On February 14, 2022 the Orioles appealed the Nationals win in the MASN case over the disputed fees for the Nats TV rights, and on March 14, 2023 the case was heard by the NY Court of Appeals. Thirteen months later!!! “Justice delayed is justice denied” clearly does not apply in New York state.
Here is the video of the hearing, it was a quick 30 minutes. Surprisingly watchable, the justices often interrupting the lawyers representing each team, asking pointed questions.
The hearing seemed to go well for the Nats.
Talk Nats readers are painfully familiar with the MASN case. From the initial contract that was included in the Nationals Park ballpark deal to give the Os a cut of the Nats TV broadcast rights in perpetuity; to the 2012 MLB hearing to reset the rights fees that left both sides fuming; to the Orioles initial win in their lawsuit against the Nationals based on a conflict of interest with the Nats representation; the second MLB hearing that produced the same result; culminating in the Orioles appeal last week to the highest court in New York State in an effort to delay if not avoid paying the Nationals fair television rights fees.
The latest arguments have been available on the NY Court of Appeals website for over a year, what was new last week was the line of questioning from the judges, providing a window into which way they may go with their decsion.
The Orioles Plead Their Case
The Orioles asked the court to throw out the MLB arbitration panel decision and to force the sides into an outside arbitration panel. Going against the terms of the original contract based on claims of bias by MLB against the Os.
Questions for the Os included:
- Do the NY court even have the authority to force the teams to change the forum for arbitration? Noting that this would be unusual.
- What grounds would there be for a change since the only noted conflict of interest (the Nats original law firm Proskauer) had been removed for the second hearing?
- Do the Os expect the court to rule that the case must go to an outside arbitor or should the case be kicked back down to a lower court with the note that the lower court has the authority to force the sides to outside arbitration?
- The prior commissioner appeared to be partial to the Os, did their issue with MLB bias only appear when the new commissioner had a different bias?
- The original case that forced the replacement of Proskauer was due to the appearance of a conflict of interest, not that the conflict affected the monetary decision of the original panel.
- Did the original contract call for the MLB Revenue Sharing Definitions Committee (RSDC) to determine valuation, not arbitrate the dispute and provide a binding decision?
That last item came up again with the Nats. Kind of a left field question. Both sides clearly felt like the RSDC was an arbitration panel and while both agreed that the contract could be interpreted in that manner neither seemed eager to pursue that direction.
The Nationals Strike Back
The Nationals requested that the judges uphold the decision from the original court and the lower appeals court, enforcing the decision of the RSDC on rights fees.
The first questions for the Nats weren’t really questions, just agreements with their arguments, it started out nicely:
- The MLB RSDC was created explicitly for these types of disputes.
- The arbitration forum should not be thrown out based on one representative having a conflict of interest.
- Did the comments from MLB Commissioner Manfred show a bias against the Os?
- Do the terms of the contract not apply if the arbitration panel is found to be unfair?
- If the panel does what the Nats want and enforces the ruling from the original case, doesn’t that just open a secondary case to determine the value of the “offsets” and “profit-sharing”?
Here again that last question is the big one. The judges were asking the Nats whether they wanted the court to participate in the determination of the final payout amount. Great question because the Os indicated repeatedly that they will sue again to resist making payments, this time based on the actual payment owed after the higher fees get offset against lower profit sharing once the fees have been retroactively increased. It would seem to make sense that the Nats would agree to this offer, delay the final decision but determine the payoff amount. My feeling on why the Nats emphatically declined the offer, accepting the threat of a second lawsuit from the Os, was because they want the injunction removed that bars them from breaking away from MASN. The original judge in this case placed an injunction against the Nats and MLB from taking any actions until after the case is settled. My guess is that the Nats value breaking away from MASN higher than the timely collection of past due fees.
Ad Hominem Attack
The Os rep repeatedly claimed that if the court granted their request to force a move to an outside arbitration panel that it would lead to a rapid end to the case. That the Os would bring no further lawsuits or objections. Strangely that didn’t seem to persuade anyone.
After the case this quote from the Os rep to the Washington Post really showed the Os true colors: “Once you get a neutral arbiter, we’re done — unless MLB tried to bribe one of the arbitrators. Though it’s more likely the Nationals would do it.” In other words, trust me, give us what we want and it will work out best for you, oh and by the way we consider you to be criminal low lifes.
Where do we go from here?
It could be weeks before we get a decision, based on the pace of the NY courts so far it could be months. One fun twist is that right now there are only six judges on the NY Court of Appeals, meaning the case could end up in a tie. In NY State a tie means they add a seventh judge and try the whole appeal over again. Months if not years of delay.
A Tie Means Two Losers
Then, even if the Nationals do prevail, the bitter bottom line was that both sides agreed that this was just the first lawsuit, the dispute will continue. The Orioles will owe $100 million in rights fees for 2012-2016 minus an undetermined amount of profit sharing to be reset. The only light at the end of the tunnel being that MLB will require a resolution before allowing the Angelos family to either sell or move the team once Peter Angelos has passed.
I stand with Ed Cohen, tear up that contract
