Nationals sought tripling of TV rights fees from MASN

Jeff Barker, The Baltimore Sun

The Washington Nationals sought television rights fees nearly three times what the team receives now from the Baltimore Orioles-controlled Mid-Atlantic Sports Network, according to documents unsealed by a New York court last week.

The documents were made available by the New York Supreme Court Commercial Division for New York County, which is hearing a dispute over the division of the rights fees the two teams receive from their shared TV network.

Both clubs now receive about $40 million a year in return for granting MASN permission to televise their games, but the Nationals were seeking an increase to $118 million, citing recent deals for other teams, according to the documents.

"Whether MASN claims it can afford it or not is irrelevant," said a recent document filed on behalf of the Nationals. "That fair market value is neither negated nor constrained by MASN's economics."

Since the Nationals and MASN — which is majority-owned by the Orioles — disagree over the appropriate size of the rights fee increase, Major League Baseball referred the matter to a panel of three baseball owners.

The panel's June 30 decision has not been made public, but several documents — including a court exhibit — say the award fell substantially short of $118 million. The court declined baseball's request to seal the entire record, although portions of some documents are redacted.

The award "valued the Nationals' telecast rights fees at amounts substantially higher than those proposed by MASN, but substantially less than the amounts that had been proposed by the Nationals," said a document filed by New York attorney Jennifer D. Bishop, representing the Nationals.

Another document filed by the Nationals said the award was "tens of millions" less than the team's request.

On Thursday, MASN won a temporary restraining order blocking baseball from implementing the decision at least until it can be heard by the court.

MASN says the panel's decision would mean the network would operate at a profit margin of about 5 percent for baseball programming, well below the industry norm. It said its profits would be reduced substantially because much of its profit stream would be redirected to pay the higher rights fees.

Any decrease in MASN's margin would be a blow to the Orioles because 85 percent of the network's profits flow to Baltimore and 15 percent to Washington, based on their ownership share of the network. Washington's share will climb by 1 percentage point a year up to 33 percent.

"Until the Award, MLB had never forced any [regional sports network] achieving greater than a 20 percent profit margin from baseball programming to operate on less," said a petition filed with the court by MASN attorneys. " And several related-party [regional sports networks] have been permitted profit margins from baseball programming well in excess of 20 percent."