A New York state judge on Wednesday denied a petition from the Washington Nationals that sought to block an independent arbitrator from hearing a dispute related to TV money.
The suit was filed this week; Wednesday’s ruling means the Baltimore Orioles can pursue private arbitration over the distribution of profits from Mid-Atlantic Sports Network, the cable network that is jointly owned by the Orioles and Nationals. (The Orioles have an 80 percent stake.)
The latest dispute arose last summer when MASN did not pay out an amount between $5 million and $10 million in network profits to the Nationals, according to three people familiar with the negotiations. The Nationals requested that Major League Baseball Commissioner Rob Manfred force the disbursement of the payment.
MASN countered that it was not paying what is essentially a dividend because of uncertainty in the cable TV marketplace, and it did not disburse around $20 million owed to the Orioles, either. The Orioles requested that an independent arbitrator decide whether the commissioner could rule on the dispute because the league office has what the Orioles consider a fiduciary stake in the Nationals. The league gave the Nationals a $25 million loan in 2013, related to a larger legal battle over television rights fees.
Judge Barry R. Ostrager on Wednesday sided with the Orioles, ruling that the profit disbursement issue does require independent arbitration to decide whether the commissioner could ultimately rule on the dispute. The process to select arbitrators — both the Nationals and Orioles share the responsibility — is underway.
“It would be illogical to allow MLB — a potentially conflicted party — to determine whether MLB itself had a financial interest in one of the parties to the dispute at the relevant time,” Ostrager wrote.
This week’s lawsuit is part of a long-running legal dispute between the two teams about TV rights fees. The Nationals contend that MASN, controlled by the Orioles, annually underpays them for the rights to broadcast their games. The Orioles maintain that MASN pays the Nationals fair value based on a contractual agreement that allowed the Nationals to relocate to Washington in 2005. Last season, the Nationals received around $50 million from MASN, according to a person with knowledge of the payment.
In November, a three-member panel of baseball’s revenue sharing definitions committee heard the Nationals’ and Orioles’ cases for the second time. In 2014, the committee ruled that MASN owed the Nationals $59 million per year from 2012 to 2016, about $20 million more annually than they would end up receiving from MASN during those years, according to the person with knowledge of the situation. The committee’s decision was overturned after the Orioles appealed.
A decision by the committee following the November hearing has not been issued.
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