The New Deal

Peter Angelos and Major League Baseball have reached a deal regarding compensation for the move of Les Expos to our fair nation’s capital. MLB and Angelos have reached an agreement on the development of a new cable network, Mid-Atlantic Sports, that will have the rights to broadcast the majority of Nat’s games.

On Thursday, MLB and the Orioles ended 6 months of negotiations and came to an agreement on a package to indemnify the Baltimore franchise for relocating the Montreal Expos in Washington, DC. It also ends years of saber rattling by Orioles owner Peter Angelos, which by the looks of things, seemed to have had the desired affect with the brass at MLB headquarters. Angelos won’t be suing, and MLB will be, well, paying. It wasn’t the Camp David Accord, but the impact of the package will have lasting effects for MLB, both internally and externally.

Here’s a Washington Post article on the deal.

Major League Baseball and the Baltimore Orioles announced yesterday the creation of a regional sports network that will televise Washington Nationals games, while designating the vast majority of ownership and any profits from the venture to the Orioles. …

Under the terms of the deal, which was negotiated over the last six months, the Orioles will own 90 percent of the regional sports network this season, with baseball owning the rest, according to sources with knowledge of the arrangement. Baseball’s share of the network would increase over the next 20 years, but it will be capped at 33 percent. …

The deal prompted expressions of concern by groups interested in buying the Nationals from Major League Baseball. They said it raised questions over whether the team would be able to fully take advantage of the Washington media market, the eighth-largest in the country and nearly three times the size of that of metropolitan Baltimore.

Here’s a link to a previous post on this blog about the negotiations. It sure looks like Angelos played the game right and got the majority of the spoils. The Nationals get a guaranteed $21 million from the agreement. According to 2001 Selig Report data obtained from Rod Fort’s webpage, the average MLB team earned just over $19 million in local media revenues. The Orioles earned just under $21 million.

It’s hard to believe some of those numbers. According to that data, the Cubs earned $23.559 million in media revenue. The Cubs play in the third-largest city in the nation, are the most popular baseball team in the city, and are owned by the Tribune company – which also owns WGN TV and Radio. But the cross-town White Sox earned $7 million more. I doubt that the Tribune company is paying the Cubs market value (assuming the $23 million figure is correct). That being said, some believe that the $21 million is low for the Washington market.

That being said, Angelos keeps majority control over the current lucrative broadcast media outlet for the Nationals (local cable) and that hinders the ability of the Nats to compete.

One person familiar with sports television deals, who asked that his name not be used, said the $21 million rights fee for both cable and over-the-air broadcasts sounded low for the Washington market. The person said the rights fee would not likely increase the value of the team, but it could reduce the amount baseball can earn from the sale.

While it may bring peace between Angelos and MLB, it may push the Expos to be what they have been for so long – MLB’s version of the Washington Capitals or the Washington Wizards. Plus ca change. But don’t expect Angelos to spend this money on the O’s because that money is not generated by the O’s… it’s generated by the Nat’s. It sounds like Angelos sure got a lot of gravy with his potatoes.

Hat tip to the Business of Baseball for the Maury Brown link.

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Author: Phil Miller

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