Would MLB expansion affect the Nats?

Jon Morosi caught me off guard yesterday when I read that MLB might be looking to expand. Only two years ago, I wrote that expansion is no longer financial advantageous to the owners, and DC was lucky to grab the Expos while they could.

My reasoning at the time was relatively simple. First, there are few open metro markets with the population to support another MLB team. Morosi correctly notes MLB owners would be hesitant to create another beneficiary of revenue sharing. Another factor: centralized revenue through national TV contracts and MLB Advanced Media is growing, and expansion cuts that pie into smaller pieces.

Franchise values have become so high, however, MLB owners could realistically charge an exorbitant fee to an expansion team’s new owner. A decade after MLB charged the Lerners over $400 million to buy the Nats, a new expansion owner might have to pay well over a billion dollars which would be pure profit for the existing owners. Morosi also identified another factor I never considered: realignment to make Cable TV more profitable. Dividing MLB into Eastern and Western leagues puts more games in prime time, further feeding the current Golden Goose for most MLB teams: local television contracts.

Expansion might affect the Nats in two ways. Most obviously, realignment might put the Nats into a different division, maybe with Tampa Bay, Pittsburgh or Baltimore (which would be easy to imagine since it would be an attendance boost for both teams).

But the most interesting development would come if MLB expanded into what I believe is the most logical market for a new baseball team: Charlotte ( Note: Morosi has at least four cities ahead of Charlotte on his list). Peter Angelos owns the television rights to an area extending south in North Carolina. For MLB to put a team in Charlotte, they would likely have to reach an agreement with Angelos similar to the one they reached prior to moving the Nationals to DC.

Of course, the prospect of starting another television rights war with Peter Angelos might be enough to persuade MLB to avoid expanding into North Carolina at all. But if the thirst for expansion becomes so great and Charlotte becomes the most obvious choice (over Montreal, Austin, Vancouver, or San Antonio), a solution regarding TV rights would need to be reached. Would MLB add the new team to MASN, giving the network control over three teams? Or would they use the occasion to confront Angelos to try to take away TV rights he logically shouldn’t have in the first place? The answer likely depends on whether MLB is more angry at Angelos or still scared of him. MLB initially gave the Nats TV rights to Angelos because they feared going to court over the matter. Now that Angelos has taken them to court anyway, why would they fear another court battle?

Morosi’s most likely expansion candidates included three cities outside the US, two in Canada and one in Latin America. Expanding overseas, while scratching the commissioner’s itch to “grow the game,” is deeply problematic from a financial standpoint. Getting stadiums built, attracting new fans, and overcoming dollar exchange rates are all huge challenges to expanding into foreign countries. Expanding within the US is far easier where Charlotte is the best choice. It’s larger than Austin and doesn’t cut into an existing fan base (like Austin does with the Astros). Moreover, the Charlotte metro area continues to grow already has the 23rd largest metro population, larger than several cities with existing MLB franchises. Charlotte is already big enough to support franchises in the other three major sports.

Perhaps it’s wishful thinking, but if MLB ever got serious about expansion, it would likely set the stage for another MASN confrontation. For those of us waiting for a solution to this mess, that couldn’t be a bad thing.

 

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