The payroll limit of the Washington Nationals has been a mystery since the Lerner family purchased the team back in 2006. Ted Lerner is the wealthiest owner in baseball, but the team doesn’t have the highest payroll. Washington D.C. is one of the largest and wealthiest markets in MLB, but the Nats are saddled with an unfavorable TV deal.
Meanwhile, contradictions abound. Mike Rizzo has repeatedly stated that the Lerners have always given him the necessary financial resources to compete. At the same time, Ted Lerner’s son, Mark, publicly stated last year that the Nationals were “beyond tapped-out” in terms of payroll. And this offseason, the Nats made a variety of penny-pinching moves such as trading Tyler Clippard and bypassing a number of affordable second base options (like Asdrubal Cabrera), only to give out the largest free agent pitching contract in baseball history to Max Scherzer.
No, this fiscal inconsistency isn’t unique. The Yankees publicly trimmed payroll prior to the 2013 season in an effort to get under MLB’s luxury tax, only to blow that plan to smithereens last offseason by signing Masahiro Tanaka, Jacoby Ellsbury, and Brian McCann. Perhaps the lesson we can draw is this: people are inconsistent. Your average MLB owner is just as unpredictable as your average American who pinches pennies on everyday purchases only to run out and buy a luxury vehicle they can’t afford. Billionaires: they’re just like us!
This speculation about the Lerner’s desire to spend money would be a pointless parlor game if it didn’t have real world implications on the payroll itself. If that last sentence confused you, consider this tweet from Buster Olney last weekend after the Nationals signed Scherzer.
MLB will have an even more difficult time explaining to Orioles owner Peter Angelos why he should give more MASN money to the Nationals.
— Buster Olney (@Buster_ESPN) January 19, 2015
It’s a little bit of a mystery what Olney–who I otherwise really like–is trying say here. Whatever it is, Olney doubled down with this comment in his “winners and losers” column about the Scherzer signing.
The troubling– and most logical–implication from Olney’s comment is this: why do the Nationals need more money? They just signed a huge contract with one of baseball’s best players!
Well then. How do I start to unpack this nonsense? First, let’s start with the understanding that Peter Angelos is making millions–hundreds of millions, really–of dollars from MASN that he is not reinvesting in his team. The numbers behind MASN are just now being dragged into court, but SNL Kagan estimated that MASN produced over $160 million in revenue in 2012, while sharing only a fraction of that amount with the Nationals. This, of course, was the design of MASN, which was originally conceived as a mechanism to pay off Peter Angelos to prevent him from challenging the Expos move to DC in court. Of course, MASN ended up in court anyway after a MLB panel awarded the Nationals a slightly larger share of the MASN profit (the Nationals initially demanded even more).
MLB, at its heart, agrees with the Nationals and attempted to make the MASN profit-sharing deal a little bit more equitable. Equitable is not a factor for Peter Angelos, who still views the MASN as a vehicle to transfer money from the fanbase of the Washington Nationals into the coffers of the Baltimore Orioles.
This leads us back to Olney’s comments. Why does anyone—MLB, the Nationals—need to explain to Peter Angelos why the Nats need more money. The MASN dispute is not about the Nationals demanding more money than they are entitled. The dispute is about whether the Nationals are receiving “fair market value” which they are guaranteed under the original terms of the deal. The Nationals define fair market value one way (somewhere above $100 million/year). The Orioles define it another (somewhere around $40 million/year). Major League Baseball split the difference (around $60 million/year). Now the Orioles are challenging MLB’s determination in court. Nowhere in this dispute is a consideration of how much the Nationals need. It’s about how much they’re entitled to under the MASN contract. The entire concept of the Nationals being under an obligation to prove how much money they need has been imported into this conversation by Olney. The Nationals are a party to a contract, not a kid asking for lunch money.
More troubling, though, is the implication that the Nationals will be financially hurt by any decision to invest in their team. Peter Angelos has decided to horde his money and run a payroll far under what he can afford considering the annual MASN windfall he is receiving. Peter Angelos could sign a Max Scherzer but he chooses not to. The Lerners, by contrast, appear to be investing in their team. The Nationals now have Top 5 payroll in baseball, despite not having a top 5 revenue stream.
Olney’s comments give the Lerners a perverse incentive avoid spending on their team. This of course is what Angelos wants, lest his competitor to the south win too many ballgames, and thus siphon off more fans from his already shrinking fanbase. See the MASN deal is fine! They can afford Max Scherzer! Such backwards thinking may lead the Lerners to fulfill Nationals fans worst fears by letting talented players like Bryce Harper and Anthony Rendon walk away in a misguided attempt to play pauper to appease a crooked owner like Angelos who thinks the Nationals “have enough.”
With the Scherzer signing, the Lerners plans became a little clearer: they’ll fight for their contractual rights under MASN deal, but they won’t let the dispute prevent them from building a winner. After a few more ignorant comments like Olney’s, those plans might change.