Nationals, Orioles MASN dispute still ongoing

Oct 22, 2014; Kansas City, MO, USA; MLB commissioner Bud Selig speaks at a press conference before game two of the 2014 World Series between the Kansas City Royals and the San Francisco Giants at Kauffman Stadium. Mandatory Credit: Christopher Hanewinckel-USA TODAY Sports

The Nationals dispute with Orioles owner Peter Angelos over the rights fees the MASN network owes to the Nationals for this year and in the forseeable future remains the subject of a lawsuit in the New York courts.

The television rights contract stated that the Nationals would be entitled to have a review of the fair market value of their broadcast rights in 2012, and every seven years after that.

The parties went through an arbitration process with MLB to resolve the dispute between the Nationals and MASN as to the correct formula to be used to determine the amount MASN owes to the Nationals for the team broadcast rights. MASN was offering to pay in the area of $36 million per year based on its interpretation of the formula the network believes the contract says is to be used.

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The Nationals dispute the formula that MASN has selected to calculate the broadcast rights, and claimed that the TV rights were worth $100-$120 million per year when it came time for the broadcast fees to be reset in 2012.

The MLB arbitration panel, it is rumored, ruled that the Nationals broadcast rights were worth approximately $50-$75 million per year.

MASN then filed suit in New York asking that the court overturn the arbitration award because the arbitration panel was biased, and because the Nationals, the arbitrators and MLB were using the same attorneys to represent all of them. MASN claims that MLB offered the Nationals a guaranteed sum of $25 million each year while the rights dispute is ongoing. Presumably, the Nationals will return the money to MLB when the rights dispute is resolved and MASN finally pays the broadcast rights fees that are due to the Nationals.

The New York court initially put an injunction in place to keep the Nationals from having their games shown on any other network while the dispute is ongoing in the court. That injunction is still in place.

Last week, MASN had a hearing on its motion for discovery requesting documents from MLB regarding MASN’s allegations regarding the potential conflict of interest regarding the arbitration panel and the attorneys representing MLB and the Nationals. The Nationals and the law firm involved voluntarily gave the documents requested to MASN, but MLB refused to do so without a court order.

The court granted MASN’s discovery request, which means that MLB will have to provide documents requested by MASN to try to get to the bottom of MASN’s allegations. MASN is especially interested in the role played by incoming commissioner RobManfred’s involvement with the arbitration panel.

This is somewhat ironic, since MLB has been twisting around for years trying to avoid lawsuits and financial disclosures related to its brief ownership of the Expos/Nationals franchise.

In my opinion, one of the reasons MLB agreed to allow Angelos to set up MASN and signed the TV rights to the Nationals away to Angelos when MLB owned the team was to make moving the franchise to the Orioles “market” palatable to Angelos and avoid the lawsuit Angelos was threatening to file against MLB for moving the Nationals to Washington D.C.

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MLB did not want to get involved in a lawsuit with Angelos where financial documents and details of the purchase of the Expos franchise from Jeffrey Loria, then allowing Loria to purchase the Miami Marlins, and all of the undercover deals that went down at the time (including the deal that allowed John Henry to sell the Marlins to Loria and then purchase the Boston Red Sox) would become public record.

Now MLB is having to turn over documents because of the MASN franchise fee dispute.

This is one of the reasons Bud Selig was publically fussing at the Nationals and MASN to resolve the dispute without resorting to the courts, and why he pushed the arbitration process so hard with the parties. MLB did not want their documents turned over to outside attorneys.

It is unclear whether any of MASN’s allegations of bias in the arbitration panel will hold up at the end of the day. Proving that the arbitrators were biased is one of the few ways that a party can get an arbitration award thrown out and send everyone back to do the arbitration over again.

As long as this issue is tied up in the courts, MASN doesn’t have to pay the increased rights fees.
The court has scheduled a hearing for March 2, 2015 to determine whether the arbitration award will stand or whether it will be thrown out.