As the Lerner family continues to explore a sale of the Nationals, the franchise’s ongoing dispute with the Orioles over television rights fees looms. Major League Baseball has renewed its efforts to try to broker an agreement between the franchises, write Barry Svrluga, Chelsea Janes and Ben Strauss of the Washington Post.
As both the Washington Post and the Talk Nats blog have covered during the sales process, the TV rights dispute presents a fair bit of uncertainty for prospective Nationals buyers. As part of the relocation efforts to move the franchise from Montreal to Washington nearly two decades ago, the Nationals agreed to tie their local broadcasting rights to the Mid-Atlantic Sports Network. MASN is jointly owned by the Nats and Orioles, but the Orioles’ ownership share is roughly 77% while the Nats own around 23%. That agreement, a condition of the franchise’s relocation into the Orioles’ geographic territorial rights, caps the Nationals’ TV revenue by making it impermissible for them to sell broadcasting rights to a regional sports network.
The Post notes the original agreement expressly stipulates that the Nationals’ obligations under the MASN deal would carry over in the event of a sale of a franchise. Thus, the unfavorable TV situation is a key consideration for those in discussions with the Lerners.
That’s all the more true in light of recent movement on that front. As Talk Nats and the Post have each reported, a group led by Ted Leonsis now appears to be the frontrunner in the sales process. Leonsis’ Monumental Sports & Entertainment also owns the NHL’s Capitals, the NBA’s Wizards and the WNBA’s Mystics, as well as having full control of NBC Sports Washington. Finding a way to broadcast games on NBCS Washington figures to be a key objective for Leonsis if his group eventually purchases the Nats, but they’d need to negotiate a settlement with the Orioles to buy out of its end of the MASN agreement. Whether the Baltimore franchise would have interest in such an arrangement isn’t clear.
Of course, there’s a strong interest on MLB’s part in facilitating some kind of settlement. Both Talk Nats and the Post have suggested the TV rights uncertainty has slowed down the sale process, and it raises some questions about the franchise’s price point. The league would prefer to see the Nationals sold for a high price (and, to a lesser extent, to expedite the process). The Lerner family has reportedly sought around $2.5 billion.
Hanging over the potential negotiations is an acrimonious past between the Orioles and Nats that hasn’t been resolved. Disputes about the Nationals’ share of TV rights led to litigation that has been pending for nearly a decade. In 2019, an arbitrator ruled the network owed the Nationals around $105MM in unpaid rights fees. MASN appealed that decision, and the appeal has still yet to get on the docket for the New York Court of Appeals.
Interestingly, while an eventual sale to Leonsis still appears to be the likeliest outcome, one person familiar with the process tells the Post a number of paths remain possible. That source suggests the Lerners could still retain majority control in the long run, or perhaps bring in a minority owner initially with a longer-term path to majority ownership. (As an example of that sort of arrangement, the Guardians agreed to a sale in June that sees incoming buyer David Blitzer purchase roughly 25-30% of the franchise initially but have the right to purchase majority control six years down the line).
As the parties try to iron through the TV deal and potential sale, the Nationals’ on-field product is coming off an MLB-worst 55-107 season. They’re firmly amidst a rebuild and have cut back payroll dramatically. The franchise has approached $200MM on player payrolls in the past, but Roster Resource calculates their 2023 expenditures (including arbitration estimates) around $98MM. Svrulga, Strauss and Janes write that a few of the team’s baseball operations staffers have expressed some uncertainty about the organization’s spending capacity and overall direction this winter. Both manager Dave Martinez and GM Mike Rizzo will stick around, at least, with the club picking up 2023 options on each this past summer.