Column: Orioles & Nats Spar Over Rights FeesAugust 4, 2014
Despite those comments, the odds of MLB returning to Montreal range from slim to non-existent. Selig has made it clear that he is opposed to relocating existing franchises and the league has repeatedly said it has no plans to expand. But Selig has good reason to lament the 2005 move of the Expos to Washington, D.C. where they became the Nationals.
In order to facilitate the Expos’ relocation to what the Baltimore Orioles claimed as their territory, MLB and the Nationals were forced to make a number of concessions to Baltimore owner Peter Angelos. The feisty, unpredictable and litigious Angelos threatened to sue MLB until Selig and company sweetened the offer to the point where Angelos couldn’t refuse. One aspect of the resolution included the formation of the Mid-Atlantic Sports Network (MASN) for the purpose of broadcasting both Orioles’ and Nationals’ games.
Initially the Orioles owned 95 per cent of MASN and the Nationals 5 percent. The Nationals’ ownership has since grown to 15 per cent and will increase by one percent per year until it reaches 30 percent. MASN agreed to pay the Nationals $29 million per year in rights fees from 2005 to 2011. Beginning in 2012, the parties agreed to reset the rights fees every five years based on a formula. After the Orioles offered to pay the Nationals $34 million per year, the Nationals countered with a proposal between $100 and $120 million per year. When the parties couldn’t agree on a figure, the dispute was submitted to binding arbitration before a panel consisting of representatives from three MLB teams.
The panel found for the Nationals but when MASN refused to pay the increased rights fee, both parties threatened litigation. At that point, Selig hit the roof. He sent a number of memos to both teams admonishing them for failing to reach an amicable distribution of revenues and castigating them for not negotiating “with the best interest of the game paramount in your mind.” The commissioner also threatened to discipline the parties, saying, “I want there to be no doubt that, if any party initiates any lawsuit, or fails to act in strict compliance with the procedures set forth in the Agreement concerning [MLB’s] decision, I will not hesitate to impose the strongest sanctions available to me under the Major League Constitution.”
In response, attorneys representing the parties engaged in dueling barrages against each other and MLB. In one letter, an attorney representing the Orioles charged the arbitration panel with violating her client’s procedural rights and claiming that their decision was not binding on the team. Shortly thereafter a Nationals’ attorney sent a letter to MASN stating that as a result of the panel’s decision the team was owed an additional $10 million on April 1 and June 1 and MASN was in default.
On July 8 another attorney representing MASN accused MLB of entering into “illicit arrangements and misconduct.” It’s doubtful that those comments endeared him to Selig. However, the attorney does have a point. Any increase in rights fees paid to the Nationals benefits all of baseball. The league takes a 34 per cent cut of all local media revenues generated by member teams. Therefore, if the Nationals receive $120 million per year in rights fees instead of the $34 million offered by MASN, MLB would receive an additional $29 million per year to distribute to lower revenue clubs. In effect, MLB is the judge, jury, enforcer and beneficiary of a deal it created. And the thought of subsidizing fellow owners obviously doesn’t sit well with Angelos.
Publicly, MLB is taking the high road, saying in a statement that, “Commissioner Selig remains hopeful that the parties can reach an agreement in an amicable manner.” Privately, Selig has to be seething at the public disclosure of the spat between the Orioles and Nationals. Throughout his term as commissioner, Selig has tried to keep disagreements among owners private and out of the courts. The airing of dirty laundry in public has always been anathema to Selig.
No wonder the commissioner pines for the days when a MLB team was in Montreal.