- The Washington Times - Sunday, May 8, 2005

The D.C. Sports & Entertainment Commission has acquired a lien on the Washington Nationals as an additional safeguard to keep the team from leaving town.

According to the Nationals’ license agreement to use RFK Stadium, obtained by The Washington Times, the sports commission now owns a security interest in the franchise specifically designed to give the District extra weight in fighting any relocation.

The Florida Marlins, during now-stalled talks to build a new ballpark in Miami, earlier this year offered Florida legislators a lien on its franchise against cost overruns. But the District’s lien on the Nationals is still believed to be a rarity within Major League Baseball, and is the result of four months of negotiations between MLB and the sports commission.

“We wanted to make absolutely sure we had adequate remedies to prevent a wrongful relocation should the unthinkable ever happen,” said Bill Hall, sports commission board member and one of the lead negotiators of the pact. “We have now a secured interest that protects the District very strongly.”

The District has signed a long-term deal with MLB, owners of the Nationals, to have the Nationals play in Washington, and strong ticket sales and sharply improved on-field play have validated the move out of Montreal. But local fear of losing baseball remains palpable after the city saw both Senators franchises leave in an 11-year span. That deal with MLB, signed last fall, contemplated several anti-relocation provisions, including legal authority for the District to seek restitution on any outstanding debt on the Nationals’ planned ballpark in Southeast, as well as punitive damages.

The legal language to that point, however, was vague until the arrival of this new RFK license agreement, which places the District’s secured interest behind only those obligations strictly needed to own and operate the team.

The District’s lien is not ostensibly designed to leave the city as the owner of the Nationals should they attempt to move. Rather, the aim is to help ensure that the city’s debt on a new stadium is recovered should the team be liquidated through a league contraction. The District also holds a greater ability to force a liquidation of the team to recover its debt should the Nationals somehow leave.

The measure is also a critical piece of legal leverage since the lien is formally disclosed to all other lenders to the Nationals, those lenders would be similarly subject to a lawsuit should their money be used to violate the District’s rights.

Conversely, the District is still subject to losing the club if several key milestone dates are not met in the development of the new ballpark near the Anacostia River waterfront. Next up on that list is acquiring and rezoning the property in the Southeast ballpark site by the end of the year.

Beyond the lien, the District holds two other key anti-relocation assets through a mandatory 30-day notice from the Nationals before they seek to leave, allowing the city time to seek a legal injunction as well as the explicit right to seek that injunction in local courts.

The RFK license agreement runs as long as the Nationals play at the stadium, intended to be three seasons, and includes language that helps transition the parties into a lease for the new stadium. The pact was completed with MLB the morning of the Nationals’ April 14 home opener. D.C. Council members were briefed on the pact Thursday.

Once in the new stadium, the Nationals will play there under a 30-year lease agreement, with the sports commission holding five two-year contract options beyond that.

Several other key terms of the license agreement were previously known and extensively negotiated last summer during the District’s bid to win the Montreal Expos relocation derby. Among them:

• The Nationals will pay $5.3 million in rent this year, as well as day-of-game expenses estimated to be about $6 million for the season. The sports commission also will receive from the team $1 for every Nationals tickets sold above 2.5 million a year, with the funds going to District youth and recreation facilities.

• The team is obligated to use “Washington” as part of its formal name.

• The Nationals are obligated to support community benefit initiatives in the city, including the establishment of a charitable foundation.

• The team holds control of advertising rights within RFK Stadium, while the sports commission retains rights to the facility exterior and any naming-rights agreement. The sports commission is currently negotiating with ProFunds Advisors LLC to name the stadium field after the Bethesda investment firm.

• The Nationals are the primary licensee of RFK Stadium, holding seniority status over Major League Soccer’s D.C. United.

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