SBD/August 11, 2014/Media

Documents Show Nationals Seek To Nearly Triple Current Rights Fees In MASN Dispute

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A rights fees of $118M is nearly three times larger than the Nats' yearly take

The Nationals sought local TV rights fees from MASN of at least an average of $118M, nearly triple their current yearly take, according to recently unsealed documents in the team's ongoing legal battle with the Orioles-controlled RSN. The figure is in line with previously reported estimates, but provides further clarity on the significant divide between the two clubs. The figure was listed as part of Nats' documents submitted to MLB as part of its internal arbitration matter and is signed by Proskauer attorney Joe Leccese, who serves as club counsel. The document states, “Whether MASN claims it can afford it or not is irrelevant. The market values -- confirmed by MLB’s own data and the record in the Dodgers’ bankruptcy -- demonstrate the fair market value of the Nationals’ rights is at least an average of $118 million/year from 2012-2016. That fair market value is neither negated nor constrained by MASN’s economics.” MASN last week obtained a temporary restraining order preventing an MLB arbitration award favoring the Nats. Sources said that award would reset its annual rights number at about $60M. Even with last week’s significant document release in the matter, many financial portions of the written record are redacted.

NO REAL PRECEDENT: Meanwhile, a longtime MLB media consultant submitted an affidavit in the case saying there are “no real 'comparables'" for assessing the Nats’ and Orioles’ rights fees. This is because both clubs operate under a unique set of circumstances. Colorado-based Bortz Media & Sports Group Managing Dir Mark Wyche, whose firm helped create and administer a formula used for nearly two decades by MLB in helping set media rights fees for revenue-sharing purposes with clubs that own interests in their own RSNs, in the affidavit stated MLB’s internal Revenue Sharing Definitions Committee “departed from the established methodology and historical precedent as well as MASN’s financial data, in attempt to justify those inflated rights fees.” Wyche’s affidavit, as well as other MASN filings, said the award for the Nats would force the RSN to accept a 5% operating margin from its baseball programming, far lower than industry norms that typically exceed 20%.

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