MASN had no positive value in sales agreement

[SemperFi]

1 hour 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

Thanks WB-interesting article.  What strikes me is the continued centralization and distribution of money through the aegis of MLB.  During the Covid period revenue sharing was suspended (the reason the Orioles show losses during that period) but the MLB Trust Securitization and Facility fund were greatly increased with MLB now holding debt for all but two franchises.   https://sports.yahoo.com/mlb-adds-1-9-billion-154052497.html

And team debt is substantial-$8.3b or almost $300m per team (2021 numbers).  This shift from locally generated revenue to one distributed through the Commissioner's office leads me to believe they are slowly shifting from a big market driven model which could greatly benefit the Orioles.

 

 

[Orioles West]

Based on the financial losses and the lawsuit settlement math — maybe MLB Commish Manfred is on to something regarding the Nats move on and find/build their own RSN or TV rights package, allowing the O’s sole possession of MASN?

For every team outside of the Yankees and Dodgers this particular revenue stream appears to be vanishing far faster than the most dire predictions.

 

[sevastras]

Back in my day….. when I was a kid, the Braves were in TBS in Hanover PA. There was an inordinate amount of Braves fans around and I believe that was just because they could see those games just as easy as Os games.   
Some people are good at tv and some aren’t. The Expos coming to DC was always a difficult and poorly negotiated deal on the Os part. 

[Warehouse]

1 hour ago, Frobby said:

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.   


 

The RSDC report indicated that MASN did fail to meet revenue projections due to higher than expected cord cutting.  It also showed that SNL Kagan dramatically overestimated MASN’s profitability.  

On the other hand, I’d also expect that MASN expenses were less than forecast in 2016 given the aggressive cost cutting measures reported in the Banner last week. 

“Further, the Nationals demonstrate that SNL Kagan overstated MASN’s profits by up to [redacted] times, which undermines confidence in the accuracy of cash flow margins SNL Kagan shows for other RSNs Bortz used in its comparisons.” P.23

“Q: And why did MASN and other RSNs not meet their revenue projections?  A: “Cord cutting was at a faster pace and more extreme than the industry and MASN had expected at the outset. So subscribers declined at a much faster rate and MASN lost about a quarter of its sub base during this time frame.” P. 35 footnote 

 

 

 

[Warehouse]

As far as the next rights negotiation, I’d expect the most contentious input to be the prospective revenue projections, whereas the profit margin may less controversial given precedent.

While there was a big debate about prospective vs retrospective analysis (resolved in Nats’ favor) in the last cycle, the prospective forecast developed by the Os in 2016 wasn’t very controversial.  This was likely because it was overly optimistic in hindsight, so Nats couldn’t credibly argue that the O’s were sandbagging.  

In the next cycle, there is tremendous uncertainty about cord cutting and MVPD deals, especially from the prospective lens of 2021.  3 of the 5 years will truly be prospective.  The Nats could try to argue that the Os’ 2021 Bortz projections represent an extreme worst case scenario. 

One thing to note is that the Nats’ incentive to prefer rights fees vs profit will be diminished in the next cycle given their increasing equity share and the revenue sharing plan impacts.  It’s still in their interest to prefer higher rights fees in the next cycle, but getting $85MM per year instead of $65MM likely nets them less than $10MM extra per year by my calcs.  

That being said, I expect the Nats’ primary objective to continue to be securing a rights fee that would bankrupt MASN, opening up a path to regain their tv rights. 

[Guest]

Bring back HTS! 

[wildbillhiccup]

Just now, MDS29 said:

Bring back HTS! 

Or add another S to MASN and give it the acronym it deserves

[Frobby]

24 minutes ago, Warehouse said:

The RSDC report indicated that MASN did fail to meet revenue projections due to higher than expected cord cutting.  It also showed that SNL Kagan dramatically overestimated MASN’s profitability.  

On the other hand, I’d also expect that MASN expenses were less than forecast in 2016 given the aggressive cost cutting measures reported in the Banner last week. 

