SBD/August 1, 2014/Media

MASN, Nationals File Preservation Rights Petitions Regarding Recent Arbitration Ruling

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Both MASN and the Nationals have filed preservation rights petitions with a N.Y. court designed to either vacate or confirm a recent, private MLB arbitration ruling favoring the Nationals in their ongoing media rights disputes, several industry sources said. Those motions had to be made within 30 days of the June 30 decision, enabling either party to go to court later if so chooses, and both sides are awaiting a judge’s ruling for how long it is allowed to continue negotiating privately before a formal suit must be brought forward. Those negotiations in the multiyear dispute have now reached a more heightened state, sources said, as MLB is particularly loathe to avoid a public suit. But the Orioles dispute the ruling for the Nationals on two primary fronts. First, the three-owner panel that rendered the decision is not a neutral third party, as is required in typical arbitration, but rather members of MLB that are a party to its agreement with the Orioles and also include owners of the Rays and Pirates that are two of the industry’s largest revenue-sharing recipients. Additional TV rights revenue for the Nationals would be taxed at a 34% rate for revenue-sharing purposes, as is typical MLB practice. Second, the Orioles contend the award for the Nationals would violate the terms of the ’05 settlement agreement with baseball that allowed the relocation of the Expos to DC, and neutralize much of the uneven profit distribution for the Orioles that represents the heart of its compensation for the relocation. The Nationals, conversely, are seeking a rights deal that would exceed $100M annually, well beyond its current local TV revenues, and bring the club much more in line with current market conditions and lucrative local team deals signed elsewhere in the league. The Orioles have long contended the clubs’ fees should be determined by the strict use of a 18-year-old league TV formula developed by Colorado-based Bortz Media & Sports Group, a consultant long employed by MLB, for use by teams with equity interests in their own television partners.

NEGOTIATIONS CONTINUE
: Even as the precursors to potential court proceedings have been filed, negotiations among the entities continue, and sources said some type of conclusion could occur within a matter of days. The Orioles, Nationals and MLB all declined to comment beyond previously issued public statements. The league earlier this week said while some legal maneuvering has taken place, MLB Commissioner Bud Selig "remains hopeful the parties can reach an agreement in an amicable manner.”
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