An attorney for the Mid-Atlantic Sports Network and the Baltimore Orioles argued on Tuesday that Major League Baseball Commissioner Rob Manfred decided at some point that the two organizations should lose a dispute about the fair market value of the TV rights for the Washington Nationals.
“His view was, ‘The Orioles should lose.’ And he has said that over and over and over again,” said Carter Phillips, an attorney for MASN and the Orioles, during oral argument before New York’s highest court. “So that partiality continues on to this day — and this court should not blink at it.”
Phillips asked the New York Court of Appeals to send the dispute to a neutral body for a third arbitration. The judges did not indicate when they will issue a decision in the case, which MASN and the Orioles have asserted in court documents could threaten the sustainability of the network as well as the competitiveness, economic viability and ability of the team to remain in Baltimore.
The case dates to 2002 when MLB bought the Montreal Expos for $120 million and later announced that the team would move to Washington, D.C.
To resolve several issues related to the move, including compensating the Orioles for another team coming into their territory, MLB pushed for a settlement.
That’s where MASN comes into play.
MASN would exclusively broadcast both Orioles and Nationals games — except, for instance, ones that are nationally televised — and pay each team the same amount every year in TV rights. Meanwhile, the Orioles would own a majority of the network and receive most of the profits.
When the sides could not come to terms on the fair market value of TV rights for the Nationals for 2012-2016, they went to arbitration before an MLB committee. That’s the process for resolving disputes outlined in the settlement agreement.
The Orioles argued that the fair market value for both teams was worth $39.5 million per season. Meanwhile, the Nationals initially asked for $118 million each year.
An MLB committee made up of three executives from other teams in 2014 determined that the fair market value of the TV rights was $298.1 million — or an average of $59.6 million per year.
New York Supreme Court Justice Lawrence K. Marks later threw out that award on the grounds that the same law firm, Proskauer Rose LLP, represented MLB, the Nationals and several other teams at the same time.
In 2019, an MLB committee composed of three executives from different teams determined that the fair market value was $296.8 million — or an average of $59.3 million per year.
Phillips said the judges should be worried about the fairness of the process.
In court documents, MASN and the Orioles wrote that Manfred personally submitted three affidavits supporting the position of the Nationals in court. That’s in addition to making statements to the press including, “I think sooner or later MASN is going to be required to pay those rights fees.”
“No other court faced with any situation like this has done anything other than send the matter to a neutral and impartial arbitration panel,” Phillips said.
But Derek Shaffer, an attorney for the Nationals, said a justice found one problem with the first arbitration: the fact that the same law firm represented the team and the league at the same time.
That’s an issue, he said, that was easily fixed. Since that time, Shaffer said, a new MLB committee held a two-day hearing, considered seven expert reports and issued an almost 50-page decision.
“So you’re arguing one person being disqualified did not infect forever or make it such that we should disregard an agreement that the parties reached in the original settlement?” Judge Shirley Troutman asked.
“That’s exactly right,” Shaffer replied.
Shaffer said the panel is “uniquely competent” to decide the fair market value of TV rights. He described the teams as sophisticated parties who agreed that’s how disputes should be resolved, noting that Orioles owner Peter Angelos once praised the process when he testified before Congress.
In his rebuttal, Phillips said the only way to end the litigation is to send the dispute to a neutral forum.
Regardless of what’s decided, Phillips said, there will no longer be a basis for challenging the fairness and impartiality of the decision in court
“That’s what we bargained for: fair and impartial,” Phillips said. “I ask the court to reverse.”