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March 23, 2005

Buying Off the Orioles

The Deal Bud Doesn't Need to Make

by Neil deMause

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According to press rumors, Bud Selig and Peter Angelos will step behind a podium any day now and announce how much MLB will pay off the O's owner for agreeing to put up with the Washington Nationals taking up residence in the town next door. That, in turn, will allow the Nats to sign a TV contract, so that D.C. residents can enjoy the pleasures of their brand-new--okay, slightly used--ballclub without getting up off the sofa.

Of course, those are the same press rumors that were floating around six months ago, when Jayson Stark reported of an Angelos deal that "the finish line is now so close that one source said Tuesday: 'I don't see anything now that could gunk this up.'" Like the revolution and Bruce Chen's career, it seems that Angelos/Selig detente is forever just around the corner.

When the inevitable announcement comes, you can expect the newspapers to present it as the happy denouement to a bitter but necessary squabble to resolve the conflict between the interests of the league as a whole and those of one particular owner. This is what those in the media-criticism biz refer to as "horsecrap." Regardless of what t's are crossed in the final agreement, it's plain and simple: Bud Selig got mugged, and he has no one to blame but his own fear.

The ostensible crux of this whole debate is TV rights. While innumerable press reports have asserted that the Orioles have "territorial rights" to D.C., this was never the case: according to baseball's bylaws, Baltimore territory includes several suburban counties in Maryland, and stops at the state line.

What Angelos does have are the more nebulous "cable rights," which for the O's extend clear to the Carolinas. This is par for the course in the monopolistic world of MLB, wherein every cable system in the country can be assigned to a specific team, even ones hundreds of miles from home plate. They are, however, provisional rights--they're owned by MLB, and only granted to teams at the whim of the commissioner and the executive committee. "My own reading of it," says baseball economist Andy Zimbalist, "is that Angelos doesn't have any legal grounds to pursue this at all."

Why, then, you may ask, is Bud Selig wasting his time negotiating with Peter Angelos, then? Just give the man some lovely parting gifts, and send him away to play the home version.

The problem is that Angelos is holding MLB's traditional kryptonite: the threat of an antitrust suit. Because the very existence of the cable-rights pie is a function of MLB's monopoly powers, an Angelos lawsuit, even if it ultimately failed, could force Selig to air some laundry he'd prefer to keep under the bed.

"I think that the discovery phase scares them to death," says SABR Business of Baseball Committee co-chair Maury Brown. "I think Angelos is sitting there thinking, 'I'm going to shove them into a corner, and they're going to bend and I'm not.' I think he's hoping they'll 'settle out of court'--that's how he dealt with tobacco."

From Angelos' perspective, it's a great gamble, because the potential payoff is so huge. The package reportedly being offered by MLB includes: part-ownership of the regional cable channel that would broadcast both O's and Nats games (talk has been of Angelos getting 60%, but that's one of the issues still being hammered out); a guarantee that if Angelos sells the team for less than $360 million--a nifty $200 million profit on what he paid for the Orioles back in 1993--MLB will cut a check to make up the difference; and a promise of annual MLB payments if the O's revenues fall short of $130 million a year, which is more than 21 of 30 MLB teams took in last year. All this for agreeing to give up TV rights that all independent observers agree could be taken from Angelos for nothing if not for Selig's fear of upsetting the apple cart of owner consensus, and risking having to open the books.

Okay, so nobody's crying for Bud and his cronies, not when they're already sitting on a taxpayer-funded stadium, a potential $300 million windfall when they finally get around to selling the team, plus a likely $10 to $20 million in profits from the Nats' inaugural season. The Washington Times, in suggesting that Congress step in to settle the Angelos tussle, harrumphed that "the competitiveness of the team that will play its games within walking distance of the Capitol will be severely constrained if Angelos is able to cut a deal with Selig to pocket a large chunk of Washington-area television-rights fees," but that's nonsense - any additional TV revenue would only have gotten rolled into the sale price when the Nats finally get a private owner, so it's only MLB as a whole that's getting hurt here.

No, the real trouble isn't for Nationals fans, but for Orioles fans. As Derek Zumsteg discussed here last fall, by guaranteeing Angelos' bottom line, MLB would be removing any incentive for him to put a competitive team on the field. A rational capitalist would just call up the entire Ottawa roster and let them play out the schedule, knowing that the money will be rolling in one way or another (think Twins owner Carl Pohlad and his mid-'90s "just keep those revenue-sharing checks coming" rosters, if you're having trouble visualizing). If Angelos has a brain in his head, he'll be dumping Miguel Tejada, Sammy Sosa and any other high-priced players the minute he realizes that the fannies they put in the seats are only serving to ease the burden on the other 29 owners' wallets.

The other long-term repercussion would likely be to gum up the works for any other teams that want to move to existing cable territories - not just San Jose, but Portland (which "belongs" to the Mariners) and others as well. Says Brown: "Now if they wish to relocate or expand, the whole country is split up into cable markets, so if you want to go to Butte, Montana, somebody has the rights. Maybe the Astros would ask for a payoff: 'You did this for Peter, now you have to do this for us.'"

Of course, that's only bad if you live in Butte (or Portland, as Brown does). If you're an A's fan hoping for more roadblocks to your team's possible relocation, not so much. When elephants fight, sometimes the best the grass can do is hope for gridlock.

--

Neil deMause is a regular contributor to Baseball Prospectus. He can be reached here.

Neil deMause is an author of Baseball Prospectus. 
Click here to see Neil's other articles. You can contact Neil by clicking here

Related Content:  Bud Selig,  Territorial Rights,  Peter Angelos

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