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SBJ/May 7-13, 2012/Media
MLB pushing toward decision in Nationals’ disagreement with MASN over rights fee increase
Published May 7, 2012, Page 6
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A ruling may arrive soon after owners’ meetings slated for May 16-17 in New York, according to several industry sources. The Nationals and MASN, majority owned and controlled by the neighboring Baltimore Orioles, have been negotiating a new deal since the end of last baseball season, when a contractual reset provision was triggered. Unable to reach a deal amid a red-hot market for sports TV rights, the team and the RSN took their dispute to a league-created ad hoc committee of owners for the New York Mets, Pittsburgh Pirates and Tampa Bay Rays to come up with a solution.
Rob Manfred, MLB executive vice president for labor relations and human resources, is leading the committee. It is not clear how the panel is leaning at present.
The committee’s job is to decide how much of an increase MASN should pay the Nationals. Currently, MASN pays the team around $29 million a year. The Nationals also hold a 13 percent equity stake in the regional sports network, accruing at an additional 1 percent per year and ultimately peaking at 33 percent.
The Nationals are using high-powered consultants — including the Proskauer law firm and Bevilacqua Helfant Ventures — with a goal of landing a rights fee increase similar to the Texas Rangers and San Diego Padres, who signed 20-year deals with Fox Sports Net worth an estimated $3 billion and $1.2 billion, respectively.
MASN’s deals with the Nationals and Orioles, however, contain a couple of clauses that are complicating matters, sources said.
One is a reset clause that allows the Nationals to reopen the deal every five years to ensure that they’re being paid the market rate. The current negotiations are a result of that clause being triggered. Given big rights fees increases in other markets, it seems likely that the Nationals stand to make a healthy increase. The question is how much.
That leads to another complication, though. MASN’s contracts include parity clauses mandating that if the Nationals get a big increase from its reset period, the Orioles’ rights fee automatically moves to that figure. That means MASN would have to pay both teams a bigger rights fee if the Nationals prevail. And that new figure for the club’s combined rights fees conceivably could exceed the revenue the 7-year-old network earns from cable carriage fees and advertising.
The timing, however, for the rights fee reset for the Nationals remains particularly good. In addition to the surging rights fee market, the club at deadline was in first place in the NL East and featured budding stars including pitcher Stephen Strasburg and outfielder Bryce Harper.
MLB and Nationals executives declined to comment.
MLB negotiated the Nationals’ initial rights deal when it operated the franchise in 2005. The deal gave Orioles owner Peter Angelos 90 percent ownership of MASN, a way to alleviate the Orioles owner’s concern that the relocation of the Nationals from Montreal to Washington would harm his club.