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Nationals’ Sales Process Still Not Near Resolution

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The Nationals have been on the market for a good portion of the past year. The Lerner family first announced in April they were looking into sale possibilities for the franchise. Subsequent reports suggested the family was hopeful of completing the process by the early-December Winter Meetings.

That obviously did not happen, and it doesn’t seem a resolution is imminent. The Talk Nats blog reported Tuesday afternoon that negotiations were not close to the finish line. That aligns with their reporting from late November, when Talk Nats wrote the franchise’s uncertain local broadcasting situation related to the ongoing MASN dispute was keeping the Lerners from settling on an agreeable price point with the Ted Leonsis group that had emerged as the frontrunner in discussions.

TV rights remain the biggest issue in the Washington sale. As part of the relocation efforts to move the franchise from Montreal to Washington nearly two decades ago, MLB (which owned the Expos/Nationals at the time) agreed to tie its local broadcasting rights to the Mid-Atlantic Sports Network. MASN is jointly owned by the Nats and Orioles, but the Orioles’ ownership share is roughly 77% while the Nats own around 23%. That agreement, a condition of the franchise’s relocation into the Orioles’ geographic territorial rights, caps the Nationals’ TV revenue by making it impermissible for them to sell broadcasting rights to a regional sports network.

Leonsis owns NBC Sports Washington and would almost certainly prefer to broadcast Nationals games on that network if he took control of the franchise. Doing so would require negotiating a way out of the MASN contract with the Orioles, though, and it’s not clear whether the Baltimore organization has any interest in doing so. MLB has gotten involved in an attempt to broker a settlement between the franchises, but there’s no indication they’ve made progress to this point.

Uncertainty about future local TV revenues is an obvious concern for a possible buyer. Against that backdrop, it’s now a real question whether the Lerner family will sell a majority stake at all. Talk Nats suggested it’s possible the Lerners pivot to selling a minority share of the franchise. Chelsea Janes and Barry Svrluga of the Washington Post echoed that sentiment this evening, writing that the Lerners now seem likelier to take on a minority partner than sell the franchise entirely. Nothing has been formally decided. Both Talk Nats and the Washington Post suggest possibilities range from no change in the ownership structure at all to a deal of a minority share or a sale of the controlling stake coming together.

Janes and Svrluga suggest a middle ground may be to sell a minority share with a path to that buyer taking over majority ownership down the line. The Dolan family took that tack with the Guardians last summer, immediately selling roughly 25-30% of the franchise to David Blitzer in a deal that reportedly gives Blitzer the option to purchase majority control six years thereafter.

It’s an ongoing saga that obviously hasn’t resolved as the Lerner family had envisioned. There are still myriad possibilities that’ll hang over the franchise for as long as this process remains up in the air. The franchise is amidst a full rebuild and ran out the worst team in the majors last season. They’ve made a few short-term free agent investments this winter, bringing in Dominic Smith, Corey Dickerson, Jeimer Candelario and retaining Erasmo Ramírez on one-year contracts worth a combined $10.25MM. Their biggest investment of the offseason was a two-year, $13MM pact for starter Trevor Williams.

Roster Resource projects the franchise’s player payroll around $104MM. That’s $31MM south of last season’s Opening Day figure. It’d be the franchise’s lowest season-opening payroll since 2012, although it’s possible GM Mike Rizzo and his staff have some more spending room to add another veteran target or two to supplement a young roster.

Latest On Nationals’ Sale Negotiations

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Hanging over the past seven months of Nationals business has been the Lerner family’s efforts to find a buyer for the franchise. Ted Leonsis, whose Monumental Sports & Entertainment owns the NBA’s Wizards, NHL’s Capitals and WNBA’s Mystics, had emerged as the favorite in those discussions in recent weeks.

While that might still be the case, the Talk Nats blog reported over the weekend the sides remain divided on a price point. Talk Nats suggests there’s some pessimism about the possibility of Leonsis finalizing a purchase of the franchise imminently, if at all. To be clear, there’s no suggestion the Lerners and Leonsis are on the verge of calling off talks, but it seems there’s still a notable gap to bridge in negotiations.

The primary stumbling block, as has been the case throughout the sale process, seems to be the franchise’s uncertain TV rights outlook. As part of the relocation efforts to move the franchise from Montreal to Washington nearly two decades ago, MLB (which owned the Expos/Nationals at the time) agreed to tie its local broadcasting rights to the Mid-Atlantic Sports Network. MASN is jointly owned by the Nats and Orioles, but the Orioles’ ownership share is roughly 77% while the Nats own around 23%. That agreement, a condition of the franchise’s relocation into the Orioles’ geographic territorial rights, caps the Nationals’ TV revenue by making it impermissible for them to sell broadcasting rights to a regional sports network.