“Further, the Nationals demonstrate that SNL Kagan overstated MASN’s profits by up to [redacted] times, which undermines confidence in the accuracy of cash flow margins SNL Kagan shows for other RSNs Bortz used in its comparisons.” P.23

“Q: And why did MASN and other RSNs not meet their revenue projections?  A: “Cord cutting was at a faster pace and more extreme than the industry and MASN had expected at the outset. So subscribers declined at a much faster rate and MASN lost about a quarter of its sub base during this time frame.” P. 35 footnote 

 

 

 

Right.  Because of the redactions, we can’t tell just how badly MASN missed its projections, and whether MASN actually lost money or simply made less profit than anticipated.   

[Frobby]

43 minutes ago, Orioles West said:

Based on the financial losses and the lawsuit settlement math — maybe MLB Commish Manfred is on to something regarding the Nats move on and find/build their own RSN or TV rights package, allowing the O’s sole possession of MASN?

The Orioles essentially gain two advantages through the MASN arrangement:

1.  A majority share of the profits, and 

2.  A guarantee that the O’s will be paid rights fees equal to the Nats.  

The only way the MASN deal can be unwound is if the Orioles are compensated somehow for the loss of those two advantages.   It couid be done, but might take a bit of creativity.  
 

[Warehouse]

35 minutes ago, Frobby said:

The Orioles essentially gain two advantages through the MASN arrangement:

1.  A majority share of the profits, and 

2.  A guarantee that the O’s will be paid rights fees equal to the Nats.  

The only way the MASN deal can be unwound is if the Orioles are compensated somehow for the loss of those two advantages.   It couid be done, but might take a bit of creativity.  
 

There’s also a third advantage: being a 2-team RSN instead of a 1-team RSN, providing scale efficiencies and increasing leverage with MVPDs.  

Arguably, MASN’s biggest weakness is lacking further horizontal integration with other teams/RSNs or, alternatively, vertical integration with an MVPD (e.g., Comcast). 

[NashLumber]

Having had a tiny, tiny business for tax purposes in years past and having shown a loss some years, while reporting all income AND using legitimate receipts to back up expenses, I got refunds or avoided paying tax those years.  Who would benefit from MASN showing this loss? Orioles and Nationals, or just the entity MASN itself? 

 

Edit: admittedly, someone may have had the answer in previous posts, but some of that inside baseball (pun intended) went way over my peanut sized head. 

Edited February 18 by NashLumber

[jrobb21613]

Moreover, Comcast’s contract withMASN is set to expire at the end of February. Ifa 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.
 

So does that mean since I have Comcast I won’t be able to watch games this year?

[billhatf]

11 minutes ago, jrobb21613 said:

Moreover, Comcast’s contract withMASN is set to expire at the end of February. Ifa 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.
 

So does that mean since I have Comcast I won’t be able to watch games this year?

This is exactly my concern.  I see this having 3 possible outcomes:  1) they fail to reach a deal and the only way to see orioles games within the blackout area is via manipulation of ip address ... 2)  they fail to reach agreement and MASN through a plethora of forethought uses the opportunity to become stream-without-cable friendly.  This would provide them income from all Os fans in the blackout area but would drop the number of subscribers, since now everyone with comcast is a masn "subscriber" , but, theyd need to drop their deal with directv too for this to work.. 3) reach an agreement with comcast, but either a) less per subscriber or b) same amount per but moved to a sports tier.

I fear #1 is the most likely, especially given MASN's poor track record thus far.

,

[Just Regular]

2 hours ago, sevastras said:

Back in my day….. when I was a kid, the Braves were in TBS in Hanover PA. There was an inordinate amount of Braves fans around and I believe that was just because they could see those games just as easy as Os games.   
Some people are good at tv and some aren’t. The Expos coming to DC was always a difficult and poorly negotiated deal on the Os part. 

There were years in the late 80's in Baltimore I had more daily access to the Braves on TBS and the Mets on WWOR on the basic cable package than the Orioles as HTS was less widely carried and/or an upsell by the cable companies.

[Warehouse]

1 hour ago, NashLumber said:

Having had a tiny, tiny business for tax purposes in years past and having shown a loss some years, while reporting all income AND using legitimate receipts to back up expenses, I got refunds or avoided paying tax those years.  Who would benefit from MASN showing this loss? Orioles and Nationals, or just the entity MASN itself? 

 

Edit: admittedly, someone may have had the answer in previous posts, but some of that inside baseball (pun intended) went way over my peanut sized head. 

It’s all pass-through to the Orioles and Nats in proportion to their ownership shares (~76% to O’s).