SBJ/October 15 - 21, 2007/This Weeks News

MSG must pay NHL’s legal costs in lawsuit

MSG will be responsible for paying the NHL’s legal costs for the digital media rights lawsuit it brought against the league last month.

According to the bylaws of the NHL constitution, lawsuits brought against the league by one of its 30 clubs must be funded entirely by that team. League executives last week confirmed the financial responsibility of MSG and the New York Rangers for the legal costs, but declined to estimate what those costs will be, with the potential expense largely subject to the length of the dispute.

MSG, in a lawsuit filed in U.S. District Court, is accusing the NHL of operating as an illegal cartel, violating antitrust provisions and improperly taking control of the Rangers’ digital media rights. MSG would prefer to control the Rangers’ Internet operations independently, but NHL team owners voted overwhelmingly in June 2006 to create a uniform template for team Web sites and centralize their overall online efforts.

The NHL’s response to the MSG lawsuit was to be filed last Friday. A hearing is set for Oct. 23 on MSG’s attempt to get a preliminary injunction against the NHL and control over the Rangers’ Internet operations.

MSG officials declined to comment on their financial responsibility for funding both sides of the lawsuit. But industry sources close to MSG say it is well aware of the rule and felt strongly enough about the case to move forward anyway. In fact, the rule may become a component of the case in the future.

Meanwhile, MSG has followed its original Sept. 28 filing of the lawsuit with several declarative statements from company executives further decrying the NHL’s digital media strategy. Scott Richman, senior vice president of MSG Interactive, wrote in his statement, “The league will be taking a luxury Rangers brand and effectively distributing it under a generic label, wasting the value of the brand and threatening its irreparable dilution.”

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