Baltimore Orioles owner Peter Angelos will receive a payment of $75 million for the Washington Nationals’ 10 percent stake in the Mid-Atlantic Sports Network, the new TV venture formed to air Nationals and Orioles games.
Major League Baseball (MLB) will pay the first $37.5 million of the fee due June 30, according to sources familiar with the agreement that MLB struck with Mr. Angelos in March.
A senior baseball official said that MLB’s central office will make the payment.
However, some groups seeking to buy the Nationals fear that MLB, which owns the Nationals, will seek to indirectly recoup the money when it auctions off the team this year.
Who will make the second payment of $37.5 million, due June 30, 2006, is not clear. Some sources think the Nationals’ new owners ultimately will be responsible for the full $75 million.
The Nationals’ stake in the Mid-Atlantic Sports Network (MASN) will increase to 33 percent over the next two decades. Mr. Angelos’ share of 90 percent gradually will decrease.
That component of the agreement previously had been reported; Mr. Angelos’ fee, however, had not.
This agreement “is even worse for the Nationals than has been reported,” said one industry source who has read the terms of the agreement.
MLB executives and Mr. Angelos declined to comment.
MLB executives struck the unprecedented settlement with Mr. Angelos to alleviate his concern that the relocation of a team to the Washington area would harm his club.
The payment places a de facto value on MASN of $750 million, a reflection of the optimism that MLB and the Orioles have in the venture and the growing importance of team-owned regional TV networks in professional sports.
An 80 percent stake in the New England Sports Network, for example, added an estimated $250 million to $300 million to the sale of the Boston Red Sox three years ago.
D.C. Council member Jack Evans, who has spoken extensively with MLB executives about the Nationals’ role in MASN, said he was not aware of the payment.
Mr. Evans, Ward 2 Democrat, has supported the Nationals’ junior status in MASN, which shields the franchise from financial risk in the venture and guarantees the team rights-fee payments that start at $20 million each year.
“Why would [MLB] make a deal like that? It doesn’t make any sense,” Mr. Evans said. “They’re bidding against themselves.”
The financial structure of MASN is heavily tilted in Mr. Angelos’ favor, but MASN executives said the network is firmly committed to providing equal exposure for the Orioles and Nationals.
The agreement between Mr. Angelos and MLB mandates parity in the TV distribution of the games of both clubs. The Orioles plan to move their local pay TV games from Comcast SportsNet to MASN in 2007, and the network intends to show the same number of games for each club and provide equal exposure for each in the other’s market.
That means the Orioles’ current deal to show over-the-air games in greater Washington on WPXW-TV (Channel 66) may not be renewed for next year and definitely will not exist in two years.
MASN also intends to pay the Orioles the same rights fee that it does the Nationals. Any profits from the network, however, go to the equity holders — predominantly Mr. Angelos.
“It’s in everyone’s best interest for this deal to be as fair as possible. We want the Nationals on TV as much as possible,” said Bob Whitelaw, executive vice president and general manager of MASN. “What we’re trying to do in days and weeks to set up this network is usually done in months. But the fans are right. They want to see the team, they should see the team, and we are undeterred in our mission to make that happen.”
Half the Nationals’ games are scheduled for broadcast on WDCA-TV (Channel 20).
Pending distribution deals for MASN with DirecTV and the Dish Network were slowed last week by the filing of a lawsuit by Comcast SportsNet. Comcast said the Orioles’ planned move to MASN breaches the terms of its contract with the club.
However, Mr. Whitelaw said that negotiations are continuing with the satellite operators to broadcast Nationals games this season and that multiyear agreements to carry MASN still are being negotiated.
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