Sunday, January 02, 2005

The Angelos travesty

Apparently, Angelos' patience with MLB has been wearing thin. There are rumors that he is prepared to sue and that the state of Maryland is prepared to sue.

Many baseball fans have considered this a hollow threat, and have wondered what Angelos and the state could possibly sue over, since the Orioles clearly do not have territorial rights to Washington. I think the sense from fans is that any lawsuit either of these two groups were to bring up would be quickly viewed as frivolous and thrown out. But the Baltimore Sun offers this nugget:

Among the issues Angelos could raise in a lawsuit is whether he had been given assurances by baseball's leaders that he would not face competition inside the Washington-Baltimore market. The state of Maryland, too, could make a claim that the security of the debt it issued to construct Oriole Park could be put at risk.


I can see where each of these could potentially give leverage. In the case of Angelos, assume that there is no basis for a verbal contract (particularly, if Angelos gave nothing up in exchange for assurances that Washington wouldn't get a team). He may still be able to argue, for example, that Selig's actions have essentially defrauded Angelos. For example, if he didn't think he had a lock on the area, maybe he would have sold high in the late '90s.

Ultimately, I don't think the merits of the case matter too much. MLB is predisposed to cut a deal that is favorable to the Orioles, at the detriment of the Nationals. Let's say that Angelos settles for what MLB has on the table right now. He'll get personal assurances from MLB about sale price and revenues, which don't matter much to the Nationals unless MLB actually has to make up a shortfall somewhere, in which case other teams are affected as well.

Angelos would also get half of the television revenues from the two teams combined, even though D.C. is the larger market, and would probably get the better deal (at least, once the team has an established audience). This more or less means that the Nationals do not get to enjoy the benefits of a free market to the extent that they would otherwise be able to do... we'll always be on an even revenue footing with the Orioles (more or less), even though we are in a much larger market.

Television revenues are such a huge chunk of change that it is almost impossible to make the missing revenue up in other ways. I doubt we're going to make it up in ticket sales, particularly when the Orioles still do pretty well at Camden Yards with a ticket price that is undoubtedly much higher than ours is going to be with all of those $7 seats. Even if we can do better in the short term on radio deals and other outlets for revenue, we're not likely to make up for the lost revenue from having to share with Angelos. We might eventually be able to keep our revenues higher than his, but not by much.

So, while we're in a bigger market and will probably be responsible for a lot more revenue in the short-term than the Orioles can bring in, we're going to have trouble just getting our revenues slightly ahead of theirs, which I find particularly inequitable. And, if Angelos gets what he wants, he may end up getting 60% of the revenues from television.

That part is a bit unclear to me. From older articles, I got the impression that he might be willing to settle for 50% of the revenues, but asking for a 60% equity share in the venture, which would probably make a real difference only when he wants to sell his share of the company.

Either way, I would love to see MLB stop catering to Angelos and gives him a big goose egg. I know this is unlikely, not just because Angelos and Selig are buddies, but because it will drag out the sale of the team, potentially by years. If they give more ground than they already have, I'll be sorely disappointed!

3 Comments:

At 12:50 AM, Blogger Yuda said...

For what it's worth, I've decided that if the State of Maryland sues over this, I'm never spending another penny in the state (I live in Virginia).

Of course, the revenue loss from me would be minimal... but an organized movement...

 
At 1:48 PM, Blogger tmk67 said...

I live in Maryland and I would be hopping mad if the state sued. This does not strike me as the type of thing Ehrlich would do, though.

The Orioles have territorial rights to Howard and Anne Arundel Counties plus 15 miles beyond those county lines. Get out a map and you will see that RFK is darn close to 15 miles as the crow flies from the Anne Arundel county line.

 
At 11:57 AM, Blogger Maury Brown said...

For the record, the territories for the Orioles are as follows:

Baltimore, Anne Arundel, Howard, Carroll and Harford Counties in Maryland.

Even with Rule 52 added in (the 15 mile buffer) DC's sites (RFK and the Navy Yard) are not within Angelos' reach as outlined by MLB’s governing documents for franchise territories.

Angelos' claim is based on discussions with Selig and MLB in which he claims that there were guarantees that the Baltimore franchise would not be harmed. “Harmed” is a rather nebulous term as he could claim that his cable and over-the-air market reached will be sliced up due to the new neighbor in the Nationals.

My contention has been that MLB will want to resolve this issue without any threat of litigation, as the discovery phase would be potentially embarrassing and possibly harmful to MLB.

Maury Brown
Co-Chair
SABR Business of Baseball committee
www.businessofbaseball.com

 

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