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Jewish World Review
May 5, 2006
/ 7 Iyar, 5766
Four Years Later, Baseball Finds an Owner in D.C.
Major League Baseball has finally gotten around to selling the Washington Nationals to a local buyer, thus ending more than four years of having 29 owners sharing the stewardship of the Montreal Expos-Washington Nationals franchise. Commissioner Bud Selig announced yesterday that the winning group, led by 80-year-old developer Theodore N. Lerner, will pay about $450 million for the franchise — the highest figure a baseball franchise has ever fetched without a TV network and stadium attached to it.
Lerner and his partners, including former Atlanta Braves and Hawks President Stan Kasten, have netted themselves a very valuable franchise thanks to MLB's insistence on playing hardball with Washington D.C., political leaders, who caved into Major League Baseball on every stadium financial need or request because Mayor Anthony Williams and the D.C. Council was desperate to land a baseball team.
In the fall of 2004, Washington beat out second- and third-tier cities like San Juan, Puerto Rico; Monterrey, Mexico; Portland, Ore.; Norfolk, Va., and Charlotte, N.C., to land the Montreal franchise, which became ownerless in 2002 following a complex deal that saw John Henry take control of the Boston Red Sox after selling his Florida Marlins to Expos owner Jeffrey Loria. Loria then sold the Expos to MLB's other 29 clubs for $120 million.
MLB was supposed to operate the Expos for just the 2002 season. The idea was to sell the franchise to local owners or move it out of Quebec. Of course, baseball made no real attempt to rebuild the Expos brand name in Montreal, reducing the number of Expos "home games" to 59 in 2003 and 2004, with the other 22 "home" games played in San Juan.
After moving the Expos to Washington for the 2005 season, baseball hoped to sell before the Nationals played a played a game in their new city. The goal then became early summer, then the All-Star break, then the end of last season. By November, with lease negotiations stalling, Selig said he would stop setting timetables for completing the team's sale.
It's no wonder the process was so excruciating. Over the past 19 months or so, MLB somehow, without any real bargaining power, got Williams to commit to building a business tax-funded stadium and give almost all of the ballpark-generated revenue to whoever wound up buying the team. But when, in December 2004, the Washington District Council asked MLB to cover half the stadium's construction costs, the league balked and pulled the plug on promoting the Nationals; it even threatened to move the franchise to another city before the ink had dried on the deal.
The hardball continued even after the City Council backed down and Williams signed the stadium deal on December 30, 2004. A year later, after running into some potential fiscal problems, Selig and Dupuy told the D.C. City Council that they would not select an owner until the stadium financing plan was finalized. They also told the groups bidding for the team not to offer to pay cost overruns on the stadium if they were selected as the owners. Selig and Dupuy then put a gag order on the groups preventing them from talking to the press about stadium finances. MLB had decided it, not the bidders or the D.C. Council, should dictate the terms of the lease.
Selig and Dupuy finally signed a lease in March, but only after the stadium's costs were capped at $611 million and MLB decided to throw in $20 million to help defray some of the construction expenses. Neither MLB nor the Nationals' new owners will have to pay for cost overruns; that's Washington's problem. Baseball, is after all, a ruthless business, and the only way its owners could recoup their Expos financial losses was by holding out for the best lease they could get from Williams and the
Meanwhile, MLB also worked out a deal with Baltimore Orioles owner Peter Angelos in late 2004 to start the Mid-Atlantic Sports Network (MASN), which will allow the Nationals to take in more than $20 million annually in TV money. Angelos, who was vocal in his opposition to a major league team in Washington, has a 90% stake in MASN, and MLB paid Angelos $75 million for 10% of the new network. Lerner and his group will get that 10% share. The deal was crafted so that Angelos's
Orioles would be protected from possible revenue losses stemming from a competitive team playing about 38 miles from Camden Yards. Now, Angelos controls the Nationals' TV dollars, an unusual arrangement even by MLB standards.
What's worse, the deal seems headed for disaster. Comcast, the Mid-Atlantic's dominant cable operator, refuses to carry MASN, something that has not gone over well with Virginia Republican Tom Davis, the Chair of the House Committee on Government reform. Davis recently held hearings to find out why he can't watch the Nationals on TV at his office in D.C. and in his northern Virginia home.
Davis, it should be noted, in addition to holding hearings on steroids in baseball, slammed MLB in 2005 for even considering selling the Nationals franchise to entrepreneur Jonathan Ledecky because his group included liberal George Soros, who put up a lot of money in an effort to defeat President Bush in 2004.
The Nationals, it seems, are a veritable political lightning rod, and they're not even two years old. Baseball owners played hardball and, for the most part, got what they wanted in Washington. Selig and Dupuy have finished the process and now have a valuable commodity to show for a bad financial situation.
Now its up to Lerner and Kasten to figure out how to run the franchise and how much money they will invest in signing and developing players in an effort to make the Nationals competitive. The hard part, at last, is done.
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JWR contributor Evan Weiner is a syndicated radio commentator. Comment by clicking here.
05/01/06: Turmoil brews beneath NFL's newfound tranquility
04/24/06: NFL and small town America wherewithal
04/21/06: The Two Scariest Words in Baseball: Salary Cap
04/18/06: Why the major leagues succeed
04/17/06: Fans welcome new stadiums; will stadiums welcome fans?
04/10/06: Fans welcome new stadiums; will stadiums welcome fans?
04/07/06: Don't mess with a congressman/sports fanatic
04/05/06: Los Angles loses yet again
04/04/06: NCAA's highest stakes are first beginning
04/03/06: The real reason Major League Baseball is worried about cheating
03/31/06: Baseball buoyant, better than ever
03/30/06: Affording to be in the big leagues
© 2006, Evan Weiner