Major League Baseball’s arbitration panel ruled in favor of the Washington Nationals in their longstanding, contentious dispute with the Baltimore Orioles over television rights fees from the Mid-Atlantic Sports Network, a person familiar with the situation confirmed Tuesday afternoon.
The person would not reveal the terms of the June 30 ruling that might only begin a new, litigious chapter in the acrimonious, years-long squabble over profits from MASN. Last week in New York’s Supreme Court, the Nationals filed a motion against MASN, which is majority-owned by the Orioles; that case has been sealed. MLB, the Orioles and MASN acknowledged the dispute remains unsettled in official statements issued Tuesday.
The Hollywood Reporter first reported the latest developments on its Web site Tuesday.
“Although certain legal maneuvering has taken place, Commissioner [Bud] Selig remains hopeful that the parties can reach an agreement in an amicable manner,” an MLB spokesman said.
Through a team spokeswoman, the Nationals declined to comment. In Miami, Nationals principal owner Mark Lerner walked away from a reporter seeking comment.
The Nationals and Orioles have squabbled over MASN since the Nationals moved to Washington from Montreal in 2005. Orioles owner Peter Angelos opposed the relocation because he said it cut into his regional television territorial rights. MLB appeased him with a unique arrangement. He would own a share of the Nationals’ television rights through a regional sports network that broadcast both teams’ games.
Under the terms of the arrangement, the Nationals started with a 5 percent ownership stake in MASN. It has grown to 15 percent and will increase by 1 percent each year until the Nationals own 30 percent. Every five years, there would be a “reset” period allowing the Nationals to receive rights fees commensurate with the formula in the contract.
By fall 2010, the first “reset” period, television rights fees for professional sports teams had exploded. The Nationals and Orioles entered into a bitter dispute over how much MASN owed the Nationals. As of 2012, the Orioles proposed giving the Nationals $34 million in rights fees from MASN; the Nationals asked for between $100 million and $120 million.
The Orioles believe MLB stands to gain financially by the ruling in the Nationals’ favor. Rights fees and profits from television networks are viewed separately by MLB. Money earned from rights fees is subject to MLB’s revenue sharing agreement. Profit earned by a team-owned television network is not. If the Nationals received a larger rights fee, then, some of it would trickle back to MLB.
“The way things are now, MLB is the judge of a deal it created and has a vested interest in,” a person familiar with the Orioles’ thinking said. “As far as we’re concerned, this should be an independent, objective review of the facts.”
Such thinking is indicative of the level of entrenchment in the dispute, the details of which Selig has sought to keep private throughout. That contentiousness was evident in e-mails obtained by the Hollywood Reporter; in some of those exchanges, Selig excoriates both owners and threatens to use the full extent of his powers if they dragged the issue to open court.
At a luncheon during the all-star break, roughly two weeks after the ruling had been issued though not revealed publicly, Selig said there was a “good chance” the dispute would be settled by the time he is scheduled to retire in January 2015.
“We’ve spent an enormous amount of time,” Selig said July 15. “We’re working through a lot of really tough detail. When you have two clubs that have differences of opinions, they’re very complex subjects. My objective is to keep away from what used to go on in this sport, where you had owners fighting owners publicly. So we’re working through a lot of difficulty. I’m satisfied we’re at least moving in the right direction.”
MLB has pursued creative solutions to the debate without success. In late 2012, MLB asked Allen & Co., a New York-based investment bank, to seek potential buyers to acquire broadcasting rights from both teams. Fox Sports and Comcast would have been the leading contenders.
“As those who follow the Clubs are aware, the Settlement Agreement between Baseball, the Orioles, and the Nationals established MASN to compensate the Orioles for the loss of market share and other damages caused by the relocation of the Nationals to Washington, D.C.” the Orioles said Tuesday in a statement. “Contracts are meant to be honored and the Orioles have every expectation that this contract will also be honored. The Orioles continue to work with the Office of the Commissioner to try and resolve this dispute.”
In a statement, MASN said it has followed protocol from the original agreement.
“MASN has honored the terms of the Settlement Agreement, including the formula in that contract for resetting the Nationals’ telecast rights fees and expects all parties will do the same,” Thomas J. Hall, the lawyer representing MASN, said in the statement. “That contract specifically includes an agreed upon and historically applied formula for resetting the Clubs’ telecast rights fees that has been applied by Baseball to virtually every other club-owned regional sports network.
“MASN is confident its contract will be honored and looks forward to further discussions with all parties to try and resolve this matter amicably. Our loyal viewers should understand this is a business dispute and will have no impact on the telecast of the Clubs’ games.”
James Wagner contributed to this report from Miami.