In case you did not know, the MASN TV contract with the Washington Nationals is binding until perpetuity. There are few ways out of the deal for the Nats. Let’s discuss some of the ways that the Nationals could get out of the deal.
If MASN could not handle paying the Nats true fair market value — and it led to a bankruptcy dissolution of MASN, then that would be one way out. It is highly unlikely it would ever get to that. MASN knows all the ways they could give the Nats an “out” due to a default, and are not going to ever make it easy. A second way out, would be to buy/negotiate themselves out of the contract. Well this was reportedly attempted years ago and was thwarted by Orioles’ owner Peter Angelos. The third most obvious way out of the MASN deal is for the Angelos’ family to sell their team to a third party and the MLB commissioner makes a transfer of sale contingent on selling the Nats their TV rights. Oh, maybe there is a fourth option in MLB going to a national TV deal like the NFL.
Whispers were spreading that MLB was considering a national TV streaming service different from the current MLB.TV subscription service for out-of-market games, and that prompted some to think that it could be a first step in a national TV contract for all games similar to the NFL, but also include a much better streaming service. Maybe that took a huge step forward today after news broke from the Associated Press that Manfred is considering taking over the failed Sinclair/Diamond RSNs. Again, a national TV contract is very complicated and could lead to legal challenges. But it is a thought that some have been discussing for a while, and that would bring more revenue parity to MLB. Of course the issue is that the largest market teams have little incentive in folding in their super profitable RSNs, and could vehemently oppose any measure like that.
Sinclair owns local broadcasting rights to 14 MLB teams via Diamond Sports Group which is on the verge of bankruptcy, and that could affect nearly half the league if it is not resolved soon. MLB commissioner Rob Manfred spoke today on the subject.
“I think you should assume that if Diamond doesn’t broadcast, we’ll be in a position to step in,” Manfred said to the AP. “Our goal would be to make games available not only within the traditional cable bundle but on the digital side, as well.”
This could be groundbreaking if MLB takes over for those 14 teams from Sinclair/Diamond. As of now, Sinclair/Diamond owns rights to the local broadcasts for the Arizona Diamondbacks, Atlanta Braves, Cincinnati Reds, Cleveland Guardians, Detroit Tigers, Kansas City Royals, Los Angeles Angels, Miami Marlins, Milwaukee Brewers, Minnesota Twins, St. Louis Cardinals, San Diego Padres, Tampa Bay Rays and Texas Rangers.
“What we do is largely dependent on how Diamond and the creditors play their cards, what they decide to do,” Manfred said to the AP. “Our No. 1 goal in terms of preparations is that if for some reason Diamond isn’t broadcasting, that we want to be in a position to make sure our fans are going to get their games.”
Doesn’t Manfred mean he wants to get the games televised and get the teams paid their regional annual TV rights money? There are billions at stake here including monies owed from last year to some of those teams. This is a major debacle, and one that the Nationals know all to well in their decade’s long battle with MASN.
“We are intent on making sure that the agreement that gets the Nationals a fair market value for their TV rights is enforced, and we’ll do whatever is necessary to get that,” Manfred said in 2015.
Yes, Manfred said that eight years ago, and the 2012 TV rights fees for the Nationals still has not been resolved. Over 11 years has gone by with no resolution, and what has Manfred done to solve the MASN mess? Nothing is easy, but the landscape could certainly change with the Sinclair/Diamond situation. If MLB does take it over, and it is successful, it could push forward a national TV deal.
“On the down side … we have a level of revenue disparity in this sport that makes it impossible for some of our markets to compete at some of the numbers we’ve seen,” Manfred said in December. ”That’s not a positive. It’s like everything else in life: There is good and bad.”
“The RSN model as it exists today is probably not sustainable over the long haul as a result of the number of people that are opting-out of the cable bundle.”
Manfred is right, but what is he going to do about it? Just think, a national TV deal would create almost instant revenue parity and would eliminate the need for revenue sharing. Manfred spoke to the revenue disparity between teams now. Even with a national TV deal, teams with their own networks could still profit off of them in different ways including additional broadcasting rights on non-game programming. Teams would make their extra revenue and profits on attendance, concessions, retail, parking, stadium naming rights, radio, and stadium ads just like the NFL teams do. And of course MLB teams are now investing in local real estate (like the Atlanta Braves and St. Louis Cardinals) to much success.
Bill Shaiken of the LA Times wrote this in early December, “The biggest challenge for the league — and for every American sports league — is the collapse of cable and satellite television. Those mega-contracts have been funded by deals in which a regional sports network (RSN) pays a team handsomely for the right to broadcast its games, providing the team with money to lavish upon players.”
While all of this is complicated, Sinclair/Diamond could be the first shoe to drop in a national TV deal for all games with MASN possibly as the next acquisition. Stay tuned for this as we wait and see how this ends up.