It would be great to get a look at the Orioles' books. Here's what I'd be looking for.
I wasn't there for John Angelos' invitation to the media to look at the team's books. If I catch an invite, here's what I'll be looking for.
By virtue of missing Monday’s Orioles’ press conference at which John Angelos announced a $5 million donation to CollegeBound to help provide advancement opportunities for young city residents, I am unfortunately unlikely to catch an invitation to the follow-up: an opportunity to look at the Orioles’ books.
The offer to the gathered reporters came as part of an exchange between the Orioles and MASN CEO and reporter Dan Connolly, who asked about Angelos’ family’s continued ownership of the team in light of recent lawsuits.
It’s a valuable opportunity if it comes together, one that would be most productive if any reporters doubled as forensic accountants but could probably still be worth something even as none are.
I’d like to formally request to be included among the colleagues of Dan’s who are invited to said forum next week, and will even go a step further to outline which areas I would love to have some insight on should that invite come my way.
Is there any opportunity for major league payroll to be higher than it is?
This would be anyone’s first thought, and is mine, too. We have seen the organization make incredible strides on and off the field under Mike Elias, Sig Mejdal, Brandon Hyde and company, but there’s a degree of difficulty to taking it to the next level when even with myriad arbitration raises and increased free agent spending the Orioles are still perilously close to the bottom of the league in major league payroll.
The thought for the previous four-ish seasons, when the team’s payroll was intentionally low and most of the resources and attention went toward scouting and player development, was that the team was keeping its powder dry to spend when the major league team got good. Now that it has, and the kind of impact spending that could have helped hasten their return the playoffs hasn’t materialized, it’s hard to know whether that was the case.
Participating in the international free agent market and picking at the top of the draft probably meant expenditures in those areas tripled or quadrupled from previous levels, as would the cost of building the infrastructure to both efficiently and effective find the right players and establishing the coaching and tools to get them to the majors. That doesn’t fully account for a payroll reduction that was at least halved from previous highs, though. (There’s also the COVID-related bonus deferrals put into place that mean the Orioles could still be paying significant bonuses to players from the 2021 and 2022 drafts on current-year budgets._
So, perhaps spending was approved outside the clubs’ means to get those payrolls to the levels they were as the Orioles chased a title in the mid-2010s. A detailed examination of the team’s books would show that.
How big an impact is the ongoing MASN dispute having on the financial state of the organization?
The ongoing lawsuits over the MASN broadcast rights fees between the Orioles and Nationals is still kicking, and there has to be a staggering amount of money being held aside by the Orioles as they wait for the hearing. The original dispute stems from a suit over the amount of rights fees paid for the 2012-2016 season, and the Orioles put $105 million in escrow in 2019 pending an appeal, according to the Baltimore Sun.
The Athletic also reported the Orioles had “withheld distributions” on the profit-sharing agreement that serves as the network’s origin story since the lawsuit as a means to preserve capital in the event they have to pay further judgments. There’s not a lot out there regarding current fees, though. The Washington Post reported this year that each team received around $60 million for its broadcast fees from MASN in 2021. That’s around the amount MLB set the fees at for the period covered by the lawsuit; there’s no telling if the fees after that are going to be satisfactory enough to prevent further litigation.
The bottom line is there seems to be a lot of money already wrapped up in this, and seeing the books could illuminate just how much and why. It’s a tough spot for the Orioles to be in–they gave up a lot when the Nationals came into town, and are never getting it back. This was, in essence, their payment, and giving it up wouldn’t make sense. If maintaining it comes at the expense of winning on the field, though, the calculations on what all this is worth should change.
To that end, what does the league’s shared revenue fund within the organization?
That local television rights fees are such a staple of Orioles life obscures the fact that the organization also gets a lot of money from national television deals, particularly for the playoffs. At the time of Apples’ $85 million agreement to stream games, Front Office Sports reported that MLB received a combined $1.74 billion per year for its national TV contracts.
There are so many zeroes in that number I had to turn my phone sideways to calculate that it comes out to $58 million per year if split evenly between 30 clubs. Add in billions MLB has received for selling BAMtech, its streaming video platform, to Disney, as well as money received from the league’s revenue sharing program, and there’s a lot of money coming in from MLB.
One would imagine that goes toward the baseball operations department and funds all the majors and minors, and serves as a baseline for the whole franchise’s budget on an annual basis. But is that all of the shared money, and if not, where else does it go?
Running a winning baseball team might not need to be a dollar-out, dollar-in proposition, but all the actually business operations around it probably should be. If they are, that would be important for people to know because it would prove all the money MLB ensures clubs get to remain competitive is going to that purpose for the Orioles. Then, as the club continues to improve and other revenue streams get stronger, everyone can be better for it. If that’s not how things are going, people deserve to know that, too.
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