- The Washington Times - Sunday, April 17, 2005

The Washington Nationals’ season and home openers finally are in the books. The weeks of ceremonial hoopla are done. Now it’s time to get back to business and address the serious questions surrounding the team: Who’s going to buy the Nationals from Major League Baseball? How much are they going to pay? And can the winning bidder turn the club into a true economic powerhouse?

Later this week, the nine prospective ownership groups will begin taking their turns for a second look at the Nationals’ financial books in order to prepare their bids. The latest fiscal review will focus on new expectations of television revenue stemming from MLB’s recent agreement with the Baltimore Orioles to create the Mid-Atlantic Sports Network (MASN) as the cable TV entity serving both clubs.

The arrival of MASN is the fulcrum of a spinfest now surrounding the nascent Nationals auction, a process that almost certainly will be filled with back-room drama right up to the moment when the new owner is named. That announcement is expected sometime this summer, but given MLB’s tendency to move slowly, the process could extend into the fall.

Several prospective owners, speaking on the condition of anonymity, believe the Nationals’ value has been greatly compromised because of the late-arriving MLB deal with Orioles owner Peter Angelos, with the final price perhaps sinking $75 million below the $350 million to $400 million figures widely discussed. The Orioles now control 90 percent of MASN equity, with their stake ultimately sinking no lower than two-thirds.

The Nationals are slated to receive an annual $21 million payment from MASN for their television rights, with the figure rising to $25 million within several years and then reset to market rates every five years. Though the rights fee provides a great measure of stability, the inability to share in most of the economic upside of MASN is causing trepidation among prospective owners, particularly as ticket prices are nearing maximum levels across the sport.

And they point no further than Boston, where an 80 percent stake in the New England Sports Network added between $250 million and $300 million to the price of the Red Sox in the 2002 purchase by John Henry and Tom Werner.

MLB commissioner Bud Selig, predictably, is already doing what he can to bring the Nationals sales price back up.

“If there’s any time to be buying a baseball team, to be getting into this business, this is it,” Selig said. “The way the industry is going, the growth across the business we’ve had, this is an excellent time to be buying a ballclub.”

Time, competitive bidding and the lords of baseball, of course, will determine the final sales price. In the meantime, there is one figure to go on: Forbes Magazine’s recent estimate of $310 million. The estimated franchise value, released early this month and more than double the $145 million figure for the team’s final season in Montreal, was compiled before the MLB-Angelos agreement was completed. But it did contemplate a strong likelihood of Angelos reaping dominant control over the Mid-Atlantic TV marketplace.

MLB executives have made a habit of attacking Forbes every year following the release of its annual list of baseball franchise values. But the magazine is often more right than Selig and others would care to admit. Last year Forbes estimated the value of the Oakland A’s at $186 million. An ownership group headed by Lewis Wolff just completed its acquisition of the A’s for $180 million.

“I think the $310 million number for Washington is a fair one given the situation that now exists,” said Michael Ozanian, Forbes editor. “There are still a lot of questions to be answered in terms of what the revenue picture is going to be in the new stadium [due to open in 2008]. Right now I would say $400 million is a pie-in-the-sky number.”

MLB executives, however, are under serious pressure to register a big score with the Nationals. The previous incarnation of the Nationals, the Montreal Expos, were purchased in early 2002 for $120 million. Add in three years of accumulated operating losses, estimated at more than $60 million, and the time value of money provided by the other 29 MLB team owners, and baseball’s collective cost basis on the franchise is likely more than $200 million.

But those same owners are also expecting real profits for the three-years-and-counting of trouble they’ve lived through and created for themselves. The prospective owners for the Nationals — which include local groups led by Fred Malek and Jeffrey Zients, William Collins III and Jonathan Ledecky — know well they’re buying against this pressure and know MLB will aggressively pit them against one another.

It all adds up to a soap opera destined to rival the Washington Redskins’ epic sale saga of 1998 and 1999.

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