The Orioles and Washington Nationals are embroiled in a dispute — which might need to be resolved in court or by independent arbitration — over the economics of their shared regional television network.
The outcome could affect how much money the Orioles have to spend on players and the team's profits.
The conflict hinges in part on the interpretation of a 2005 agreement under which the Orioles ceded the Washington market as the team's exclusive domain but were permitted control of the Mid-Atlantic Sports Network, which broadcasts both clubs' games
Here are seven things to know about the flap:
What is at the core of the dispute?
It's about how the teams share money from MASN. The 2005 agreement was weighted toward the Orioles — giving the team a bigger ownership stake and a proportionately larger share of the profits — after it argued that the Nationals' arrival into the region deprived Baltimore of 35 percent of its market share.
Are television rights fees the only issue?
That's what precipitated the skirmish. The Nationals want a television deal on par with the lucrative long-term deals that other clubs have signed in recent years. But the issue also has come to include MASN's profits. That's because a panel of three Major League Baseball owners selected by Commissioner Bud Selig recently concluded — in a decision released privately to the parties — that a substantial portion of the profits should be channeled into the television rights fees that are split equally between both teams.
How much does each club get in rights fees?
The amount was $29 million in 2011 — the last year for which figures were available. It's believed to be higher now. Under the terms of the 2005 agreement, the rights fees are reset every five years to consider changes in ratings and other considerations. The Orioles have said in the past that the agreement laid out a specific formula that is supposed to be used to set the market value of the rights fees.
What would be the impact of MLB's decision?
The MASN economics would swing closer to what the Nationals have long thought the distributions should be. The Orioles stand to lose tens of millions of dollars that potentially could be used to sign or re-sign players. Diminishing the profits would hurt Baltimore because it currently receives 85 percent, while Washington gets 15 percent. That reflects the clubs' respective ownership stakes in MASN. Washington's share will climb by 1 percentage point a year up to 33 percent.
What happens next?
Negotiations will continue to try to head off litigation. Certainly, MASN and its managing partner, the Orioles, don't like the decision and likely would argue in court that it runs afoul of the 2005 settlement agreement and should be reviewed by an impartial body that is not connected with MLB. Neither party is saying much publicly about the dispute. But MASN already has filed a petition in a New York court that could be a precursor to a full-blown lawsuit. The Nationals, too, have filed a petition and likely would seek to affirm the MLB owners' decision.
Could the dispute escalate enough that games stopped being televised?
There is no indication that could happen. Washington fans were frustrated in 2005 when some games were not televised. That was because the sports network — in its earliest days — wasn't able to find local outlets for all of the available contests. Nobody wants a repeat of that period.
Is the Washington-Baltimore market big enough to support two teams?
It seems to be, although each team must make sacrifices. Washington's natural marketing territory, which includes rapidly growing Northern Virginia, dwarfs Baltimore's in population. Nationals' fans routinely complain that Washington shouldn't have its network majority-owned by another club. The Orioles have countered that it's important to note that they once commanded a region stretching from southern Pennsylvania to North Carolina and included Washington, where the team operated a retail store. If the MASN finances favor the Orioles — and they do because of their majority stake— the club believes the reason is grounded in recent history.