- The Washington Times - Sunday, October 3, 2004

Baltimore Orioles owner Peter Angelos earned both his fortune and local fame as a legal battler, a fearless litigator willing to scrap against many of the country’s largest and richest corporations.

That fighting spirit, however, is about to be severely blunted if an unprecedented compensation agreement with Major League Baseball over the relocation of the Montreal Expos to the District comes to fruition. And the damages could easily ripple beyond Washington and Baltimore and through the rest of the sports industry.

Under terms still being negotiated — Angelos and MLB president Bob DuPuy are meeting again today in Baltimore — the owner is set to receive guarantees that will keep his annual revenues no lower than $130million, set his minimum franchise value at a figure hovering around $360million and grant him a majority equity stake in a new regional sports TV network. If the financial thresholds are not met, the rest of MLB owners will make up the shortfall.

The second sports TV outlet for the Middle Atlantic region is a more than proper idea. Comcast SportsNet already grapples with the complexities of scheduling the Washington Wizards, Washington Capitals, Baltimore Orioles and a smattering of college sports and cannot singularly absorb the soon-to-be-renamed Expos.

But the other two elements of the deal trample over any sense of capitalism — even the version of it existing within the cocoon of baseball’s antitrust exemption — leaving Angelos with little obvious incentive to compete in the marketplace.

Whether Angelos fields a dominant, high-dollar team with a 100-62 record or one with a minimal payroll and a 62-100 record, his asset value and cash flow will stay protected in a fashion enjoyed by no other club.

The deal also is believed to carry terms that increase the threshold amounts as the level of MLB’s total revenues grow, particularly through the value of the sport’s TV rights and Internet division. So what started as a discussion on how to protect Angelos’ assets has turned into the functional equivalent of giving him an ATM.

“I find this whole situation very problematic,” said Andrew Zimbalist, Smith College economic professor and frequent author on the business of baseball. “You’re taking out every prong of the market system for him. We obviously don’t know yet exactly how Angelos will react, but there is some motivation inherent here to do the wrong thing.”

In fairness to Angelos, this developing pact amplifies to a degree the revenue-sharing system already present in baseball. Struggling clubs, the Expos included, receive money from big-market teams, providing a fairly reliable base line of support to help smooth out poor years on the field and at the turnstiles.

Numerous sports teams, including the Philadelphia Flyers, New York Rangers and Los Angeles Kings of the NHL, also have received one-time payments when expansion or relocated teams entered in or near their market territories. But none of those subsidies provided what the Expos compensation agreement for the Orioles would: robust, clearly defined and guaranteed benefits, lasting at least as long as Angelos owns the club.

Industry sources familiar with the developing deal say the potential fallout of removing competitive impetus for Angelos “is a point of significant discussion.”

More broadly than that, the deal also promises to establish a dangerous precedent for baseball. The sport obviously has a natural reluctance toward relocation. But officials in northern New Jersey; Portland, Ore.; and Las Vegas have their eye on landing a relocated team in the next few years, with the leading candidates being the Oakland Athletics and Florida Marlins.

If those moves were to happen, nearby clubs like the New York Yankees, New York Mets, Seattle Mariners, Los Angeles Dodgers and Anaheim Angels would have the Orioles agreement in hand to hammer against MLB executives for similar or better terms.

“This is very perilous,” Zimbalist said. “The bar is clearly being raised for any other team that feels infringed upon going forward. This could become a real problem.”

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