SBJ/20090316/This Week's News

NHL and MSG winding down fight over Web

The NHL and Madison Square Garden are close to completing a settlement in their contentious, two-year-old legal battle over new media rights, a letter filed with U.S. District Court shows.

Terms of the settlement aren’t disclosed in the letter, but it does say that the settlement is expected to be completed by the end of March, at which time documentation of it will be submitted to the court and the lawsuit will be dismissed.

Sources familiar with the pending settlement say that it will see MSG cover all of the league’s legal fees, which are more than $15 million. Additionally, MSG will receive a seat on the NHL’s digital committee, NHL governors will be given the right to motion for anonymous votes on issues put before the board, and ownership groups will be able to propose a 30-day waiting period before the board votes on an issue brought forward by the NHL.

In separate statements, both the NHL and MSG said that the settlement requires board approval and declined to provide further comment.

The pending settlement will bring to an end a court case that began in September 2007 when MSG filed a lawsuit against the league, accusing the NHL of operating as an illegal cartel and violating antitrust provisions. MSG moved for a preliminary injunction to prevent the league from fining it $100,000 for its refusal to migrate to a common league platform.

Despite a series of rulings against MSG in the lawsuit, the New York Rangers’ owners continued to battle the NHL in court. By last summer, the matter had become so controversial that the NHL proposed disciplinary proceedings against MSG that could have resulted in the suspension or termination of its ownership of the Rangers.

Throughout the lawsuit, relations between MSG and the NHL were strained. MSG Chairman James Dolan even banned NHL Commissioner Gary Bettman and Deputy Commissioner Bill Daly from suite 200, a private club inside the Garden where politicians, celebrities and New York power brokers often gather before, during and after games.

Representatives from MSG first approached the NHL’s executive committee about a settlement in December during a board of governors gathering at The Breakers in Palm Beach, Fla. Initially, MSG wanted the league to pay its legal fees, but executive committee members said that was not negotiable, sources familiar with the discussion said.

The two parties worked around that issue, and by the all-star break in Montreal in late January, it became clear to several board of governors how much headway had been made when MSG executives Scott O’Neil and Glen Sather remained in a board meeting while NHL executives offered an update on the lawsuit. The two parties subsequently continued to work toward a settlement during the month of February.

At the time of its filing and through much of its preliminary phases, the lawsuit had been eyed as a likely bellwether case in the future of league-owned and controlled digital media. More broadly, the dispute also appeared to act as an important litmus test on the centralization of many business functions in American sports leagues that the NHL argued leads to improved revenue, but which Dolan believes hurt his ability to market locally.

In the end, both overarching questions will not gain a clear, definitive answer in the form of a legal verdict. But with MSG ceasing its fight, the status quo appears to gain a sizable boost.

“If this is true, it looks like a victory for the league,” said a New York-based attorney who declined to be identified because his firm represents several pro teams. “The league has sent the message that if you’re going to make a challenge like this, it’s going to be costly.”

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