That 2004 contract that MLB and Baltimore divvied up to bring the Montreal Expos to Washington D.C. was always going to put a governor on the Washington Nationals revenues. That contract stated that the Orioles had to receive the same amount of annual TV revenue as the Nationals. Equal. The Washington D.C. TV market is ranked 8th largest by the Nielsen ratings and Baltimore is 28. Washington has higher income demographics than most of the markets ahead of them — making Washington very desirable. But yet, Washington receives small-market money on TV revenues and only $5 million a year more than the Tampa Bay Rays per MLBTR.
Back in 2004, nobody knew how much that relocation contract granted to Baltimore would shift the revenue dynamics by giving MASN so much power of control on Washington’s baseball broadcasts.
“I believe Peter [Angelos] has been treated fairly. We came to a conclusion that there has to be equity on all sides. I’m confident with what has been done.”— said former-MLB commissioner Bud Selig in 2004, who along with Bob DuPuy, baseball’s President and Chief Operating Officer, negotiated the compensation package with the Angelos family
Of course the MASN deal with Baltimore’s majority control was going to have a tremendous negative impact on Washington. And it turned out to be a whole lot of time, money, and frustration that was never really solved by the RSN lawsuits. The Nats never felt like they were getting fair market value in their RSN deal that has been determined by an arbitration panel known as the RSDC which is made up of executives from other MLB teams.
What has happened due to the MASN split is that Washington’s competitive divide is getting larger in a circular equation that the other team’s in the NL East can far outspend the Nationals just based on the RSN payouts, and can then sign better players which then attracts more fans by theory in higher attendance which causes a reverberating effect in revenues. Every team in the NL East is ahead of the Nats in TV revenue except the Marlins, as they trail the Nats by only $12 million a year in TV revenue.
If the Orioles are considered a small-market team by MLB definitions, why aren’t the Nationals? Last year both teams got $61 million in annual TV rights, and remember, the profit split gave the Orioles nearly 75 percent of the tally which would give the Orioles a substantial advantage in making money off of MASN in profitable years.
Last year, the Orioles outdrew the Nats in attendance by 1,936,798 to 1,865,832. To add to the revenue questions, Thom Loverro of the Washington Times claims the Orioles are ready to sign a jersey sponsorship deal for $15 million a year with T. Rowe Price. By the way, per Forbes, the Orioles were the 4th most profitable team in baseball. But that certainly won’t stop the Angelos family from whining as you can read:
“The hardest thing to do in sports is be a small-market team in baseball and be competitive, because everything is stacked against you — everything.”— Orioles’ CEO John Angelos said in a New York Times article in August
The fact that the Nationals did not, and still do not, have a small-market designation ended up costing the team the No. 1 draft pick this year after the lottery ball popped-up for the Nats and was voided, because per the rules, the Nats could not pick earlier than pick No. 10 this year as a large-market team.
Per Forbes, the Nationals made a profit last year with operating income at $45 million which ranked 9th in baseball, so this should not excuse the Nats’ payroll levels which are right now projected at only the 20th highest in baseball, and really need to increase to league average at the very least. Part of the Nats issues on revenues seem to be self-inflicted by not taking advantage of completing a sale of stadium naming rights, jersey patch sponsorships, a lack of innovative marketing of their product, and a poor public relations presence that stumbles over their own feet in embarrassing ways as witnessed by last year’s botched Strasburg retirement. How much does a flawed public perception cost a business in sales aka attendance?
What might be troubling is that the Nats’ controlling ownership, through the Lerner family, is also primarily involved in commercial real estate which is in a deep decline in the U.S. per the Wall Street Journal. The Lerner family wealth, per Forbes, hit a high value of $6.8 billion, and nobody knows how far they can fall based on the decline in office buildings in the D.C. area. Per Forbes, the Lerner family value is now down to $6.3 billion. Not bad if they only lost a half-billion in net worth. Everything is a guess, considering the Lerner Corporation is not publicly traded.
Could we see a sale of the Nats this year? That is the $3 billion question. We’ve been writing for over a year — and back into 2022 that the MASN debacle was seen as the significant roadblock to getting the team sold as the “Rubik’s Cube that must get solved.” More importantly, can the Nationals somehow gain full control of their TV future?