MASN had no positive value in sales agreement

[Roll Tide]

Quote

So why no love for MASN?

Industry insiders tell Forbes that MASN has no real equity value. Three years ago, MASN generated operating income (earnings before interest, taxes, depreciation and amortization) of more than $90 million, according to SNL Kagan. But now, sources say, the rights fees that MASN pays the Orioles and the Nationals—a little over $60 million per team annually—eat up all of its cash flow.

In addition, as a result of a television rights fee dispute that was settled in December, the Orioles and the Nationals are due to receive around $305 million each from MASN. Funding that payout may require hefty borrowing, sources say. Moreover, Comcast’s contract with MASN is set to expire at the end of February. If a deal is not reached, the TV provider would no longer broadcast Nationals and Orioles games. MASN, which has already undergone cost-cutting measures, would also lose out on valuable income.

 

 

 

 

https://www.forbes.com/sites/mikeozanian/2024/02/16/why-masn-was-given-no-value-in-17--billion-sale-of-baltimore-orioles/?sh=6feba36a5e5f

Edited February 18 by Roll Tide

[Can_of_corn]

Why?  Because it was ineptly managed.

Now it is not considered superior to any deal another team has in place.

[RZNJ]

11 minutes ago, Can_of_corn said:

Why?  Because it was ineptly managed.

Now it is not considered superior to any deal another team has in place.

I’m sure it was ineptly managed.  Would you say the same thing about Diamond Sports Group?

[ThisIsBirdland]

In addition to the usual RSN issues, I wonder how much the rights fees disputes may have enabled ownership to collect profit which would in the future be owed back to the teams? I’m still surprised they didn’t have to keep that money in escrow but if money was being pulled out of MASN for all those years of disputes that helps explain the team/MASN value. The sale may well have been entirely necessary to provide the Angelos’ with the cash needed to settle the rights fees balance?

Fingers crossed Rubenstein unwinds MASN, reaches a deal to sever the relationship with the Nats, and we have a streaming option in the near future. I’ll drop FIOS once that happens.

[Aristotelian]

Shouldn't most of the cash flow go to the team? This just means that MASN's value is embedded in the Orioles. I have no idea if that is unusual or not but doesn't strike me as necessarily a red flag.

[SemperFi]

25 minutes ago, ThisIsBirdland said:

In addition to the usual RSN issues, I wonder how much the rights fees disputes may have enabled ownership to collect profit which would in the future be owed back to the teams? I’m still surprised they didn’t have to keep that money in escrow but if money was being pulled out of MASN for all those years of disputes that helps explain the team/MASN value. The sale may well have been entirely necessary to provide the Angelos’ with the cash needed to settle the rights fees balance?

 

I posted previously that that makes the most sense.  I can't see another reason the Angelos family would absorb the tax hit on the sale prior to the stepped up basis.  Lot of assumptions but back of the envelope math ends up with a tax bill of ~$133m (assuming 80% ownership and a conservative 30% tax with $100m purchase basis).  Why sell now?  

Maybe someone with an estate planning background can help??  The ironic thing is it could end up as a nice gift to the state that JA was so recently trying to leverage.

 

 

[wildbillhiccup]

This article is from Dec of 2023. Apparently MLB's goal is to have "both national and local broadcast revenue run through the league's media department". I could see that eventually happening for every team not named the Yankees or Dodgers. 

https://sports.yahoo.com/how-the-collapse-of-the-regional-sports-network-is-affecting-mlb-economics-now-and-in-the-future-155227283.html

[UMDTerrapins]

I’ve speculated this before, but I wonder if the negotiated sales price and structure of the deal was improved at some point to cover the tax hit the Angelo’s family would face if selling prior to PA’s passing. 

[forphase1]

4 minutes ago, wildbillhiccup said:

This article is from Dec of 2023. Apparently MLB's goal is to have "both national and local broadcast revenue run through the league's media department". I could see that eventually happening for every team not named the Yankees or Dodgers. 

https://sports.yahoo.com/how-the-collapse-of-the-regional-sports-network-is-affecting-mlb-economics-now-and-in-the-future-155227283.html

Very informative article that I'd missed.   Thanks for sharing. 

[Can_of_corn]

2 hours ago, RZNJ said:

I’m sure it was ineptly managed.  Would you say the same thing about Diamond Sports Group?

Yes but I'm not clear on how well it worked out for the parent company.

[Frobby]

There are some things in the Forbes article that make no sense.  I do believe that MASN’s value isn’t that large, but some elements appear greatly exaggerated.  

For example: “In addition, as a result of a television rights fee dispute that was settled in December, the Orioles and the Nationals are due to receive around $305 million each from MASN.”   What’s referenced there is the arbitration award covering the period 2017-21.  The panel set the total fees for the period at $305 mm per team.  But the only way that is what is “owed” now is if MASN has been paying the two teams absolutely nothing over that five year period.   That can’t possibly be what’s happened.   

As to the rights fees eating up “all of MASN’s cash flow,” that certainly wasn’t the intent of the arbitration panel, which looked at MASN’s revenue and expense projections for 2017-21 and set the rights fees at a level that was supposed to leave an operating profit of 10-20% depending on the year.  If those fees did eat up MASN’s cash flow, it’s because MASN failed to meet its own projections during 2017-21, probably due to greater than expected cord-cutting.  

In any event, so far as we’ve heard the rights fees for the current period (2022-26) haven’t been set yet, but based on the past arbitrations they should be set at a price that is expected to leave MASN some profit.   


 

[eddie83]

Not saying it will ever happen but if I was running a team I would go back in time. I would air 20-25 games on local TV. The Orioles did this on WJZ until a couple of years ago. It helps to keep more fans connected to the team. It’s not like you will lose customers of RSN/streaming either. 

[btownoriole]

3 minutes ago, eddie83 said:

Not saying it will ever happen but if I was running a team I would go back in time. I would air 20-25 games on local TV. The Orioles did this on WJZ until a couple of years ago. It helps to keep more fans connected to the team. It’s not like you will lose customers of RSN/streaming either. 

I believe some NBA teams are doing this in response to the RSN mess.  With cord-cutting teams desperately need reach and this is still the best way to do it.

[Roll Tide]

4 hours ago, RZNJ said:

I’m sure it was ineptly managed.  Would you say the same thing about Diamond Sports Group?

The non baseball programming is awful. And they don’t even cover the Orioles right IMO.

[Going Underground]

41 minutes ago, eddie83 said:

Not saying it will ever happen but if I was running a team I would go back in time. I would air 20-25 games on local TV. The Orioles did this on WJZ until a couple of years ago. It helps to keep more fans connected to the team. It’s not like you will lose customers of RSN/streaming either. 

Only about five or so teams last year ran games on local tv. Mets had the most I think of any team. Maybe with the RSN's issues ,teams can start to put a few games on regular tv 

Edited February 18 by Going Underground