Leonsis owns NBC Sports Washington and would almost certainly prefer to broadcast Nationals games on that network if he took control of the franchise. Doing so would require negotiating a way out of the MASN contract with the Orioles, though, and it’s not clear whether the Baltimore organization has any interest in doing so. MLB has gotten involved in an attempt to broker a settlement between the franchises, but there’s no indication they’ve made progress to this point.

Hanging over the potential negotiations is an acrimonious past between the Orioles and Nats that hasn’t been resolved. Disputes about the Nationals’ share of TV rights led to litigation that has been pending for nearly a decade. In 2019, an arbitrator ruled the network owed the Nationals around $105MM in unpaid rights fees. MASN appealed that decision, and the appeal has still yet to get on the docket for the New York Court of Appeals.

While Leonsis purchasing the franchise still seems well within the range of possibilities, it doesn’t appear a resolution is coming in the near future. The Washington Post wrote in August the organization was hopeful of completing the sales process by November. That certainly isn’t going to happen, and it seems an open question whether a solution will be known by the time the calendar turns to 2023. It’s hardly an ideal situation for general manager Mike Rizzo and his staff to construct their roster this offseason, although the Nats look likely to be relatively quiet regardless after firmly committing to a rebuild with the Juan Soto trade over the summer.

Latest On Nationals’ Sales Process, MASN Deal

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As the Lerner family continues to explore a sale of the Nationals, the franchise’s ongoing dispute with the Orioles over television rights fees looms. Major League Baseball has renewed its efforts to try to broker an agreement between the franchises, write Barry Svrluga, Chelsea Janes and Ben Strauss of the Washington Post. The Talk Nats blog first reported last month that MLB was getting involved in trying to bring the sides together.

As both the Washington Post and Talk Nats have covered during the sales process, the TV rights dispute presents a fair bit of uncertainty for prospective Nationals buyers. As part of the relocation efforts to move the franchise from Montreal to Washington nearly two decades ago, the Nationals agreed to tie their local broadcasting rights to the Mid-Atlantic Sports Network. MASN is jointly owned by the Nats and Orioles, but the Orioles’ ownership share is roughly 77% while the Nats own around 23%. That agreement, a condition of the franchise’s relocation into the Orioles’ geographic territorial rights, caps the Nationals’ TV revenue by making it impermissible for them to sell broadcasting rights to a regional sports network.

The Post notes the original agreement expressly stipulates that the Nationals’ obligations under the MASN deal would carry over in the event of a sale of a franchise. Thus, the unfavorable TV situation is a key consideration for those in discussions with the Lerners.

That’s all the more true in light of recent movement on that front. As Talk Nats and the Post have each reported, a group led by Ted Leonsis now appears to be the frontrunner in the sales process. Leonsis’ Monumental Sports & Entertainment also owns the NHL’s Capitals, the NBA’s Wizards and the WNBA’s Mystics, as well as having full control of NBC Sports Washington. Finding a way to broadcast games on NBCS Washington figures to be a key objective for Leonsis if his group eventually purchases the Nats, but they’d need to negotiate a settlement with the Orioles to buy out of their end of the MASN agreement to do so. Whether the Baltimore franchise would have interest in such an arrangement isn’t clear.

Of course, there’s a strong interest on MLB’s part in facilitating some kind of settlement. Both Talk Nats and the Post have suggested the TV rights uncertainty has slowed down the sale process, and it raises some questions about the franchise’s price point. The league would prefer to see the Nationals sold for a high price (and, to a lesser extent, to expedite the process). The Lerner family has reportedly sought around $2.5 billion.

Hanging over the potential negotiations is an acrimonious past between the Orioles and Nats that hasn’t been resolved. Disputes about the Nationals’ share of TV rights led to litigation that has been pending for nearly a decade. In 2019, an arbitrator ruled the network owed the Nationals around $105MM in unpaid rights fees. MASN appealed that decision, and the appeal has still yet to get on the docket for the New York Court of Appeals.

Interestingly, while an eventual sale to Leonsis still appears to be the likeliest outcome, one person familiar with the process tells the Post a number of paths remain possible. That source suggests the Lerners could still retain majority control in the long run, or perhaps bring in a minority owner initially with a longer-term path to majority ownership. (As an example of that sort of arrangement, the Guardians agreed to a sale in June that sees incoming buyer David Blitzer purchase roughly 25-30% of the franchise initially but have the right to purchase majority control six years down the line).

As the parties try to iron through the TV deal and potential sale, the Nationals’ on-field product is coming off an MLB-worst 55-107 season. They’re firmly amidst a rebuild and have cut back payroll dramatically. The franchise has approached $200MM on player payrolls in the past, but Roster Resource calculates their 2023 expenditures (including arbitration estimates) around $98MM. Svrulga, Strauss and Janes write that a few of the team’s baseball operations staffers have expressed some uncertainty about the organization’s spending capacity and overall direction this winter. Both manager Dave Martinez and GM Mike Rizzo will stick around, at least, with the club picking up 2023 options on each this past summer.

