NEW YORK, N.Y. – A New York state judge has thrown out an arbitration decision that said the Mid-Atlantic Sports Network, which is controlled by the Baltimore Orioles, owes the Washington Nationals about $298 million for the team’s 2012-16 television rights.
MASN and the Orioles sued in New York State Supreme Court last year, claiming the arbitration was improper because the law firm Proskauer Rose, which represented the Nationals, at times worked for MLB and the teams of all three arbitrators.
Supreme Court Justice Lawrence K. Marks issued his ruling Wednesday, nearly six months after hearing arguments.
“MASN and the Orioles have established that their well-documented concerns fell on entirely deaf ears,” Marks wrote. “The court concludes that this complete inaction objectively demonstrates an utter lack of concern for fairness of the proceeding.”
MASN was established in March 2005 after the Montreal Expos relocated to Washington and became the Nationals, moving into what had been Baltimore’s exclusive broadcast territory since 1972. The Orioles were given a supermajority partnership interest in MASN, starting at 90 per cent, and Washington made a $75 million payment to the network for an initial 10 per cent stake.
The agreement called for the Nationals’ equity to increase 1 per cent annually, starting after the 2009 season, with a cap of 33 per cent. The network’s rights payments to each team were set at $20 million apiece in 2005 and 2006, rising to $25 million in 2007, with $1 million annual increases through 2011.
When the parties could not agree on a rights fee for 2012-16, they appeared in April 2012 before baseball’s Revenue Sharing Definitions Committee, which included Pittsburgh Pirates president Frank Coonelly, Tampa Bay Rays principal owner Stuart Sternberg and New York Mets chief operating officer Jeff Wilpon. The committee issued its decision in June 2014, saying MASN owed Washington approximately $53 million for 2012, with the amount rising to nearly $67 million for 2016. The Nationals had asked for $109 million for 2012 and the MASN said the figure should be $34 million.
In addition to objecting to Proskauer’s role, MASN and the Orioles claimed it was not fair MLB gave the Nationals a $25 million loan in August 2013 in anticipation it would be repaid from higher broadcast revenue.
Marks did not tell the parties what to do next but offered suggestions.
“Because it is ultimately the Nationals’ choice of counsel that created the conflict, the parties may wish to meet and confer as to whether the Nationals are willing and able to retain counsel who do not concurrently represent MLB or the individual arbitrators and their clubs, and thereby return to arbitration by the RSDC,” Marks said. “If the current conflict remains, the parties might meet and confer regarding whether they can … agree to a different neutral dispute resolution process.”
“We look forward to a fair and neutral process before an objective decision-maker in the future,” Alan Rifkin, MASN’s managing partner and an Orioles’ lawyer, said in a statement.
Washington and MLB did not have any substantive comment.