The Nats are a small-market revenue team but some of that is self-inflicted

Much has changed this month since the news broke that the Orioles will be sold — and the Washington Nationals were taken off of the shelf as a team for sale. These two teams are still tied together through the MASN TV contract and per the Baltimore Sun — that contract might be severed to give the Nats back their RSN autonomy. For years, the Nationals have suffered in restrictive revenues — but they must take some of the blame for their own failures in not taking advantage of available revenue streams such as stadium naming rights, jersey patch sponsorships, and of course attendance that has been in a freefall.

Things look so gnarly that the Nationals declining revenues might have turned them into a position of actually benefiting from revenue sharing. Per MLB’s rules, all teams keep 52 percent of their revenue, and then pool the remaining 48 percent of their revenue to be shared and split evenly and given back to each team. That is supposed to help steer money from big-market revenue teams with those lucrative media deals, high ticket prices and attendance, to the lower revenue teams. It is very possible that in 2023 that the Nationals were a beneficiary of revenue sharing.

If MASN gives the Nats full control of their own regional TV coverage, much will be resolved on that end. Back in 2004, nobody knew how much that relocation contract of the Expos would grant to Baltimore a shift of the revenue dynamics by giving MASN so much power of control on Washington’s baseball broadcasts and ultimately the split of the money.

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. Hopefully this will be resolved soon.

If the Orioles are considered a small-market team by MLB definitions, why aren’t the Nationals? In 2022, 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 didn’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.

What has happened due to the MASN split is that Washington’s competitive divide was 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 and fielding competitive teams through higher payrolls.

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. But again, the Nats have revenue streams that they can control. This chart below is mostly estimates, and when you compare the numbers to Forbes, it would be hard to believe the numbers will be close to accurate for the Nats’ 2023 season. The Braves are publicly traded, and they also own their own real estate venture in Battery Atlanta, and had the highest numbers in attendance in the NL East.

On payroll, the Nats are only the 20th highest in baseball, and really needed to increase closer to league average at the very least. Part of the Nats issues on spending more on payroll was directly related to the low revenues — much of which 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?

One new face in Nationals Park is Kimberly Bolt. She is in the C-Suite as the team’s new Chief Marketing Officer reporting to Mike Carney, the Chief Revenue Officer. They have to see what we are seeing in that chart. Carney has it all in his job title. Revenue. Get the numbers up. Sign better players and you will get the higher attendance and more revenue. Circular motion.

If the Nats could get close to the Braves numbers of an estimated $22 million just for the jersey patch sponsorship and stadium naming rights, and then get a good deal on RSN money, hopefully the team can get over $100 million from the $61 million they are at now. The Braves reportedly get $122 million, and the Phillies are at $133 million. The Braves and Phillies have used that money to sign better players which leads to winning and positive fan sentiment leading to higher attendance. This is all inter-related in revenues and ultimately in winning.

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