Baseball, TV and the antitrust exemption

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As fate would have it, Washington's new baseball team must compete in the National League East division, where mega-dollar TV packages underpin the financial clout of the New York Mets, Philadelphia Phillies and Atlanta Braves. With that in mind, the lopsided television deal that Baltimore Orioles owner Peter Angelos extracted from Major League Baseball Commissioner Bud Selig has the great potential to become a long-term financial albatross for the Washington Nationals.

The premeditated, broad-daylight financial mugging that the Angelos-Selig gang perpetrated against the Nationals, their fans and the nation's capital was so vicious that it cries out for Congress to revoke baseball's unique antitrust exemption, which made the mugging possible. (The courts may be reviewing baseball's antitrust exemption following a lawsuit that Comcast SportsNet filed Thursday against the Orioles, Major League Baseball and Mid-Atlantic Sports Network, or MASN, the newly created, Angelos-controlled regional sports network.)

Moreover, as several prospective owners of the Nationals prepare their bids for the team, they must understand that the value of the ballclub has been seriously compromised by Selig. In an era when the potential on-the-field fortunes of baseball teams rise or collapse with the size of the television contracts they can negotiate off the field, the Nationals have suffered a major financial setback whose relative and absolute dimensions will almost certainly worsen over time unless the outrageous, back-stabbing deal is reversed.

Let us be clear: Forcing the Nationals to become a very, very junior partner in a regional sports network overwhelmingly controlled and operated by Angelos -- an irascible, vengeance-seeking malcontent -- seriously jeopardizes their short- and long-term ability to compete. Beyond their division rivals, the Nationals must also compete against other National League TV-financed goliaths, including the Los Angeles Dodgers and Chicago Cubs, to say nothing of the cable-enhanced wallet of the New York Yankees and George Steinbrenner, with whom all teams must compete in bidding for free agents.

For the Nationals and the D.C. area, both the current and long-term ramifications of this deal are as ludicrous as they are disastrous, making them utterly intolerable. How ludicrous? Consider the fact that the Washington Nationals will be the only Major League Baseball team whose games will be televised in 2005 and 2006 by MASN, which is 90 percent owned by Angelos and the Orioles. The Orioles games will continue to be telecast by Comcast through next season. It is as though baseball had created a network owned and controlled by the New York Yankees and Steinbrenner in order to televise the New York Mets, while the Yankees' games were still being televised by the Madison Square Garden cable network.

It is even more absurd. The Washington television market is vastly larger and wealthier than the Baltimore market. Yet, Angelos will currently pocket 90 percent of the MASN profits. Moreover, by any reasonable standard, the $20 million rights fee that MASN will pay the Nationals in 2005 and subsequent rights-fee escalations are almost certainly far below fair-market value. Also, the terms of the Selig-Angelos deal guarantee that Angelos' ownership and profit share of MASN will never fall below 67 percent.

According to U.S. census data, the Washington metropolitan area, which is the nation's seventh-largest market, had 5.1 million people in 2003. That was nearly double the 2.6 million people residing in the Baltimore region, the country's 19th-largest market. Total personal income in the Washington region in 2002 was $214 billion, 2.3 times the personal income level ($92 billion) of the Baltimore area. In addition, average per capita income in the Washington area was $42,773 in 2002, more than 20 percent higher than Baltimore's. According to the 2000 census, median household income in the Washington area was the fifth-highest in the nation; and it probably ranks fourth today following San Francisco's post-census dot-com implosion.

Based on median household income, the Washington metropolitan area is so wealthy that it encompasses four of the nation's 10 richest counties, including Fairfax County (the second-richest county in the United States) and Loudoun County (the third-wealthiest). Falls Church, which the Census Bureau classifies as a county, was ranked eighth, and Howard County was 10th. Montgomery County, which had been among the top 10 for 20 years, fell to 13th. Arlington County and the city of Alexandria, meanwhile, are among the top 10 in per capita income. Needless to say, none of the Baltimore area counties cracked the top 20.

Congress should immediately investigate how Selig and his cronies have abused baseball's expansive antitrust exemption. Passing legislation prohibiting such abuse of monopoly power and reversing Selig's deed cannot occur soon enough.