Baseball owners felt 'taken advantage of' in Angelos-negotiated deal

Settlement agreement in 2005 allowed Nationals to come to Washington

September 27, 2014|By Jeff Barker | The Baltimore Sun

Even before they signed it, a handful of Major League Baseball owners expressed deep misgivings about a 2005 agreement negotiated by Orioles owner Peter Angelos establishing conditions under which the Montreal Expos would move and become the Washington Nationals.

The owners, all members of baseball's executive council, sounded like customers having second thoughts after buying something from an aggressive salesman. They questioned whether Major League Baseball ceded too much to the Orioles for their agreement to share the club's exclusive television territory, according to the minutes of a March 28, 2005, conference call released last week as an exhibit in a court case.

The Orioles-controlled Mid-Atlantic Sports Network filed the exhibit in a New York Supreme Court case in which it seeks to overturn a Major League Baseball panel's June 30 decision ordering the network to pay tens of millions of dollars a year more to the Nationals in television rights fees. MASN broadcasts both clubs' games.

During the call, Chicago White Sox owner Jerry Reinsdorf "spoke in extremely negative terms about the agreement," which gave the Orioles supermajority control of MASN, the exhibit said.

Kansas City Royals owner David Glass "noted that he also has significant problems with the deal, in particular its length, and stated that he believed [Major League] Baseball is being taken advantage of." At least three other owners also expressed reservations, the exhibit said.

It also said Reinsdorf expressed concern that the agreement could depress the sales price of the team. It said Bob DuPuy — then Major League Baseball's chief operating officer — said baseball would consider adding a new provision stating that it "will not have to protect the regional sports network."

The exhibit appears designed to bolster MASN's argument that baseball officials were unhappy with the 2005 deal, and have not abided by its terms for deciding Nationals' rights fees.

At the time, Major League Baseball owned the Expos and wanted to move the club to Washington, where it would soon fetch a lucrative sale price. But first, baseball officials needed to negotiate with Angelos, who had threatened litigation over another team's entering the Orioles' market.

The settlement agreement — the topic of the 2005 call — awarded the Orioles a much larger ownership stake in MASN and a proportionately larger share of the profits after the team argued that the Nationals' arrival deprived Baltimore of a third of its market.

The agreement has no time limit and exists "in perpetuity," a baseball financial consultant told the owners in 2005, according to the exhibit.

MASN attorneys said they could not discuss the exhibit since it is part of an ongoing case.

"As borne out by subsequent events, Baseball suffered from buyer's remorse after the settlement agreement," MASN said in a petition with the court filed last week.

The petition said baseball officials "let it be known to the prospective purchasers of the Nationals that Baseball would use its powers to restructure the economics of the MASN partnership to the benefit of the Nationals."

John Buckley, an outside counsel for Major League Baseball, referred inquiries about the petition Friday to a baseball spokesman, who had no comment.

MASN has alleged that baseball has strayed from the 2005 agreement and did not use the proper methodology in determining the rights fees.

The Nationals countered in a court filing that the panel of three baseball team owners "applied the exact methodology required by the parties' agreement" in its June decision.

The panel ruled that the market dictates that the Nationals should receive about $60 million in TV rights fees per year. MASN, which now pays about $40 million, won a temporary injunction from the court on Aug. 18 blocking the decision while the matter proceeds in court.

jebarker@baltsun.com

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