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Orioles, Nationals continue dispute over MASN revenue

The Orioles and the Nationals are still grappling over MASN, with the possibility of going to open court in the near future.


The confusing, messy dispute between the Orioles and Nationals over the division of revenues from the Mid-Atlantic Sports Network is continuing, and in fact may be getting worse, if a recent report from Eriq Gardner of the Hollywood Reporter is to be believed.  The report contradicts recent statements from Bud Selig that the dispute was heading toward resolution within the calendar year.

I'm by no means a primary source nor an expert on the issues at hand in this dispute, but I'll point you to this excellent summary (part of a series) over at Camden Depot.  That summary helped me come around to understand that of all the big hundreds-of-millions numbers that get thrown around, what the Orioles and Nationals are ultimately arguing over is the distribution of the same pot of money, and the're doing so via technicalities.  You see, MASN pulls in a certain amount of revenue, and pays each team a certain amount for the rights to broadcast its games.  The problem, which should have been easily foreseeable by Major League Baseball, is that the Orioles own a larger stake of the network than the Nationals do.  So the Orioles have a strong incentive to have MASN keep as much money as possible in the "profit" column, whereas the Nationals have a strong incentive to ask for as much as possible from MASN for their media rights.

That's what the ongoing dispute boils down to: The Nationals are using a clause in the team's contract that allowed for media rights renegotiation to ask for a massive increase in those fees (from $29M to over $100M per year), while the Orioles are attempting to keep the media rights down to a modest increase (to $34M per year) and continue to hold most of the excess funds in the form of MASN profits.  Each team gets a cut of the big dollars flowing in either way, but the Nationals' share of the pie increases as the media rights increase.

The big revelation in Gardner's piece, therefore, has little to do with the actual revenue issues and more to do with how acrimonious the ongoing dispute has gotten.  In the article, Gardner notes that the teams are on the verge of going to court with one another (a horrible outcome for MLB, as the discovery phase could make public all sorts of documentation that the league would rather keep closed -- plus, in general, two clubs duking it out in court is not seen a sign of a successful league), and that Selig had gone so far as to make veiled threats of ownership removal or other drastic measures.

In a lot of the chatter on this subject, I've seen writers, bloggers and commenters tie this dispute in to fandom and the growing on-field rivalry between the two neighboring ballclubs.  In my opinion, this is a pretty flawed argument for either team's fans to make.  The issues of which club was here first, whose fans are more devoted, who draws better ratings -- none of these things matter.  This is a messy contractual dispute between two millionaire/billionarie owners.  Anything else is just noise.  Tipping the monetary scale toward one club or the other might affect that club's payroll, or it might not.  Neither owner is poor to begin with, and both Angelos and Lerner could easily pump more money into payroll at the drop of a hat right now if they wanted to.

The fact is, the Washington Nationals and Baltimore Orioles are businesses, and they'll be operated like businesses no matter who prevails in the MASN dispute.  Media rights fees and regional network profitability aren't reflections of either fanbase.  Media rights fees barely even exist in the realm we call reality, with the Dodgers recently receiving over $8 billion, with a B, for theirs through 2038.  So the Nationals can make a plausible argument that their media rights are worth more than they're currently receiving, while the Orioles can point to other examples, like Philadelphia or Houston (similarly sized markets to Washington where the clubs have lower media rights fees) and say that they aren't.

None of these arguments actually mean a damned thing about the franchises, the players or the fans.  What they mean is the obvious -- the Lerners and Peter Angelos both want to keep more of the money that's coming their way.  MLB put the two franchises into opposing camps, with opposing incentives. Complicated arguments can be made favoring either side -- arguments that don't break down cleanly based on a single objective metric or piece of contract language, and have nothing to do with your loyalty, Adam Jones's performance or the ugliness of the WalgreensNationals logo.

How the clubs haven't come to a compromise on media rights fees in the $50-60M range is beyond me.  Gardner's article mentions an arbitration panel whose decisions have apparently satisfied no one.  Setting up this dispute is basically a leadership failure from the league, and failing to resolve it in the more than two years since the renegotiation clause kicked in is an even worse one.  Fans of both clubs would do well to stop tying their fandom to this complex issue that's ultimately nothing more than a clash of one-percenters.  Unless MLB gets even stupider and allows the Nationals to take their broadcast rights elsewhere, or tries to break up the teams' territorial rights even though the cities are only 30 miles apart, this is a dispute that will probably drag on, will someday be resolved to neither side's satisfaction, and will probably not affect the on-field fortunes of either franchise regardless.