Last week I caught wind of a feature piece that Grantland’s Jonah Keri was penning about the Baltimore Orioles and their wretched offseason. Keri happens to be one of my favorite baseball scribes and when I heard that he was writing thousands of words about my beloved O’s, I woke up like a kid on Christmas morning rapidly refreshing Bill Simmon’s website until “For the Birds” finally popped up.
Keri’s hard work and research didn’t disappoint as he unearthed quite a bit about the history of the Orioles payroll, the money MASN generates for Peter Angelos and the team’s relationship with the Nationals. Here were five things I took away from the column.
1. Orioles Spent Big In The Late 90’s Due To Good Attendance
Though it’s hard to remember, the Orioles were atop the list in payroll in the late 1990’s. How could they afford to spend like the Yankees in such a small market? Well, this was in the days before big-time contracts with regional sports networks.
In 1996 and 1998, the O’s spent more on payroll than any other team. Considering how teams earned money back then, it made perfect sense: Attendance was king, and Baltimore led the American League in that category every year from 1995 through 1998, then finished second in 1999 and 2000. The immense appeal of Oriole Park at Camden Yards (which opened in 1992 and became the gold standard for new ballparks) combined with the team’s on-field success (the O’s reached the ALCS in 1996 and ’97) made the team a financial powerhouse.
2. Peter Angelos Isn’t The Meddling Owner Everyone Thinks He is
Thankfully, Andy MacPhail received the credit he deserves in Keri’s piece. MacPhail is responsible for building the core of the current Orioles roster and acquired much of the talent in highway robbery-like trades with Seattle and Texas.
In defending Angelos during our conversation, MacPhail said he had to sell the owner far more on trading away an established star like Bedard than he ever did on acquiring high-priced veteran help. He said Angelos’s guiding principle, far more than with most owners, is deliberation.
MacPhail goes on to describe how he had to make a case for the Bedard trade and says that Angelos wasn’t any more involved than any other owner.
3. MASN Isn’t Generating As Much Revenue As It Could (Should)
While regional sports networks are often viewed as money printing machines, the Mid-Atlantic Sports Network isn’t being utilized by the Orioles as much as it could be. As it turns out, the O’s are leaving a lot of money on the table. MASN has much more potential to generate revenue.
While the Orioles are bringing in quite a bit more than the Nationals, neither team is profiting from MASN as much as it could be. According to SNL Kagan, a group that analyzes cable and broadcast network deals as well as regional sports networks (RSNs), MASN properties generated $167.8 million in total revenue in 2012.5 The bulk of that money came from advertising and subscriber fees, with 5.4 million consumers paying $2.14 a month. That’s well below the $2.47 industry average for 2012 and $2.69 projection for 2013,6 and several of the media experts and sports deal makers interviewed for this story said MASN should be getting much more. Comcast SportsNet Mid-Atlantic, which primarily airs Washington Capitals and Wizards regular-season games, got $4.02 per month in 2012, indicating the market would likely support a higher rate for MASN. It’s hard to know whether to blame the network’s low subscriber fee on inept management, the timing of the deal,7 or other factors, but whatever the reason, it’s clear MASN will be leaving tens of millions on the table until it renegotiates with local cable providers.
4. Angelos Is Preparing For A Doomsday Scenario
The Lerner family was finally able to challenge the terms of the Nationals deal with the Orioles and MASN after five full seasons under the current contract. However, Keri points out that the two sides couldn’t be any further apart in resolving their dispute. The Nats were able to contest the equity of the deal, but asked for $100 million a year in rights fews, the Orioles countered with $35 million.
There’s no hope in hell of an easy compromise when the two sides are that far apart, and the Orioles have good reason to dig in their heels. Remember that while RSN rights fees are subject to revenue sharing, the money left after those rights fees have been paid out is not. Remember, too, that the O’s and Nats must make the same amount in rights fees every year. So if Washington succeeded in getting $100 million a year in rights fees, Baltimore would have to pay itself $100 million a year, too. That would force the Orioles to pay the 34 percent revenue-sharing tax on $100 million instead of on the current $29 million. It would also leave MASN broke.
Angelos and the Orioles haven’t dramatically increased spending because they don’t know how much longer Major League Baseball will allow the teams to continue to operate under the terms of their current cable deal.
5. Major League Baseball Is Sending The Nats Some Cash
To make up for this bad situation, Keri says that the league is helping to financially compensate the Nationals.
For now, the MASN status quo remains. The Nationals aren’t completely helpless, though: According to a source close to the Washington franchise, MLB has sent the team an undisclosed sum every year to help bridge the gap, and to prevent the Lerners from taking matters to court, until the deal becomes more balanced.
While I expected the Orioles to be embarrassed in a tell all piece by a respected national journalist, I ended up feeling more sorry for them than I previously expected. It’s a sticky situation, the Nats invaded the O’s turf and in return Bud Selig let Angelos get away with this RSN contract. Even if the Orioles are sitting on bags of Benjamins, they have no idea what the future will hold for them once the league finally steps in to balance out their TV deal with the Nationals.
There’s plenty more insightful information in Keri’s piece on Grantland, everyone should click over and give it read.