MASN pay-up and status of Nats ownership

It was always a question of “when” not “if” regarding the Washington Nationals getting paid for past funds owed for annual TV rights fees from MASN. Approximately $100 million was set aside by the Orioles-controlled MASN entity in escrow for a 5-year period that began back in 2012. That amount was based on the last arbitration amount determined by MLB’s RSDC for annual rights fees during 2012-2016, and later affirmed by a lower court. Based on years in the courts system and appeals, the money sat in escrow until now per a report by the Washington Post and others, that those funds are finally going to be paid to the Nats after the latest unanimous win by Washington in the New York Court of Appeals.

After nearly 11 arduous years of court battles, there are still seven more years to settle up on between MASN and the Nationals, plus three years going forward in the 2022-2026 five-year period. Agreeing to payment terms on those seven years will finally determine whether or not the two sides can coexist outside of the courts on being partners in MASN, and in turn might help both sides if they choose to sell their franchises.

Some background, the Nats own a 24 percent stake in MASN. The Nationals ownership stake grows by 1.0 percentage point a year until 2032 when the partnership will set at a final 33 percent to the Nationals and 67 percent to the Orioles. This deal continues into perpetuity unless there is a default or a buyout, or the deal is mutually dissolved which is unlikely. With the current RSN crisis in baseball, just about anything is possible as the cord-cutting in cable TV took a large bite out of the once lucrative regional sports networks that were piling up the revenues based on cable subscribers just a decade ago. MASN, per reports, is down to approximately 3.3 million subscribers in 2023 which is almost half of where it was back in 2016.

Recent evidence of the cable meltdown could be seen with Diamond Sports Group and their broadcast rights to 13 MLB teams that landed them into bankruptcy. In the past few weeks, MLB had to take over the broadcasting of the San Diego Padres games after Diamond failed to pay the team. The bankruptcy judge ruled against Diamond and all of the remaining dozen teams are in limbo to see if they join San Diego or whether Diamond can move forward with some of the teams and get current with payments.

MASN has an advantage over Diamond and some of the other RSNs because the MASN fair market value is determined in five-year terms with the Nats. As the RSN market is deteriorating, the Nats will get paid less most likely in the current term. Can the two sides resolve the 2017-2021 five-year term quickly? That money is still due, but since that was not included in any lawsuits — it never became public information. Will the litigious Angelos family come to a quick payout for the remaining MASN money is a key here.

“My goal is to never be around any litigation again. You don’t need litigation to solve problems. You just need good partners. We can sort that out, and solve that very quickly.”

— Orioles’ principal owner John Angelos said a few months ago

How does all of this affect a sale of the Washington Nationals going forward? That is the $3 billion question. The Nats had many interested buyers and TalkNats broke the news in early January that the potential sale was off. As we described last summer, MASN was the Rubik’s Cube that had to be solved. It was not, and to this point it still is not solved. Yes, a big step forward, but this is far from done per a source.

“…it is just a big step in the right direction. The team has another 5-year period to come to a settlement for the years 2017-2021. I would say if that comes to terms quickly then maybe potential buyers re-engage.”

— per a source

Another source thinks getting paid for monies owed going back more than a decade has no effect because everyone knew the number was $100 million. The source said that the Nats valuation from Forbes is $2 billion, and that is not a number that appears to interest the Lerner ownership group. A quick fact check confirms that number as of March 2023 per Forbes. But as you saw with a recent sale of the Charlotte Hornets basketball team this week that they sold for $3 billion reportedly by Michael Jordan to a group of investors, and that was far over Forbes estimates of $1.7 billion.

That is further ammunition for the Lerners to support a rumored asking price much closer to $3 billion. You would think that an MLB team in Washington, D.C. with a bright future is worth at least as much as the Charlotte Hornets and probably more. Look at the sales number at over $6 billion that the Washington Commanders just sold for.

“Everyone has an opinion of course. Some will say that the Nats could now sell quickly. I just do not see that as a reality unless a buyer got close to $3 billion. And with every sale out there of a hockey, basketball, soccer or football team, prices certainly indicate that the Lerners should easily get that number. All it takes is the right buyer.”

— A source told us

As this source continued to tell us, that unless the Lerners are in some desperate need to sell that this might not happen for a while if at all. Some have heard that principal owner Mark Lerner is much more engaged in the day-to-day operations of the team and was seen in Spring Training camp and at many games this year.

“All the fans should be concerned about is that the team is striving to get better, and will improve the product seen on the field. I believe the season is over in about four months. Then I think the Lerners will spend more in the offseason. A better team goes a long way to a better valuation.”

–the source continued in his thoughts on the future

By the way, the Charlotte Hornets were horrible this year with a .329 winning percentage. They had a worse record than the Washington Wizards yet they sold for 176% of Forbes’ estimate of value.

Time of course will tell us a lot, and we are certainly in wait and see mode. Thomas Boswell has written two articles this year. In mid-May, he wrote that second article, “These Washington Nationals are scrappy, fun — and on their way back up” and one of the key takeaways read:

“When (or if) the Nats eventually approach .500, they will do what they did in 2011 when they signed Jayson Werth as a free agent. Each year, as they see who panned out and who didn’t, they will add a piece or two.”

— Thomas Boswell wrote in his article

Okay, the facts are a little off from Mr. Boswell and should we remind him that the Nats were nowhere close to .500 when they signed Werth. The team was coming of a disappointing 69-93 season in 2010 and two months and two days after the 2010 season ended, Rizzo signed Werth to a deal on December 5, 2010. After Werth signed, the team improved to 80-81 in 2011. Hopefully these 2023 Nats can better that 69-93 record, but certainly that mid-May optimism looks bleak today as the team is back to a 61-101 pace. The main point is that Boswell states as a fact that ownership will spend on a big piece or two. We have heard that from Mark Lerner too.

“We are all in, and we feel great about it. We feel Mike [Rizzo’s] plan for this team has got it covered.”

— Lerner said in an interview with Dan Kolko on Opening Day

While Lerner might be “all in”, he was also honest and transparent that the team is still technically for sale. But something can be for sale and not sell. That has been the situation with the stadium naming rights for the past seven years when the team hired Korn Ferry to try to sell those stadium naming rights in March of 2016. The stadium is still called Nationals Park, just like it was when it opened in 2008. That seems to be the M.O. for the Lerners in that they set a price and if nobody is willing to accept it — nothing changes.

The MLB draft is just 2 1/2 weeks away, and the Nats should come away with a superstar piece of the future. The mixed results at the MLB and farm system levels might lead to some skepticism, but most realize that rebuilds are painful and good times are not far away. All a rebuild does is expose the weak links while also accentuating your strengths. It is all part of the process.

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