New York’s highest court is set to hear oral argument on Tuesday in a more-than-decade-long dispute between the Mid-Atlantic Sports Network and Baltimore Orioles and the Washington Nationals over TV rights fees — a case that could have large implications for the station and both teams.
MASN pays both teams the same amount in TV rights fee, but the Orioles receive a majority of the network’s profits under a settlement agreement designed to compensate the team for a competitor moving into the area.
A Major League Baseball committee for a second time determined that the fair market value of the TV rights fees for the Nationals was an average of more than $59 million per year for 2012-2016. But MASN and the Orioles contend that the arbitration again was not fair and argue that, if the award stands, it could have consequences for the network and the team.
The hearing is set to start at 2 p.m. in the New York Court of Appeals. Each side will have 10 minutes to argue their case. [Click this link for a livestream of the court proceedings.]
Here’s what you need to know:
What is the origin of the court case?
The controversy dates to the creation of the Nationals.
In 2002, MLB bought the Montreal Expos — a franchise that was failing off the field — for $120 million and later announced that the team would relocate to Washington, D.C.
The owner of the Orioles, Peter Angelos, was the only one to vote against the plan in 2004.
From 1972-2005, the Orioles were the only team in the Mid-Atlantic. The ownership group created a regional sports network that broadcast games in all of Maryland, Virginia, Delaware and Washington, D.C., as well as certain parts of West Virginia, Pennsylvania and North Carolina.
So to resolve a number of issues related to the move, including compensating the O’s for the harm of a new team moving into the area, MLB proposed a settlement.
Under a telecast agreement, MASN would exclusively broadcast both Orioles and Nationals games — except, for instance, ones on national TV. The network would pay each franchise the same amount every year in TV rights fees.
The Orioles would serve as managing partner and initially own 90% of MASN. Meanwhile, the Nationals would hold 10%. But that stake would go up one percentage point each year starting in 2010 until it reached 33% in 2032.
That’s how profits — which come after the network pays TV rights fees and other expenses — are distributed.
But the sides could not come to terms about the fair market value of the TV rights fees for the Nats for 2012-2016. So in accordance with the agreement, they went before an MLB committee.
MASN proposed paying an average of $39.5 million per year. The Nationals, though, asked for $118 million per year.
The Revenue Sharing Definitions Committee — composed at the time of Stuart Sternberg, principal owner of the Tampa Bay Rays; Frank Coonelly, president of the Pittsburgh Pirates; and Jeff Wilpon, chief operating officer of the New York Mets — heard the case in 2012.
In a letter on June 30, 2014, then-MLB Commissioner Bud Selig notified the teams of the arbitration award.
The fair market value: $298.1 million, or an average of $59.6 million per year.
Selig wrote that the decision was “final and binding” and told the teams that nothing authorized them to file lawsuits over the decision. If that happened, he warned, he would “not hesitate to impose the strongest sanctions available to me.”
How did we get here?
Later in 2014, MASN took legal action in New York Supreme Court and then asked a justice to vacate the award, which the network characterized as being the result of a “corrupted and biased process.”
Supreme Court Justice Lawrence K. Marks threw out the award in 2015, stating that while MASN and the Orioles had expressed concerns that the same law firm, Proskauer Rose LLP, represented the Nationals, MLB and several other teams at the same time, those objections “fell entirely on deaf ears.”
“Under the circumstances,” Marks wrote, “the Court concluded that this complete inaction objectively demonstrates an utter lack of concern for fairness of the proceeding.”
A New York intermediate level appeals court upheld that ruling in 2017 but split on other legal questions.
So the Revenue Sharing Definitions Committee — this time made up of Mark Attanasio, chairman and principal owner of the Milwaukee Brewers; Kevin Mather, president of the Seattle Mariners; and Mark Shapiro, president and CEO of the Toronto Blue Jays — heard the dispute for a second time in 2018.
The committee determined in 2019 that the fair market value of the TV rights fees for the Nationals was $296.8 million — or an average of $59.3 million per year.
Next, Supreme Court Justice Joel M. Cohen in 2019 confirmed the award, a ruling that was upheld on appeal in 2020.
The New York Court of Appeals agreed in 2021 to take the case and decide the following legal question:
“Whether courts have the power, after vacating an arbitration award based on ‘evident partiality’ related to the forum, to order rehearing in a forum other than that provided for in the parties’ arbitration agreement.”
What does the case mean for the Orioles, Nationals and MASN?
In a brief, Jonathan Schiller, an attorney for the Orioles, wrote that the initial award was “so lopsided” that it threatened the viability of the network as well as the competitiveness, economic viability and ability of the team to remain in Baltimore.
If MASN had to pay about $60 million per year for TV rights fees to each team, he said, that would erase “virtually all” of the network’s profits. So that would wipe out the money that the Orioles receive each year under the settlement aimed at compensating the team for the Nationals moving into its territory.
Schiller asked the judges to adopt one of three outcomes, the first of which is sending the case for a third arbitration in an alternative, neutral forum.
“MASN and the Orioles are not trying to avoid arbitrating — just the opposite,” Schiller said. “They are asking to arbitrate in a fundamentally fair forum, consistent with the law’s guarantees and their original expectations.”
At the beginning of spring training, Orioles CEO and chairman John Angelos said ensuring that there’s permanent long-term compensation for the Nationals moving into the team’s territory is essential.
He expressed his belief that the dispute is “eminently solvable.”
“I think it’s resolvable today, tomorrow,” he said. “I’m oversimplifying. Separate and apart from that appellate track. That’s litigation. My goal — as you won’t be totally surprised to hear — is to never be around any litigation again.”
Kenneth Feinberg, an attorney who oversaw the September 11th Victim Compensation Fund, submitted a friend-of-the-court brief in support of MASN and the Orioles.
So did Baltimore Mayor Brandon Scott and the City Council. Their brief stated that the outcome of the case is “likely to have a direct impact on the long-term viability of the Baltimore Orioles to remain in Baltimore City.”
Patrick Curran and Derek Shaffer, attorneys for the Nationals, could not be reached for comment.
But the Nationals argued in its brief that MASN and the Orioles are “sniping about the arbitration venue and process to which they agreed” and “now rehash the same arguments already rejected four times.”
The Lerner family that owns the Nationals has been exploring a potential sale of the team. MLB Commissioner Rob Manfred recently said he had no update on that process.
A spokesperson for MLB declined to comment.
It’s unclear when the court will issue its ruling.
Meanwhile, Maryland Gov. Wes Moore recently traveled to Sarasota, Florida, and visited the Ed Smith Stadium complex, the spring training home of the Orioles. The team’s lease at Oriole Park at Camden Yards is set to expire at the end of 2023.
Moore said he believes that the Orioles and the Maryland Stadium Authority can come to an agreement on a new long-term lease.
“I feel good about our prospects to get a quality, sound and productive deal done that’s going to make sure we have Orioles baseball in Baltimore for generations to come,” Moore said. “And something that’s going to benefit the entire neighborhood and the entire community.”