Stadium Arbitration Could Take Months
Wednesday, December 21, 2005
If Major League Baseball takes the District to arbitration to force the city to honor its agreement to build the Washington Nationals a stadium, it could take six months before a decision is handed down, according to individuals familiar with arbitration.
Sports teams have used arbitration to settle disputes over land prices or construction costs for a stadium. But it is uncommon for baseball officials to take a municipality to arbitration just to get a stadium built.
The D.C. Council has postponed until next month its vote on the stadium lease agreement between the city and baseball. Without a lease, the city has said it will not issue construction bonds and baseball officials have said they will not sell the Washington Nationals, which is owned by baseball's 29 team owners and is on the market for $450 million.
Baseball officials have said that if the lease agreement is not approved by Dec. 31, the city would be in default of its contractual commitments and baseball would prepare to go to arbitration.
The stadium agreement that the District and Major League Baseball signed a year ago calls for the city to build the Nationals a stadium along the Anacostia waterfront in Southeast Washington and stipulates that disagreements over any part of the stadium contract be settled first through nonbinding mediation that is not to exceed 15 days.
If the sides cannot agree, the agreement calls for baseball officials and the city to claim a "dispute" and proceed to binding arbitration through the American Arbitration Association. The process, the agreement states, shall take no more than six months, with each party paying its own expenses and sharing the costs of the mediator and a panel of three independent arbitrators. Binding arbitration means that both sides would have to abide by the panel's decision.
"The use of arbitration between cities and sports leagues is not unusual," said lawyer Jeffrey Kessler, who has been involved in many arbitrations with professional sports teams. "What is unusual about this case is that the very existence of the stadium seems to be the issue going before the arbitrator, rather than a dispute over contract terms."
The case also would be unusual because Major League Baseball, rather than a specific team, would be one of the parties.
"I never heard of an arbitration over something like this before," said lawyer Richard Ravitch, an experienced negotiator who has represented baseball in collective bargaining with its players union. "It certainly would take a minimum of weeks. Probably months."
A year ago, Kessler was involved in a crucial arbitration with the Montreal Expos, which became the Nationals, that helped pave the way for the team to move to the District. In that case, a three-member panel from the arbitration association dismissed claims against Expos owner Jeffrey Loria by 14 former limited partners who had accused him of masterminding a conspiracy to devalue the club and remove it from Montreal.
Kessler, who represented Loria's former limited partners, also represented the city of Oakland, Calif., and Alameda County against the owners of the Oakland Athletics in the late 1990s. The municipalities wanted to exercise their right to buy the team rather than allow it to leave the area.
The Oakland case went to arbitration but was settled after several months when the two sides agreed to keep the team in the city. The arbitrator in that case never made a ruling.
If Major League Baseball and the District go to arbitration, Kessler predicted, it could take as long as six months to get a ruling from an arbitrator.
Arbitration is usually much faster and less costly than going to court, which could hold up the stadium for years, Kessler and Ravitch said.
Kessler said the Alameda County case involved a specific breach of contract. He said the District case seems to focus on points that the two sides have not agreed to. "The interesting thing is how the neutral arbitrator is going to decide," he said.