Over at The Athletic, Meghan Montemurro takes a fascinating look at how monster free agent contracts are negotiated. Subscribers will certainly want to read the entire piece for themselves, but there are a few notable takeaways that are worth discussing here. Notably, Montemurro’s efforts at canvassing prior signings reveals that heavy and early ownership involvement is a staple in major, long-term deals. Every front office/ownership dynamic is different, of course, but unsurprisingly the level of coordination required increases as the deal size goes up.
Ultimately, there’s no way to separate the higher-level business considerations from the hot stove — or, indeed, the game itself. With that in mind, here are some recent industry notes …
- The Nationals are hoping that a hearing later this week will represent a major step toward the resolution of their longstanding dispute with the Orioles over television rights fees, as Chelsea Janes of the Washington Post reports. A three-person panel consisting of Brewers owner Mark Attanasio, Mariners CEO Kevin Mather, and Blue Jays CEO Mark Shapiro will hear the case. A prior arbitration proceeding way back in 2014 was invalidated by the courts owing to a finding of a conflict of interest in the Nats’ choice of counsel; that decision ultimately led back to this new MLB-constituted panel. As Janes explains, the arbitral proceeding will address a pair of five-year rights-fees periods for the jointly-owned (and Orioles-controlled) Mid-Atlantic Sports Network, with hundred of millions of dollars at stake. Even if the Nationals get the outcome they hope for of course, there’ll still be a possibility of further appeal, though the odds are long against upsetting a properly convened arb panel (which is why the original Baltimore victory, though procedural, was so notable). It’s not entirely whether the Nats’ immediate roster plans will be much affected, but Janes does conclude by noting that, “if the Nationals do get the revenue they are owed, their ability to sign elite free agents will improve, according to those familiar with the organization’s plans.”
- There’s less at stake for the division-rival Mets, but they too face an upcoming date of note for resolving a financial matter. As Ken Davidoff of the New York Post reports, the wind-down of the David Wright contract is not quite as complete as was generally supposed. The Mets stand to receive coverage for three-quarters of the $27MM left on Wright’s deal, but there’s one wrinkle. While his playing career is now over, Wright remains on the club’s 40-man roster … even as the deadline for protecting players from the Rule 5 draft approaches (November 20th). Because he was activated late last year for a brief farewell, the first 59 games of the 2019 season are, by the terms of the insurance policy, not covered. And the club still has not worked out a settlement that will enable it to trim Wright from the roster (he otherwise must remain on it for the team to collect) and thereby open up a roster spot to utilize as the organization sees fit.
- Allegations arose recently of racist statements from key baseball operations figures with the Mariners — a worrying situation, unquestionably, the future course of which remains unclear. Regardless of how things shake out, writes Larry Stone of the Seattle Times, “the stain from this episode will cling to the organization for a long time.” Even as Stone rightly advises that it’s too soon to issue any final judgment on the specifics of the case, he explains that this matter coincides with other, preexisting issues with the organization’s management.
- MLB has now announced the formation of a new Prospect Development Pipeline League, as Jeff Passan of Yahoo Sports recently reported. The idea here is to present a showcase opportunity each year for top high-school draft prospects. Such chances exist already, of course, but they are run by a private entity (Perfect Game) and may not be within the means of many prospects. This new PDP development will also allow team to access physical testing and data-tracking on the participating players. That’s something of a concern to the MLBPA, per Passan, though the union is said to be on board. As he puts it, “any fear is mitigated by the recognition that the youth system, as currently constituted, is broken.”
Kevin Mather should just not be a thing.
Mather wasn’t accused of anything and rehashing the incident from almost a decade ago is just stupid.
Let’s see how this plays out and go from there. It may all be false or it all may be true. Time will tell
Exactly! M’s need an exorcism from the top down!
It seems weird that the Blue Jays CEO would be on the panel, given that Toronto and Baltimore are division rivals.
I was thinking the same thing! Seems biased if you ask me. The arbitrators should all be from random teams out west or in the central who have no connection to either team
Bingo. Conflict of interest. Shapiro should be removed.
The Nats never should’ve moved to Baltimore, they should move back to Montreal ASAP before another club does. The O’s are Baltimore’s team
Yes, it was a dreadful move—never should have been approved. Really hurt the Orioles existing market. The Nats seem to be going against the basic agreement that allowed them to move to the Baltimore/DC Metro area in the first place.
