Local TV contracts for major-league teams are rising dramatically. The Baltimore Orioles and Washington Nationals share ownership of the Mid-Atlantic Sports Network (MASN), but the Orioles hold by far the larger stake.
Now, according to sources, a panel of baseball officials will decide what the two teams could not resolve in negotiations — the annual rights fee that the Nationals will receive from MASN.
The matter went to arbitration after talks between the Orioles and Nationals sputtered. While there is no known deadline for a decision, the panel is meeting regularly due to the urgency of the situation, sources say.
The decision of the panel will be binding, and could double or even triple the reported $29 million annually that the Nationals currently receive, sources say.
The fee, according to the agreement that created the network, is re-set to market rates every five years. Still, the teams disagree over what the new terms should be.
Washington D.C. is the ninth largest television market, according to Nielsen. The San Diego Padres, who play in the 28th-ranked market, recently completed a deal with FOX Sports San Diego that will pay them a $200 million upfront bonus and $50 million annually for 20 years.
The Texas Rangers, who play in the fifth-ranked market, will receive $150 million per year under a 20-year extension with FOX Sports Southwest, according to USA Today. That deal begins in 2015.
Local TV money is the Nationals’ second-largest source of revenue after ticket sales, and is growing even more critical to the team’s future.
The Nationals, because they play in one of the sport’s 15 largest markets, will be ineligible to receive revenue sharing by 2016, according to the new collective-bargaining agreement.
And the Nats already are at a severe disadvantage in their co-ownership of MASN.
Baseball helped create the network in 2004 as part of a deal in which the Orioles allowed the new Washington franchise to move into their territory.
The Nationals’ share will increase from its original 10 percent over the 25-year agreement, but max out at 33 percent. The Nats currently hold about a 13 percent stake, compared with about 87 percent for the Orioles.