overdue sum on which interest is now due.     In the course of making the argument, MASN disclosed that it paid the Nats $41.8 mm in profit distributions during 2012-16.     It went on to say that it couldn’t have made these payments if rights fees were set at the levels awarded by the panel.    

This figure is interesting because the Nats only owned 13-17% of MASN from 2012-16, so this implies that the Orioles share of the profits (if the O’s had won the arbitration) would have been about  $236.9 mm, in addition to the $197.6 mm in rights fees they received.    So, a total of $434.5 mm over 5 years.    Instead, they’ll receive $296.8 mm in rights fees (equal to the Nats) and about $68.3 mm in profits, for a total of about $365.1 mm.    Still a nice chunk of change from their TV network.    

Wow. Enough to pay a Scherzer.  Only. Good pick up. 

[DrungoHazewood]

10 hours ago, Satyr3206 said:

And some said the deal was stupid and not negotiated well.

Those mostly seem to be the people who think the only correct outcome was the Orioles having 100% control of the entire area from Raleigh, NC to York and from Wilmington to Charleston, WV for all time, and that no team would ever encroach on that.

In that context having the Orioles own 2/3rds of another team's RSN in a larger and richer market seems like a raw deal.

In the context of one who believes that Baltimore and DC aren't the same city and one shouldn't control the other's destiny the O's current agreement seems fantastic for the Orioles and kind of ridiculous for the Nats.

[weams]

Just now, DrungoHazewood said:

Those mostly seem to be the people who think the only correct outcome was the Orioles having 100% control of the entire area from Raleigh, NC to York and from Wilmington to Charleston, WV for all time, and that no team would ever encroach on that.

In that context having the Orioles own 2/3rds of another team's RSN in a larger and richer market seems like a raw deal.

In the context of one who believes that Baltimore and DC aren't the same city and one shouldn't control the other's destiny the O's current agreement seems fantastic for the Orioles and kind of ridiculous for the Nats.

Or they could just go back to Montreal. That would be better for all. 

[weams]

There is no question that Baltimore, DC, and Annapolis are the same market area. Not necessarily for driving around. But for advertising and shared boosterism. Better mass transit could correct the issues. The TV market is definitely shared. Now maybe not Harrisburg or Norfolk. I could see that debate. 

[DrungoHazewood]

39 minutes ago, weams said:

There is no question that Baltimore, DC, and Annapolis are the same market area. Not necessarily for driving around. But for advertising and shared boosterism. Better mass transit could correct the issues. The TV market is definitely shared. Now maybe not Harrisburg or Norfolk. I could see that debate. 

It's going to take some kind of crazy multi-billion dollar Elon Musk hyperloop to make it convenient to get from Nats Park to OPACY in a reasonable amount of time in normal weekday traffic.  And by your definition San Francisco and Oakland are one market, as are Anaheim and LA.  Certainly the Bronx and Flushing Meadows.  Not sure baseball really needs to kick out all the teams splitting huge markets.  The Yanks don't need the help.

Also, it'll be sad to see the Ravens go.

[Going Underground]

I can see the Orioles not wanting to give more in broadcast rights fees to the Nationals. This is subject to revenue sharing. Plus the Orioles have to match that.So all the additional money in rights fees go to revenue sharing and not separate of MASN revenue.Also when you own 90 or so percent of the network and will go down to 67 % by 2032,the profits will keep decreasing .Also RSN will be much different by then.