The O’s and Senators co-existed from 1954-60 when the STL Browns became the O’s and both were AL teams. The O’s didn’t have the “full market” until 61 when Washington moved to MN and became the Twins.
momentarily forgot about the 2nd Senators team from 61 – 71, probably because they we mostly forgettable.
As a resident of the area, there’s enough people in Baltimore and DC to support both clubs. In addition to Maryland, you have a pretty heavy population of people in Northern Virginia as well.
The Orioles are just upset (fairly so) that they’re not the main draw for the 4 million or so people living in this cramped and congested state.
yaow…….About 12 years ago I traveled back east to see an old HS friend in DE who was dying from cancer. I flew into BWI instead of Philly so I could spend the night before my return home in a hotel in MD hoping to have a meal of Maryland Blues (no luck there as it had been a lousy season). Anyways, after I arrived and got my rental car it was late afternoon. I guess I was and am spoiled by the fairly wide open roads in northern AZ because the traffic was horrendous. I had lived in B-More in 78-79 and it was bad but not like this trip. I can’t imagine what it’s like now. I’ll stick with the somewhat rural life in NW AZ.
Everything more than 20 minutes south of Baltimore are now DC fans. That’s a huge and higher income market. It’s a legitimate problem and that’s why they agreed on the splitting up of the MASN pie.
Last time I checked, the Nats moved to Washington, not Baltimore. The Os had some following in Washington, but most Washingtonians were likely Braves fans before Orioles because of TBS broadcasts in the 80s-90s. There weren’t Oriole games being played on local DC channels anyway before MASN, so fans in the Washington area would have had to travel to Baltimore to watch a game. The original network deal was made between MLB, who owned the Nationals at the time, and Angelos with the agreement the Nats would get a max of 33% ownership in MASN compared to the 66% ownership by the Orioles. Over the course of the Nationals’ 13-year existence, they’ve surpassed the Orioles in every statistical and monetary category, and the Lerners are aware that the Orioles are profiting off the Nationals. That being said, MASN and the Orioles should be lucky that the Nationals are still broadcasting their games on MASN and haven’t either created their own network or moved over to a different network, since MASN would likely tank if that did happen. Nationals have all the rights to profits they’ve produced.
If any team is moving to Montreal, it’s likely the O’s.
The “youth system…is broken”
so that gives the MLB a right to exploit these kids too?
“Throw as hard as you can, until your elbow pops.” (I’m sorry but that’s real and probably wont change anytime soon, unless you want everybody topping out at 91 again)
You’re right! It feels a lot different coming from a MLB official than a private baseball coach.
I guess that stance depends on whether or not the PDP run in conjunction with USA Baseball follow the MLB Pitch Smart program, doesn’t it?
mlb.com/pitch-smart/
MLB is not exploiting the kids. If anything the PDP league will provide opportunities and exposure to HS-level baseball prospects from lower income families who cannot afford to attend private showcases.
Youth programs has a ‘win at all cost’ attitude while MLB will have a developmental philosophy.
“The Mets stand to receive coverage for three-quarters of the $27MM left on Wright’s deal”
They owe Bobby Bonilla about the same amount. Only 17 years left on that deal…
Bobby Bonilla had one hell of an agent.
With Wright, the fact that things are not scheduled speaks volumes to the recent status of their front office. One would have thought someone in the organization would have known all implications and explained them fully before that otherwise amazing on field celebration for the deserving Wright. Perhaps they were and this “story” was just really about advising their new management leaders.
“the stain from this episode will cling to the organization for a long time.”
Even if it’s proven to be completely false. I’m not saying it will. And if it’s true, they deserve everything that is coming to them, But if it’s false and still stains the organization’s reputation? It would just go to show just how ridiculous the court of public opinion can be sometimes.
I think most reasonable people (not outrage culture millennials) would get over it pretty quickly if proven false.
“if the Nationals do get the revenue they are owed, their ability to sign elite free agents will improve, according to those familiar with the organization’s plans.”
Correct me if I’m wrong, but the Nationals are owed nothing. Isn’t the whole point that they want the original agreement changed because there was way more money involved than they realized?
They signed a bad deal, they should have to live with it.
