O's majority owner of TV network

MLB not in a league with Angelos

April 01, 2005|By Laura Vecsey

IF MAJOR League Baseball officials like Bud Selig looked flummoxed and intellectually overmatched by members of the House and Senate over baseball's steroid stupidity, it's nothing compared with the mincemeat made of them this week by Peter Angelos.

In the words of SpongeBob SquarePants: All Hail Plankton Pete.

Angelos wanted to protect the Orioles. He got his wish.

"Over-the-air TV is a dead business," said Dr. Robert Bellamy Jr., associate professor of communications at Duquesne University.

"Rights to the regional sports network is Angelos' compensation for allowing a team into the market. I'm not sure he had a case, legally, the way baseball divvies up markets. But his assertion is that `I'm giving up the market that I had and that Baltimore has had for 30 years, the least I can do is be the dominant partner in the RSN.' That has real serious meaning."

Bellamy has broadly studied the effects of television on the marketplace and business structure of Major League Baseball. He called the spoils of the eighth-largest TV market once solely controlled by the Orioles "a big deal."

He said Angelos was successfully able to argue that the market's division would have "serious ramifications that could seriously hinder his ability to exploit the market."

Regional sports networks are the crucible of profitability for many franchises, except the NFL. In the past three to five years, the revenue streams channeled through these networks have become incredible.

Think of the YES Network and the millions the Yankees have to spend on free agents.

"It's gotten to the point where teams figured out they're already producing the product, so why not own the network and become the supplier of the programming, too?" Bellamy said.

By securing a proportionally larger share of the revenue than the Nationals from a regional sports network, Bellamy said: `'I think it's fair to say Angelos won big-time."

Score one for Angelos.

"It's amazing to me that they allow this to happen. These incredibly wealthy people, who were not born wealthy, must have shown some level of intelligence to accumulate what they have. But all intelligence goes out the window when you buy a baseball team. Except for Angelos, He may be the exception."

The size of Angelos' hammer could ultimately be determined in the purchase price of the Nationals.

If they sell for less than the $350 million MLB initially projected, that will be a good indication of how much revenue power Angelos garnered in the TV rights deal in which the Orioles and MLB will share ownership of a regional sports network called Mid-Atlantic Sports.

The Orioles will gain more than 50 percent of the profits from the RSN, while the Nationals would get $20 million to $30 million in annual rights fees.

Not only are the Orioles in control, but they have also likely signaled the start of seismic shifts in broadcast arrangements for all local pro teams, including the Wizards, Capitals, D.C. United and Mystics.

These franchises could be wooed away from Comcast SportsNet by Mid-Atlantic Sports, much the way the YES Network has brought on the Nets to enhance the marketability and fee scales for YES to cable operators.

The financial pressure on Comcast from Mid-Atlantic Sports might even force Comcast to consider buying Mid-Atlantic Sports - a means of retaining the rights to the Orioles after 2006 while adding the Nationals to its roster.

This potential (and potentially lucrative) sale could mean millions to the Orioles, courtesy of the Nationals, whose suburban fan base/demographics will enhance value.

With this kind of potential revenue on the table, there was no way Angelos was going to roll out the welcome mat for the Nationals, not without asking for a major league cover charge.

Angelos took a hard-line stance against a team in D.C. before and upon baseball's September 2004 decision to move the Expos to D.C.

He played hardball in negotiations throughout the winter, refusing to add payroll to his club until he was assured of the market's future.

Then he waited until hours before Opening Day to agree to a deal, timing that smacks of baseball flinching as time ran out.

Maybe now the Nationals can hire some broadcasters and call in a camera crew.

Bellamy thinks the Nationals' arrival will have a "very minimal effect on the Orioles, who have built up a very good base of fans. They've made a very good marketing effort, and they have one of the finer stadiums. They continue to draw tourists."

"But," Bellamy added: "Good for him."

Good for the Orioles.

The owner will never have another excuse not to go as hard after the Red Sox and Yankees as he went after Selig and the Nationals.

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