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The New York Court of Appeals, the state’s highest court, on Tuesday ruled 6-0 against the Mid-Atlantic Sports Network and the Baltimore Orioles in a long running dispute about the fair market value of the TV rights for the Washington Nationals — but signaled that might not be the end of the case.
In an 18-page opinion, Associate Judge Madeline Singas wrote that the courts properly upheld an arbitration award from a Major League Baseball committee that concluded that the fair market value of the TV rights for the Nationals was almost $300 million for 2012-2016. But she said the sides agreed to a different process for resolving disputes about the nonpayment of those fees.
“While it is unfortunate that our decision may send this protracted litigation into extra innings, that result is necessitated by the settlement agreement’s terms,” Singas said.
MASN, the Orioles and the Nationals could not immediately be reached for comment.
The origin of the dispute can be traced back to when MLB bought the Montreal Expos for $120 million in 2002 and later announced that the team would relocate to Washington, D.C.
The Orioles were one of the only MLB teams in the mid-Atlantic from 1972-2005, and objected to the move. The ownership group had created a regional sports network that broadcast its games in all of Maryland, Virginia, Delaware and Washington, D.C., as well as portions of West Virginia, Pennsylvania and North Carolina.
MLB pushed for a settlement to resolve several issues, including compensating the Orioles for another franchise moving into what used to be its exclusive territory. That’s where MASN comes into play.
Under a telecast agreement, MASN would exclusively broadcast the games for both teams — except, for instance, ones that were nationally televised — and pay each franchise the same amount every year in TV rights. The Orioles, though, would own a majority of the regional sports network and therefore receive most of its profits.
The ownership agreement, the opinion notes, incentivizes the Orioles to push for lower TV rights fees. That’s because doing so maximizes profits for MASN.
When the sides could not come to terms about the fair market value of the TV rights for the Nationals for 2012-2016, the issue went before an MLB committee — the mechanism for resolving disputes outlined in the settlement agreement.
MASN argued that the fair market value was $39.5 million per season. Meanwhile, the Nationals at first asked for $118 million per year.
An MLB committee made up of three executives from other teams in 2014 decided that the fair market value of the TV rights for the Nationals was $298.1 million for 2012-2016, or an average of $59.6 million per year.
So MASN took legal action.
New York Supreme Court Justice Lawrence K. Marks in 2015 threw out the arbitration award on the grounds that the same law firm, Proskauer Rose LLP, represented MLB, the Nationals and several other teams at the same time. He wrote that concerns expressed about that arrangement “fell entirely on deaf ears.”
The case continued to be litigated.
In 2019, a MLB committee comprised of three executives from different teams determined that the fair market value of the TV rights was $296.8 million — or an average of $59.3 million per year.
Next, New York Supreme Court Justice Joel M. Cohen upheld the arbitration award and entered a money judgment for more than $105 million in favor of the Nationals. That ruling was upheld on appeal.
In the meantime, MASN has been paying TV rights fees to the Nationals — but millions less than the award.
Carter Phillips, an attorney for MASN and the Orioles, asked the judges to send the case to a neutral body for a third arbitration, arguing that MLB Commissioner Rob Manfred decided at some point that his clients should lose the case.
MASN and the Orioles have argued in court documents that the award could threaten the sustainability of the network as well as the competitiveness, economic viability and ability of the team to remain in Baltimore.
An attorney for the Nationals, Derek Shaffer, asked the court to uphold the award.
In the opinion, Singas said the conflict of interest that arose during the first arbitration — the fact that the same law firm represented everyone except MASN and the Orioles — was subsequently fixed.
Plus, Singas said, the MLB committee that determined the fair market value of the TV rights for the Nationals was composed of three different team executives in the second arbitration. The sides, she said, agreed to a process that involved industry insiders as well as the commissioner of baseball.
“MASN and the Orioles cannot now complain that they received something different than what they bargained for through the insider process they selected,” Singas said.
But Singas said the courts erred in entering a money judgement in favor of the Nationals. She said there’s a different process outlined in the settlement agreement for dealing with nonpayment of TV rights fees.
Associate Judge Caitlin Halligan did not take part in the decision. The New York State Senate recently voted to confirm her to the state’s highest court.
dylan.segelbaum@thebaltimorebanner.com
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Dylan Segelbaum is the courts reporter at The Baltimore Banner.
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