A Major League Baseball committee ruled the Washington Nationals are owed nearly $100 million by the Mid-Atlantic Sports Network, according to court filings that were made public Tuesday, marking the latest twist in a years-old dispute between the Nationals and the Baltimore Orioles over TV rights fees.
A three-member panel of baseball’s revenue sharing committee decided that MASN owed the Nationals around $59 million annually in TV rights fees for the years 2012-16, which is about $20 million more per year than the network has paid the team, according to court filings. MASN broadcasts Nationals and Orioles games and is owned by both teams but is controlled by the Orioles, who retain an 80 percent stake.
The Orioles have informed the New York State Court that they intend to appeal the decision.
Nationals attorney Stephen Neuwirth wrote to the court in a letter dated May 6 that the Nationals are harmed by the delay in payments.
“The Nationals have an intense interest in receiving prompt payment of the sums they are owed, which may be invested in player contracts and other significant cash expenses that the Nationals must bear,” he wrote.
According to a person with knowledge of the MASN payments, the Nationals would not receive the full $100 million, but something closer to $60 million to $70 million once MASN’s profits were adjusted.
The revenue sharing committee’s decision comes after a hearing in November meant to end a long-simmering legal debate between the two teams. In 2014, MLB’s revenue sharing committee reached a nearly identical decision, awarding the Nationals $298.1 million cumulatively for 2012-16. (The total amount in the decision made public Tuesday is $296.8 million.)
The Orioles appealed that 2014 decision on the grounds that there was a conflict of interest: The Nationals used a law firm, Proskauer Rose, that also represented the league. The Orioles also argued that MLB cannot decide the dispute because it tendered a $25 million loan to the Nationals in 2013, creating a financial stake in the team. A New York State Court sided with the Orioles and sent the dispute back to MLB. The Nationals have since hired new representation.
The Orioles contend that the deal the team signed in 2005 with Major League Baseball, when the league moved the Montreal Expos to Washington, created MASN, which would compensate them in perpetuity for having to share their geographic and TV territory with another team.
The team maintains that the original deal set forth a methodology that first calculated expected profits for MASN, and then determined annual rights fees for the Nationals and Orioles based on the remaining revenues and costs. (The Orioles keep a greater share of the network’s profits, since they own a greater share of the network. The teams receive identical rights fees.) The Orioles argue that the deal included an expected profit margin of around 30 percent, if the network were run effectively.
The Nationals argue for a methodology based more closely on the market value of MLB television rights fees, which have escalated in recent years. The Philadelphia Phillies, for example, signed a 25-year, $2.5 billion deal in 2014.
The Orioles’ appeal also will focus on jurisdictional grounds and whether Major League Baseball can decide the case internally because of the aforementioned loan, as well as public comments made by MLB Commissioner Rob Manfred that the Orioles said are prejudiced against their case. In court filings, an attorney for the Nationals wrote that loan has been paid back with interest.
A New York state judge last month denied a petition from the Nationals in a separate case that sought to block an independent arbitrator from hearing a dispute related to whether MLB could force a MASN dividend payment from last season. The Nationals want the network to release the payment, which is in the $5 million to $10 million range, while MASN contends it’s the network’s right to withhold it and that MLB’s loan to the Nationals disqualifies it from being an unbiased party. A judge ruled that an independent arbitrator could decide the proper jurisdiction for that dispute.
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