Similar to my earlier comment, the Lerners, current owners of the Nats, didn’t sign the deal. MLB signed the deal with the assumption that the Orioles will always hold a bigger share of the market as the original team in the area. That assumption was a horrible assumption given the Washington market is bigger than Baltimore. The Nats have surpassed the Os in every statistical and monetary category, which should mean the Nats should get more than the 23% of revenues they’re currently getting compared to the Os 77%.
Those things usually have the old ‘successors and assigns’ clause in them, I would think. Matter of fact, with Peter Angelos being the other party, I’m sure it did. And I’m sure the Lerners were well aware of the contract and all of it’s clauses and stipulations before they bought the team.
Actually, if any team is moving to Montreal it’s likely Tampa. MLB won’t allow the best stadium in baseball to be vacated. And the Orioles actually have higher tv ratings than the Nats did.
And No, they shouldn’t get more than they are getting. The Lerners knew the original deal MLB made with Angelos when they bought the team. Now live with it.
So a franchise moves to a city where they will draw smaller crowds with a weaker dollar, worse stadium and higher taxes? Don’t count on it.
They may have known the deal was in place and would’ve had to agree to it to appease MLB and get through the actual purchase of the team, but does that mean they can’t fight that deal?
View it a little differently – you’re a no-name baseball player just coming into the league and are forced by MLB to accept a salary of $50,000 and can only increase that salary each year by $500. The top MLB players are making millions each year, as opposed to your measly $50,000. You finally begin to perform and are playing well – maybe make an all-star team, but your argument is saying that because I was forced to sign the contract when I first entered the league, I’m stuck making $50,000 plus a year and can’t negotiate a new contract?
I agree that some contracts need to be stuck to, but this contract was in complete favor of the Orioles and had zero interest in mind for the Nationals. The Orioles are currently making money off the success of the Nationals. That should never happen.
The Nationals are not trying to fight the deal. They are trying to get Angelos and the Orioles to pay them for broadcast rights on MASN as agreed to under the formulas that were established in 2005, and Angelos still refuses.
You are wrong. The Orioles/MASN originally paid the Nationals $20 million a year for their broadcast rights. The rights are renegotiated every 5 years to ensure fair market value. When the renegotiation failed in 2012 it went to the MLB panel which said the Nationals fair market value for the next four year period should be $59 million a year for 2012-2016. The Orioles appealed the ruling to a New York State Court because they believed the ruling was biased based on the law firm who represented the Nationals having also done work with members on the MLB panel.. The new panel will rule on the Nats rights from 2012-2016 and the new rights window for 2017-2021. The best I can tell, the Nats are still getting $20 million a year for their annual rights. Once a decision is made and appeals are exhausted, the Orioles/MASN will owe the Nationals the entire sum from 2012-2016 (which will likely bankrupt MASN).
In no way have the Nationals tried to change the MASN deal or pull out of it. This is all about a bad deal Selig made and the Orioles/MASN not wanting to play by the rules they agreed to.
Exactly. ^^
You are wrong. The Orioles/MASN have used every trick possible to delay paying the Nationals the fair market value for their rights. Once the whole thing is worked out, the Orioles/MASN will owe the Nationals quiet a bit of money from 2012-2016. The deal was a bad one, but the Orioles/MASN are the only side not playing by the rules.
Balogne. The Nats knew the agreement. The Orioles agreed to the move barring they were rewarded financially. The Orioles should have more of the market than the Nats. If you think it should be 50/50 you have to be a Nats fan. Blame Selig and MLB if you don’t like the deal.
Jimmie Foxx. You do realize the contract the Orioles/MASN came up with entitles the Nationals to have their annual broadcast fees renegotiated every 5 years correct? That’s what the lawsuits have been over. The Orioles disagreed with the MLB Panel’s decision in 2012 and they haven’t event gotten around to the renegotiating the new renegotiation period that started in 2017.. It’s not the Nationals fault the Orioles agreed to a deal they refuse to honor.
The Orioles should have more of the market than the Nats
Why, exactly? Baltimore is about half the size of Washington — why should The Orioles have a larger market? That makes no sense at all.
And it was guaranteed that the Nationals would never reach a certain percentage of rights to MASN And they are trying to go above that. The Nationals moved into another teams market, and expects to be on the same level. That wasn’t the deal nor was ever supposed to be.
What does the size of the population have to do with it? Why should another team have more profit or as much profit as the team that owns the RSN?
