jbooma
March-16th-2005, 02:32 PM
http://www.washingtonpost.com/wp-dyn/articles/A38414-2005Mar15.html
By Thomas Heath
Washington Post Staff Writer
Wednesday, March 16, 2005; Page D01
With less than three weeks to go until Opening Day, the Washington Nationals remain without a local television deal.
The control of broadcast rights to the Baltimore-Washington region is at the center of talks between Major League Baseball and Baltimore Orioles owner Peter Angelos, according to sources familiar with the negotiations. The issue is holding up final agreement on the compensation package that baseball will give Angelos for the financial impact that the Nationals would have on his team.
Until the compensation package is agreed upon, the Nationals cannot make a deal with a local television outlet, forcing Nationals President Tony Tavares to lose valuable marketing and promotional opportunities.
"While we understand what a difficult issue this is, we are highly frustrated at the amount of time it has taken to bring this to a resolution," Tavares said.
Angelos assumed the broadcast rights to the Baltimore-Washington region, extending from the Pennsylvania border to North Carolina and from West Virginia to Delaware, when he bought the Baltimore club for $173 million in 1993. After moving the Expos from Montreal to Washington last fall, baseball wants to recast the Orioles' broadcast region to accommodate the Nationals.
"We are presently in good faith negotiations and it would be inappropriate for me to comment at this particular time," Angelos said yesterday.
The Orioles and Angelos oppose any redistricting of the team's broadcast rights, saying they paid for those rights and need the financial revenues from viewers to stay competitive in the challenging American League East Division, which includes the New York Yankees and Boston Red Sox.
Angelos has proposed an Orioles-owned regional sports network that would pay the Nationals, collectively owned by Major League Baseball's 29 other teams, fair market value for televising their games on the Orioles network. That number, presumed to be in the $25 million range, would likely increase over time as the Nationals grow more popular and their television rights grow with it, according to sources familiar with the proposal.
Baseball has been reluctant to cede control of the Nationals' television rights to any broadcast entity controlled by a rival team. The league said that it told Angelos when he purchased the Orioles that a team might someday play in Washington and that the Orioles would not control that area's broadcast rights forever.
The television deal is the only loose end in a six-month negotiation between baseball and Angelos that is designed to compensate the Orioles.
The Orioles said they expect to lose $30 million in ticket sales, advertising, parking and concessions due to the Nationals' arrival in the Washington market.
Baseball has guaranteed that the Orioles would fetch at least $365 million if Angelos chose to sell the team, or it would make up the difference.
Under the Orioles' proposal, the regional sports network would also pay the Orioles a fair market value for its rights, which would be in the same $25 million range as the Nationals'. The Orioles would assume the risk of operating the regional sports network and would be able to keep the vast majority of net profits, if there are any, as compensation for the Nationals being in Washington.
The league fears that the sale price of the Nationals could be dramatically reduced if a would-be buyer had to negotiate with the Orioles and Angelos every few years to get the Washington team's games televised.
One television expert compared the arrangement to the New York Yankees controlling the broadcast rights of its metropolitan rival New York Mets.
"Controlling the broadcast entity has been the threshold on the negotiations," said one baseball source who would not allow his name to be used because of the sensitivity of the negotiations.
Baseball has been reluctant to unilaterally redistrict the Orioles' broadcast region, fearing a messy lawsuit by Angelos, who made a fortune as one of the nation's most successful trial lawyers. Top baseball officials believe they would ultimately prevail in a suit by Angelos, but they are trying to avoid it nevertheless.
The stalemate has stalled baseball's attempts to sell the team. At least seven individuals or groups have deposited $100,000 each with MLB for the right to bid on the Nationals, but the process has not moved much beyond an examination of financial records because of the failure to achieve a deal with Angelos.
At least two bidders, who would not allow their names to be used for fear it could hurt their chances to buy the team, said they would have grave concerns if the Nationals' television rights were controlled by Angelos. One bidder said that if the Nationals were locked into an Orioles-controlled network and forced to negotiate with Angelos every few years on new terms, it could reduce the sale price of the Washington team.
But if the Nationals are allowed to own part of a regional sports network, it enhances the value of the team in a sale. Baseball is hoping the Nationals will fetch at least $350 million, which will be divided equally among the league's other owners.
"Until you know what the television deal is, it is impossible to value the team because the media rights are the bedrock of the value of the franchise," said investment banker Sal Galatioto, president of Galatioto Sports Partners. "Until you know what your [television] rights payment is going to be, until you know what share of the regional sports network, if any, you are going to get, it is impossible to value the franchise."
The negotiations between Angelos and baseball have touched on several points that could assuage the concerns of would-be buyers, such as a 15-year clause that would lock in certain financial and marketing incentives for the Nationals that the Orioles could not manipulate. There has also been discussion about an independent arbitrator to oversee disagreements between the Nationals and Orioles, sources said.
There is still the question of whether the teams will be broadcast on a new sports channel or whether an existing channel, such as Comcast SportsNet, would carry the games. The Orioles have two years left on their contract with Comcast to televise about 100 games per season. Fox Sports Net has also been contacted about working with the Orioles and Nationals.
