For more than a year, all the parties involved in the Mid-Atlantic Sports Network media rights battle were operating on the timetable of New York Supreme Court Justice Lawrence Marks. Now MLB, MASN, the Baltimore Orioles and Washington Nationals are on their own schedule again.
Marks last week vacated an internal MLB arbitration ruling in favor of the Nationals, providing a key legal win for the Orioles-controlled MASN in their long-running dispute and a rare legal overturning of a private arbitration. But in doing so, he also sent the matter back to the league, RSN and individual clubs to try again to sort out themselves.
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Orioles-Nationals has been a long-running off-field battle.
Photo by: GETTY IMAGES
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What that means, according to several industry sources, is that a series of private negotiations between MLB Commissioner Rob Manfred and representatives of Orioles owner Peter Angelos will commence in the next several weeks. Those talks will take on several forms. There is the initial matter of the Nationals’ media rights for the 2012-16 seasons, which have been at the center of the dispute, now in its fifth year with no apparent end in sight.
But there is also the larger issue of how the Nationals and MASN recalibrate the club’s media rights going forward.
A 2005 settlement between Angelos and MLB regarding the relocation of the Montreal Expos to Washington created MASN and gave Angelos majority ownership of the network in perpetuity. It also laid out the internal arbitration process to reset the Nationals’ rights fees every five years should the club and MASN fail to reach an agreement on their own.
Marks’ ruling last week found the Nationals’ retention of law firm Proskauer, which also represents MLB and members of the arbitration panel, corrupted that process and “objectively demonstrated an utter lack of concern for fairness.”
Because of that, sources close to MASN said there is “no way” the network and the Orioles will agree to appearing again before MLB’s Revenue Sharing Definitions Committee to arbitrate the dispute and reset the Nationals’ rights fees. Marks in his ruling suggested but did not demand the parties seek “a different neutral dispute resolution process.”
“There is going to have to be a different mechanism to resolve this,” said a source familiar with the case but not authorized to speak publicly on it. “It’s not going back to the RSDC.”
In the meantime, the Nationals are considering an appeal of Marks’ ruling, and if that happens, the case would move to the New York Court of Appeals, the state’s highest court. An appeal to that court could take one to two years, and would maintain the current ruling in the meantime. Both the league and Nationals were heartened by the fact the decision vacating the arbitration ruling rested on the Proskauer issue. MASN also argued on several other fronts, including a $25 million advance paid by MLB to the Nationals, and a deviation by the RSDC from typical methodologies for related-party media rights when rendering its arbitration decision for Washington.
Nationals attorney Stephen Neuwirth said “in all other respects” beyond the Proskauer issue “the Court rejected MASN’s and the Orioles’ arguments for vacating the award.” But should MASN, the Nationals and MLB fail to reach a settlement, the RSN would almost certainly revisit many of those same arguments in the new arbitration setting.
The ruling represents one of the first setbacks in what has otherwise been a largely positive first year for Manfred as commissioner. In his prior roles as MLB chief operating officer and executive vice president for economics and league roles, Manfred was deeply involved in the MASN dispute, including the RSDC proceeding itself in 2012. Conversely, Manfred has made owner inclusiveness a hallmark of his early tenure, and finding a way to end the dispute internally theoretically presents a huge opportunity.