No — they are not trying to go above that. That is not in dispute. Please get your facts straight.
Nats are due +1% every year until they reach 33%. That is a crappy deal but MASN will go bankrupt before that happens, and Lerner will own MASN as a result.
DC is not Baltimore’s market any more than Oakland is the Giants’ market.
Mets and Yanks share a market and don’t have a problem. Why are you trying to make a problem here?
What does the size of the population have to do with it?
Ummm… everything? Seriously, what is it you don’t understand about TV markets?
Your comparing MY to DC/Baltimore? LOL.
And the Orioles ratings were higher than the Nats. So your point isn’t valid anyhow.
Market meaning MASN. The whole dispute is about the Nats coming to the Orioles market. Get your own facts straight pal.
The only one making it a problem is you. Don’t respond if you have an issue. Unless y
What are you talking about? The Nationals can add an additional 1 percent stake in MASN every year until they reach 33 percent. That’s not what any of this is about. This is about renegotiating the fair market value of the Nationals broadcast rights. The original rights were $20 million a year. In 2012, an MLB panel raised it to $59 million a year and the Orioles refused to pay (ultimately taking it to a New York State Court). The court sent it back to the MLB panel. The panel will now decide how much the Nationals should have been paid from 2012-2016 and set the new fees for 2017-2021.. This has nothing to do with who owns MASN. It’s about how much MASN has to pay the Nationals to broadcast their games.
I never disputed what the lawsuit is about.
You are once again wrong on the ratings. In 2018, the Nationals averaged a 2.8 rating. The Orioles averaged a 2.39. Further, DC is the nation’s 6th largest TV market. Baltimore is the 26th.
forbes.com/sites/maurybrown/2018/10/04/2018-mlb-re…
Then why do you keep trying to argue it has something to do with the Nationals ownership in MASN? The lawsuit is only about how much MASN has to pay for the right to broadcast the Nationals. The original deal lays out exactly how that happens, and the Orioles/MASN still don’t want to play by their own rules.
You know I’m done discussing it with you. Your right I’m wrong. That’s what you obviously need to read.
MASN was created to appease the Orioles for allowing the Nats to move here. Thwy were granted majority ownership. Their rights fee should be higher than the Nats. If you don’t agree that’s fine.
This isn’t an discussion about who deserves higher rights fees. In fact the MASN agreement says the Orioles get the same rights fees as the Nationals. This is a discussion about what those right’s fees should be. The Nationals per the agreement are allowed to renegotiate their rights fees with MASN every 5 years. The Orioles/MASN have done everything they can to avoid the renegotiation. Once the MLB panel makes its decision, MASN will owe the Nationals quiet a bit of money from the 2012-2016 window. That sum will probably bankrupt MASN.
And they will appeal. I (along with millions) are forced to pay a monthly fee to our cable company for MASN, whether we watch it or not. Thwy will be fine
Well that’s the thing (and the article talks about it). The Orioles have very few possible appeals left. The only way it’s making it to federal court is if they challenge the MLB anti-trust agreement. You can bet challenging that agreement would create a major problem for Baltimore (who MLB remains fed up with over their conduct during the MASN renegotiation). If the panel reaffirms the 2012-2016 rights deal, MASN will owe the Nationals $195 million dollars ($59 million – $20 million equals 39 million annual the Orioles have managed to avoid paying because of their appeals). MASN would owe the same amount of money to the Orioles. Do you really think MASN can afford paying out $390 million dollars?
The amount of revenue MASN generates is cloudy. The rumors have it anywhere from as low as a 100m a year approaching $200m a year. Minus operation costs and misc expenses, I’d say they could manage that payout if forced.
We only know the numbers to 2015, when MASN $60 million in profits. Oddly if it wasn’t for the appeals, MASN would have had to pay the Nationals $59 million in 2015 for their rights. There is no way MASN is making $200 million a year and they probably aren’t cracking $100 million in this era of cord cutting.
Mariners are cursed
“Blue Jays CEO Mark Shapiro” because it’s fair to have a division rival of the Orioles on that panel.
The same Mark Shapiro who is the son of a longtime Baltimore attorney/sports agent who has a long/close relationship with the Baltimore Orioles front office?
His dad had a relationship with the Orioles. The blue jays keep food on the table now.