By Thomas Heath
Washington Post Staff Writer
Wednesday, March 16, 2005; Page D01
With less than three weeks to go until Opening Day, the Washington Nationals remain without a local television deal.
The control of broadcast rights to the Baltimore-Washington region is at the center of talks between Major League Baseball and Baltimore Orioles owner Peter Angelos, according to sources familiar with the negotiations. The issue is holding up final agreement on the compensation package that baseball will give Angelos for the financial impact that the Nationals would have on his team.
Until the compensation package is agreed upon, the Nationals cannot make a deal with a local television outlet, forcing Nationals President Tony Tavares to lose valuable marketing and promotional opportunities.
"While we understand what a difficult issue this is, we are highly frustrated at the amount of time it has taken to bring this to a resolution," Tavares said.
Angelos assumed the broadcast rights to the Baltimore-Washington region, extending from the Pennsylvania border to North Carolina and from West Virginia to Delaware, when he bought the Baltimore club for $173 million in 1993. After moving the Expos from Montreal to Washington last fall, baseball wants to recast the Orioles' broadcast region to accommodate the Nationals.
"We are presently in good faith negotiations and it would be inappropriate for me to comment at this particular time," Angelos said yesterday.
The Orioles and Angelos oppose any redistricting of the team's broadcast rights, saying they paid for those rights and need the financial revenues from viewers to stay competitive in the challenging American League East Division, which includes the New York Yankees and Boston Red Sox.
Angelos has proposed an Orioles-owned regional sports network that would pay the Nationals, collectively owned by Major League Baseball's 29 other teams, fair market value for televising their games on the Orioles network. That number, presumed to be in the $25 million range, would likely increase over time as the Nationals grow more popular and their television rights grow with it, according to sources familiar with the proposal.
Baseball has been reluctant to cede control of the Nationals' television rights to any broadcast entity controlled by a rival team. The league said that it told Angelos when he purchased the Orioles that a team might someday play in Washington and that the Orioles would not control that area's broadcast rights forever.
The television deal is the only loose end in a six-month negotiation between baseball and Angelos that is designed to compensate the Orioles.
The Orioles said they expect to lose $30 million in ticket sales, advertising, parking and concessions due to the Nationals' arrival in the Washington market.
Baseball has guaranteed that the Orioles would fetch at least $365 million if Angelos chose to sell the team, or it would make up the difference.
Under the Orioles' proposal, the regional sports network would also pay the Orioles a fair market value for its rights, which would be in the same $25 million range as the Nationals'. The Orioles would assume the risk of operating the regional sports network and would be able to keep the vast majority of net profits, if there are any, as compensation for the Nationals being in Washington.
The league fears that the sale price of the Nationals could be dramatically reduced if a would-be buyer had to negotiate with the Orioles and Angelos every few years to get the Washington team's games televised.
One television expert compared the arrangement to the New York Yankees controlling the broadcast rights of its metropolitan rival New York Mets.
"Controlling the broadcast entity has been the threshold on the negotiations," said one baseball source who would not allow his name to be used because of the sensitivity of the negotiations.
Baseball has been reluctant to unilaterally redistrict the Orioles' broadcast region, fearing a messy lawsuit by Angelos, who made a fortune as one of the nation's most successful trial lawyers. Top baseball officials believe they would ultimately prevail in a suit by Angelos, but they are trying to avoid it nevertheless.
The stalemate has stalled baseball's attempts to sell the team. At least seven individuals or groups have deposited $100,000 each with MLB for the right to bid on the Nationals, but the process has not moved much beyond an examination of financial records because of the failure to achieve a deal with Angelos.
At least two bidders, who would not allow their names to be used for fear it could hurt their chances to buy the team, said they would have grave concerns if the Nationals' television rights were controlled by Angelos. One bidder said that if the Nationals were locked into an Orioles-controlled network and forced to negotiate with Angelos every few years on new terms, it could reduce the sale price of the Washington team.
But if the Nationals are allowed to own part of a regional sports network, it enhances the value of the team in a sale. Baseball is hoping the Nationals will fetch at least $350 million, which will be divided equally among the league's other owners.
"Until you know what the television deal is, it is impossible to value the team because the media rights are the bedrock of the value of the franchise," said investment banker Sal Galatioto, president of Galatioto Sports Partners. "Until you know what your [television] rights payment is going to be, until you know what share of the regional sports network, if any, you are going to get, it is impossible to value the franchise."
The negotiations between Angelos and baseball have touched on several points that could assuage the concerns of would-be buyers, such as a 15-year clause that would lock in certain financial and marketing incentives for the Nationals that the Orioles could not manipulate. There has also been discussion about an independent arbitrator to oversee disagreements between the Nationals and Orioles, sources said.
There is still the question of whether the teams will be broadcast on a new sports channel or whether an existing channel, such as Comcast SportsNet, would carry the games. The Orioles have two years left on their contract with Comcast to televise about 100 games per season. Fox Sports Net has also been contacted about working with the Orioles and Nationals.