Contrary to an insinuation of H.L. Mencken, there is a simple eminent domain answer to the complex dispute over televising the Washington Nationals, and it is right.
The District of Columbia should pay just compensation for taking the team’s local broadcasting rights from Peter Angelos’ Mid-Atlantic Sports Network (MASN). The purchase price should be based on the annual $21 million MASN has promised the Nats. The D.C. government in turn should issue licenses to broadcast the National’s games through competitive bidding, and then transfer the rights to the team’s new owners at the price paid to Mr. Angelos. Local broadcasting revenues will be indispensable to purchasing star players by the new Nationals’ ownership in an era of free agency. Nationals fans should no longer be held hostage to Mr. Angelos’ avarice.
The current broadcasting fiasco traces back to the Baltimore Orioles owner. For long years, Mr. Angelos exploited MLB’s judicially fashioned exemption from the antitrust laws to block a Washington D.C. franchise to inflate the Orioles’ value. In comparable circumstances, in contrast, the National Football League was foiled by the Sherman Antitrust Act from blocking a move by the Oakland Raiders to Los Angeles.
Mr. Angelos extracted handsome concessions from MLB for yielding on the Washington Nationals as a regional competitor. He was guaranteed a $350 million floor by MLB on any future sale of the Orioles. Further, he received a 90 percent interest in MASN, formed as a joint venture with MLB (current owners of the Nationals), which paid $75 million for the remaining 10 percent. MASN obtained ownership of the Nationals’ local broadcasting rights in exchange for a $21 million guaranteed annual payment to MLB or its successor owner of the team.
That sum is below fair market value. Comcast Sports Network (Comcast), for example, offered more. In addition, the figure was negotiated between Angelos and MLB team owners, who did not deal at arms-length. Washington is the eighth-largest media market, compared with Baltimore’s 23rd ranking. The nation’s capital also dwarfs Baltimore in television sets and personal income. Yet Mr. Angelos will enjoy 90 percent of the profits from the Nationals’ local broadcasting rights.
Outstanding litigation between Comcast and the Orioles pivoting on MASN has deprived millions of Nationals fans television opportunities. The cable network alleges Mr. Angelos welched on its right of first refusal to telecast the Orioles games beyond 2007 by unceremoniously transferring its local broadcasting rights to MASN.
Comcast has declined to pay MASN to televise the Nationals’ games to avoid undermining its lawsuit over the Orioles’ rights. Mr. Angelos has denied Comcast’s claims, and has summoned the Federal Communications Commission to order the sports network to add the Nationals to its programming menu.
An end to the Comcast-Angelos legal war is nowhere in sight, underscoring the urgency of an eminent domain broadcast solution as a concession to Nationals fans’ brevity of life.
According decisions by the U.S. Supreme Court and sister tribunals, eminent domain may be exercised to take intangible as well as tangible or real property. A patent on processes that might aid production of nuclear weapons, for instance, is subject to taking with just compensation via eminent domain.
Local broadcasting rights for the Nationals are no different. In West River Bridge Co. v. Joseph Dix (1848), the Supreme Court elaborated: “A distinction has been attempted … between the power of government to appropriate for public uses property which is corporeal … and the like power in government to resume or extinguish a franchise. … “We are aware of nothing peculiar to a franchise which can class it higher, or render it more sacred, than other property. A franchise is property, and nothing more; it is incorporeal property.”
Taking the Washington Nationals’ broadcasting rights from MASN to enhance the leisure or recreational cravings of the team’s avid would-be television viewers would serve a valid public purpose. The Supreme Court lectured in Rindge Co. v. Los Angeles (1923): “Public uses are not limited … to matters of mere business necessity and ordinary convenience, but may extend to matters of public … recreation and enjoyment.”
Accordingly, the California Supreme Court in City of Oakland v. Oakland Raiders (1982) declared the taking of a professional football team franchise to preserve Raiders fans’ recreation opportunities was a legitimate exercise of eminent domain.
Transferring at cost the Nationals’ broadcasting rights to the new team owners would not vitiate their taking from MASN by the D.C. government. The transfer’s public purpose would be to upgrade the Nationals by purchasing star players and thereby increasing local fans’ satisfaction. And the U.S. Supreme Court held in Hawaii Housing Authority v. Midkiff (1984) that, “The mere fact that property taken outright by eminent domain is transferred in the first instance to private beneficiaries does not condemn that taking as having only a private purpose.”
If Mr. Angelos fights eminent domain, the D.C. government should consider suing to nullify MASN as an illegal restraint of trade under the Sherman Act and ultimately ask the Supreme Court to reverse baseball’s antitrust 83-year-old exemption. It invites team owners’ abuses that would be unlawful in any other sport.
Bruce Fein is a constitutional lawyer with Bruce Fein & Associates and former general counsel of the Federal Communications Commission under President Ronald Reagan.