Peter Angelos surcharge

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Baltimore Orioles' owner Peter Angelos is scheming with Major League Baseball (MLB) to deny the Washington Nationals customary television broadcasting rights to enrich his own regional sports network. Mr. Angelos hopes to crush a competitor, not on the playing field, but by backroom machinations. If he succeeds, satellite and cable providers will pay a $2 to $3 surcharge per subscriber to obtain broadcast rights from Mr. Angelos, a cost that will correspondingly raise monthly fees for customers of Comcast, Starpower, DirectTV and Dish Network in the District of Columbia.

Congress should strip MLB of its unique exemption from the antitrust laws if the Washington Nationals are withheld tens of millions in broadcast revenues indispensable to competing in a free agency era.

Adam Smith in "Wealth of Nations' anticipated the Angelos-MLB deviltry. He owlishly observed: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." Mr. Angelos fiercely fought for years against a D.C. franchise to inflate the value of the Orioles. He lost that battle but hopes to win the war. In a largely secret part of the franchise award, MLB bowed to Mr. Angelos' ultimatum that the new team become minority partners in a new regional sports network controlled by him.

MLB teams on average earn $40 million annually from television rights, an enormous sum that Mr. Angelos hopes to keep from the Washington Nationals coffers. Money speaks on the baseball field. The Florida Marlins captured the World Series in 1997 by offering lucrative salaries to star performers. Jason Giambi jumped from the Oakland Athletics to the New York Yankees for a munificent contract. Mr. Angelos himself bid Miguel Tejada away from the Athletics with a six-year contract worth $72 million.

What is good for Mr. Angelos is not necessarily good for MLB and baseball fans in the District of Columbia. Professional sports thrive on competitive balance. Each team should enjoy an equal opportunity to win the World Series. The Angelos-MLB pact, however, handicaps the Washington Nationals before the first pitch is thrown. It would also mean greater expense for home team fans to follow the Nationals on television.

The New York Yankees example is illustrative. The team created its own regional sports network. The Yankees then escalated the fees it charged cable and satellite operators to air its games by $2 a month per subscriber.

In a free and fair competitive market, the new Nationals owners, like all other team owners, would be entitled to bid for the broadcast rights to their games. Existing networks would similarly enjoy the right to bid to broadcast the games, which would depress or eliminate any pass-through costs to cable or satellite subscribers. Mr. Angelos himself can be summoned in favor of competition of this sort. In a Nov. 11, 2002, interview with the Baltimore Sun, he stoutly defended his legal fee agreement with Maryland entitling him to more than $1 billion stemming from settlement of the tobacco industry litigation.

He argued: "The agreement between our firm and the state when we were chosen to represent Maryland in its case against the tobacco industry was the result of a competitive bidding process engaged in by a number of law firms across the U.S. Our office was selected as having submitted the bid most advantageous to the state."

Local politicians ranging from Councilman Marion Barry to Jack Evans have protested the "Angelos surcharge." It is like Robin Hood in reverse: stealing from the poor to give to the rich.

Unless Mr. Angelos yields, the new owners of the Nationals will be less capable of providing a private financing alternative to building the new stadium if the City Council determines a mix of public and private underwriting is appropriate. In other words, D.C. taxpayers would pay to loft Mr. Angelos from being super wealthy to being a virtual Croesus.

Monopoly is a narcotic, and competition a stimulus in all businesses and professions. In MLB, teams generally should prosper or perish based on defeating the opposition on the baseball diamond. Of course, there are exceptions to every rule. But the only justification proffered for the "Angelos surcharge" is to enrich the Orioles owner and to hamstring the Nationals as a competitor, but a minor variation on railroad robber baron William Henry Vanderbilt's, "The public be damned."

Bruce Fein is a constitutional lawyer and international consultant with Bruce Fein & Associates and the Lichfield Group.