Baltimore Orioles: Has Peter Angelos outsmarted himself?

One fringe theory on why the Baltimore Orioles haven’t spent as much as fans would have liked this off season is due to the negotiations going on between MASN and the neighboring Washington Nationals. In a nutshell, Washington’s television rights fees were to receive a “reset” following the 2011 season. MASN (owned in majority by Orioles’ owner Peter Angelos along with Washington owner Ted Lerner having a minority stake) submitted a number in the $40-$50 million range per season. The Nationals submitted a number in the $100-$120 million range per year. (The Nationals currently draw approximately $29 million in rights fees each year from MASN.) One of the keys of the deal: the Orioles have to get exactly the same amount as the Nationals.

Angelos inserted that last part above into the deal so as to ensure that for the life of the contract the Orioles’ rights fees are worth as much as Washington’s. The point that Washington is trying to make is that “market value” for TV rights is much higher now than it was when the contract was signed. MASN’s point is that (allegedly) there’s a specific formula in the contract which states how the rights fees are to be calculated, supposedly on a sliding scale of some sort. That’s something that the network has always maintained, however we would obviously need to have the contract in front of us to know for sure. However one thing is certain, and that’s the fact that the two sides are at an impasse. The contract states that in that event the situation is to go to an independent board of arbitrators (owners of the Pirates, Mets, and Rays) to be decided. That’s where we stand with it right now.

Ultimately Washington will get their reset, and it will be retroactive to 2011. If the aforementioned clause actually does exist and there’s a formula for the rights reset in the contract, then I suspect that Angelos would go to court if the arbitration panel finds in favor of Washington. That has to scare the heck out of Major League Baseball. However it also behooves the panel (and thus the league) in a sense to rule in Washington’s favor because it continues to establish a very high market value for TV rights. So you have the issue of what’s perceived to be best for the league overall and for Washington, vs. what might actually be “legally right” as is written in the contract. And ultimately, neither the league nor the panel would want to go to court against a litigator like Peter Angelos.

As I said, the bit about the two teams getting the same rights fees was inserted in effect to “protect” the Orioles. However now one has to wonder if Angelos hasn’t inadvertently put his

Courtesy of Brace Hemmelgarn-USA TODAY Sports

franchise in peril by trying to protect it with jumbled legalese. Over the off season several articles have stipulated that the Orioles have been so frugal (ie-not wanting to risk signing Grant Balfour due to his physical) because Peter Angelos knows that there’s a chance he might have to ante up a heck of a lot more money. MASN and the Orioles are sovereign of each other in a sense, but let’s put it this way; let’s say you work at a hardware store, and the owner also owns a supermarket. If the supermarket suddenly has a lot of expenses and/or goes under, even if the hardware store is in decent financial shape it probably doesn’t bode well for things.

MASN has silently maintained that having to pay Washington $100 million would potentially bankrupt the network because they would then have to pay out $200 million (due to having to pay the Orioles the same). So it’s entirely possible that something that was designed to protect the franchise could in turn now make things a heck of a lot more difficult for the O’s. But going back even further than the contract, Angelos only owns Washington’s TV rights because when the Expos relocated he threatened to sue MLB for infringing upon his market (in which he also claimed Washington DC). Ultimately, I suspect that Angelos wouldn’t have been able to win in court given the fact that the Expos/Nats are an NL team. However he probably could have delayed their relocation enough to where it would have made more sense to simply go elsewhere. So in the interest of giving Washington a team and not having to go to court against Angelos, MLB awarded MASN Washington’s TV rights (for 30 years).

So again, Angelos did all of this with good reason and incidentally with good intentions for the O’s. He ensured that his team would be financially competitive for a long time in a sense. However now being faced with a prospect of potentially having to pay revenues he never anticipated, is it not possible that the team is trying to conserve money as best they can? I suppose saying that Angelos outsmarted himself might in a way be a bit harsh. However it’s also worth saying that when you’re in effect the writer and thus the executor of a contract, any discrepancy or disagreement over the intention or implication of a part of said contract generally works against you.

As I said, it falls at some to this independent arbitrator group to make the decision. Do they rule in favor of their fellow owner Ted Lerner, and thus help to keep MLB’s television revenue high? Or do they rule in favor of their fellow owner Peter Angelos, and enforce what he says the contract actually states? In my personal opinion if the contract states a formula, this should be an open-and-shut case. But if it’s hazier than MASN and Angelos is letting on, it becomes less transparent. I do believe that Angelos’ intention in this deal was noble with regard to the O’s. However sometimes we have unforeseen things happen in life and especially in business.