Ted Leonsis’ Group Emerging As Front-Runner In Nationals’ Ownership Sale

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Six months ago, the Lerner family announced they were exploring the possibility of a sale of the Nationals. As the offseason nears, some clarity has emerged on that process. David Aldridge, Britt Ghiroli and Ken Rosenthal of the Athletic write that a group led by businessman Ted Leonsis is now the “clear front-runner” to eventually take over the Nationals. The Talk Nats blog first reported in late September the Leonsis group had broken through as the most likely party to buy the Nats.

Leonsis is already a key factor in the D.C. sports scene, as his Monumental Sports & Entertainment owns the NBA’s Wizards, the NHL’s Capitals and the WNBA’s Mystics. (The Lerners are a minority owner in that venture). Landing the Nationals would give Leonsis control over the D.C. franchises in three of the four major men’s sports leagues, The Athletic notes, a distinction currently only held by the Kroenke family that owns the Los Angeles Rams, Colorado Avalanche and Denver Nuggets. Leonsis isn’t mounting a solo ownership bid, however. The Washington Business Journal reported in August that private equity businessman David Rubenstein is also part of the group; it is unclear whether anyone else is involved.

Previous reports have also linked South Korean businessman Michael B. Kim and mortgage mogul Stanley Middleman to the sales process. There were reportedly upwards of five bidders in talks with the Lerner family at one point, but The Athletic reports that Leonsis’ group seized control roughly a month ago.

While it appears that Leonsis and company are now in the driver’s seat to push the deal across the finish line, the closing of the sale isn’t imminent. Aldridge, Ghiroli and Rosenthal hear the sale isn’t likely to be finalized before the December 4-7 Winter Meetings in San Diego. That appears to be the more optimistic end of the timetable, as The Athletic writes it’s possible the sale isn’t finished until after the calendar flips to 2023.

As The Athletic notes, Leonsis also controls his own regional sports network, NBC Sports Washington. Monumental Sports & Entertainment had previously purchased 33% of NBC Sports Washington, and it bought out NBCUniversal’s 67% share this past August. Not coincidentally, NBC Sports Washington holds the local broadcasting rights to Capitals, Wizards and Mystics games.

The Nationals’ local broadcasting contract currently runs through the Mid-Atlantic Sports Network, which it shares with the Orioles. The Orioles own approximately 75% of the network, while the Nationals own the remaining share. The two franchises have been embroiled in rights fees litigation for the better part of a decade. The Washington franchise won a major victory in 2019 when an arbitrator ruled the Orioles owed the Nats $105MM. The Baltimore organization appealed that decision, and the matter has still yet to be decided by the New York State Court of Appeals.

While The Athletic notes it’s unclear how or if the sale of the Nationals would affect the MASN dispute, Talk Nats tweeted in August that Leonsis’ group would be interested in reaching a settlement with the Orioles to buy out of the MASN deal. If that did come to pass, the Nationals would presumably then be broadcast on the NBC Sports Washington platform. That’d obviously be a complicated process that requires negotiations with the Orioles, but it does seem to offer a glimmer of hope for a resolution to the saga.

The Lerner family first bought the Nationals in 2006, paying $450MM. The specific prices under consideration in their sale aren’t clear, but Daniel Kaplan of the Athletic wrote last month they were seeking $2.5 billion.

Latest On Potential Sale Of Nationals

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Ted Leonsis has emerged as a potential suitor in the ongoing sales process involving the Nationals, according to a report from Barry Svrluga, Ben Strauss and Chelsea Janes of the Washington Post. Leonsis’ Monumental Sports & Entertainment is already a major factor in the D.C. sports scene, owning the NBA’s Wizards, the NHL’s Capitals and the WNBA’s Mystics.

According to the Post, Leonsis is one of a few potential buyers granted access to the Nationals financial data. He’s not making a run at sole ownership, however; Drew Hansen of the Washington Business Journal reports that David Rubenstein, a private equity businessman, is part of the group with Leonsis. It isn’t clear who else is involved with Leonsis and Rubenstein.

The Leonsis group becomes the third known potential suitors for the Nationals. Since the Lerner family announced in April they were exploring the possibility of a sale, the Post has reported that South Korean equity mogul Michael B. Kim and mortgage executive Stanley Middleman have each met with Nationals personnel. Whether Leonsis and Rubenstein have also formally met with Nationals executives yet isn’t known. The Post has reported that at least five potential bidders have met with the Lerners in recent weeks, so it’s not a given that any of the three publicly-known suitors will wind up submitting the winning bid.

The Lerner family has stopped short of making a firm declaration it’d pull the trigger on a sale, although it’s generally expected they’ll do so. The Post writes that the process could be finalized shortly after the conclusion of the season, with potential ratification of a sale taking place at the owners meetings in November. The Nationals are one of two franchises that could soon change hands, as Angels owner Arte Moreno announced yesterday he was looking into the possibility of selling the Anaheim organization as well.

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