MASN wants arbitrator to end dispute

In court hearing, MLB’S impartiality questioned in conflict with Nationals

In the years-long dispute between the Baltimore Orioles and Washington Nationals over TV rights, Major League Baseball is not impartial and should not be allowed to decide how much the Nationals receive in rights fees, the Orioles’ Mid-atlantic Sports Network argued at an appeals hearing Tuesday.

The Nationals countered that MLB is impartial — and that if the court didn’t affirm MLB’S ruling, it would be a “recipe for just having this litigation continuing and continuing in never-ending fashion.”

Lawyers for the network and the Nationals appeared before the New York Court of Appeals to make arguments that will help decide the disbursement of around $100 million in disputed TV rights fees. Tuesday’s hearing could be critical to providing long-sought clarity about the value of the Nationals’ media rights as the Lerner family, which owns the team, considers a sale. MASN is controlled by the Orioles and owns the rights to Orioles and Nationals games.

While Tuesday’s hearing had larger implications, it focused narrowly on MLB’S impartiality after a revenue-sharing committee in 2019 awarded the Nationals an additional $100 million in TV rights fees payments from 2012 to 2016.

MASN lawyer Carter Phillips said MLB’S process “reflects a lack of concern for fundamental fairness” and argued Commissioner Rob Manfred has made comments about the inevitability of the Nationals prevailing in the dispute.

After the hearing, Phillips said the Nationals should want the case to go to a neutral arbitration body because it would foreclose any future legal challenges by MASN or the Orioles.

“The bottom line is if we try this in front of a neutral decision-maker, we’ll live with the result,” he said. “Once you get a neutral arbiter, we’re done — unless MLB tried to bribe one of the arbitrators.”

He added, “Though it’s more likely the Nationals would do it.”

Nationals attorney Derek Shaffer declined an interview request. A decision from the appellate court is expected next month.

The case has been slowly winding its way through the courts for more than a decade. In 2012, the Nationals challenged the rights fee payments they were set to receive for the next five seasons — around $200 million, or $40 million per year. The team asked MASN for $475 million. An MLB revenue sharing committee found the Nationals should receive about $20 million more annually than MASN agreed to pay, or nearly $100 million in total.

But MASN sued, arguing MLB was not an impartial arbiter. The Orioles won their case in a New York court because MLB had given a loan to the Nationals and the entities had shared legal counsel.

The dispute was sent back to MLB. The Nationals hired new lawyers, and another MLB committee made an identical ruling in 2019.

But MASN sued again, still arguing MLB was not impartial. Two lower courts affirmed MLB’S ruling.

On Tuesday, justices grilled attorneys for both sides. One suggested to Phillips that untangling the representation conflict of interest was enough to restore integrity to MLB’S process. Another justice asked Shaffer about Manfred’s comments that predicted the results of MLB’S second committee would mirror its first.

A ruling in the Nationals’ favor could help set the terms for future rights fees calculations and potentially lay the groundwork to award the team additional money from 2017 to 2022. But Phillips said MASN would challenge any future decisions made by MLB — and not an independent arbitration panel — in Maryland court.

The relationship between the teams since baseball returned to D.C. has been bitter and litigious, with MASN at the center. The Nationals say they are seeking fair market value for their TV rights, while the Orioles argue the Nationals’ demands would undermine the original purpose of the agreement.

MASN was created when the Nationals moved from Montreal in 2005 as payment to the Orioles for giving up geographic territory to another major league team. MASN wants to ensure there are sufficient profits for the network from 2012 to 2016 to compensate the Orioles, essentially, for the existence of the Nationals.

“It’s a question of fair market value versus how do you make sure the Orioles are compensated?” Phillips said.

Baltimore’s mayor and city council filed an amicus brief in support of the Orioles, arguing the MASN situation was an existential crisis for the Orioles and the city. “The team’s long-term viability, and with it, a substantial component of Baltimore’s character and identity, relies on a fair and unbiased enforcement of the protections afforded to the Orioles by the agreement put in place when Major League Baseball moved the Montreal Expos to Washington, D.C. in 2005,” the brief read. The Nationals called that argument “far-fetched and contrary to all known facts.”

Another backdrop for the hearing is the crisis troubling the regional sports network ecosystem, which had been shaken ahead of an expected bankruptcy filing by Diamond Sports Group that took place Tuesday. That could affect millions of dollars in rights payments to MLB teams. Amid cordcutting, RSNS have seen their revenue shrink in recent years.

According to Kagan, the media research division of S&P Global Market Intelligence, MASN was in 5.6 million homes in 2018 but just 3.6 million homes in 2022. MASN has responded by cutting costs: This spring training, the network is broadcasting just four Nationals and Orioles games each, the fewest in baseball.

The appellate court’s decision could be appealed to the Supreme Court, but it is unlikely that the high court would take the case.