Friday, April 1, 2005

Baltimore Orioles owner Peter Angelos and Major League Baseball yesterday agreed on a compensation deal that will allow Washington Nationals games to be seen on television, restart efforts to sell the Nationals and radically alter the Orioles’ economic prospects.

The deal calls for the creation of the Mid-Atlantic Sports Network (MASN), which will serve as the cable home of the Nationals immediately and the Orioles by no later than 2007.

Mr. Angelos and the Orioles will control a majority stake in MASN and the Nationals the remaining share. The agreement mandates equality in the quantity and quality of each team’s exposure on MASN.

The Nationals and Orioles now will be, in effect, business partners, a surprising twist given the rivalry between the two host cities and the passion with which Mr. Angelos fought the relocation of the club to Washington.

The Nationals will receive an annual rights fee, thought to be between $25 million and $30 million, that will provide the club with its second-largest source of revenue, behind ticket sales.

That fee will be reviewed every five years and reset to market rates. The Nationals retain in that review a right of appeal to Major League Baseball (MLB) Commissioner Bud Selig.

Mr. Angelos had been seeking protection from economic damage to the Orioles caused by the arrival of the Nationals in Washington.

MLB guaranteed as part of the agreement that Mr. Angelos will receive at least $365 million for the Orioles and his stake of MASN whenever he sells the franchise.

MLB is assuming that guarantee will not need to be invoked because of the rising values of baseball teams and regional sports networks.

However, Mr. Angelos did not receive a guarantee from MLB that his local revenue would exceed a certain level each year, as he had originally sought.

“We were dealing with essentially the intersection of the Orioles’ need to be protected coupled with our absolute demand that such protection come from the industry in general and not at the expense of the Nationals,” said Bob DuPuy, MLB’s president and lead negotiator. “It was a very tricky situation and took quite a bit of time to work through.

“But in the end, I think we’ve protected the Orioles fairly and actually created additional value for the Nationals.”

MLB and Mr. Angelos had argued for six months about control over the regional TV marketplace for baseball.

Mr. Angelos claimed a territory stretching from Pennsylvania to North Carolina. MLB argued that it owned all TV territories and licensed them out to individual teams.

The agreement reached yesterday gives the Nationals a home-TV territory “co-extensive” with that of the Orioles, with the regional sports network the most visible sign of that shared marketplace.

The settlement sets into motion a series of significant and rapid moves and changes for the Nationals.

The team is making arrangements to televise Monday’s season opener on WDCA-TV (Channel 20), which will serve as the Nationals’ primary over-the-air TV station.

Working in partnership with the Orioles, the Nationals in the next few days will select an announcing crew and pursue sponsorship and advertising sales.

“This is something that’s definitely workable. It’s all a matter of keeping the lines of communication open,” said Nationals President Tony Tavares. “If everybody’s talking, I think we can work all this out.”

The deal, because it clarifies how much revenue the Nationals will generate, also will restart the long-dormant effort to sell the club.

MLB purchased the then-Montreal Expos three years ago for $120 million, and at least seven prospective ownership groups are seeking to buy the franchise in its new incarnation as the Nationals.

MLB hopes to sell the Nationals for at least $350 million in an auction tentatively set for the summer or early fall.

“We haven’t seen all the terms, and the proof is going to be in the details,” said Jerry Burkot, spokesman for American Baseball Capital, a bidding group led by Williams Collins III. “But we are pleased that this looks like the last hurdle to getting the sale process expedited again.”

The Orioles Television Network, a team-owned entity that controls the club’s over-the-air game broadcasts, will morph into MASN. The Nationals will become an equity partner in that new business.

However, many logistical hurdles remain for the network to begin operation.

Negotiations have begun with several cable and satellite providers to carry MASN broadcasts.

Until such deals are reached, the only Nationals games that will be seen on television will be a few nationally broadcast games on Fox and ESPN and 76 over-the-air games this season scheduled for WDCA and WTTG-TV (Channel 5).

A deal to reach Comcast cable subscribers could prove difficult because MASN will compete directly against Comcast SportsNet, another regional sports network that serves Baltimore and Washington.

MLB sources said Comcast eventually might be a partner in MASN, though Mr. Angelos is not thought to prefer such a move.

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