Latest MASN TV rights court ruling: What does it mean for the Orioles, Nationals?

Publish date: 2024-05-01

The New York State Court of Appeals ruled Tuesday to uphold the lower court’s decision that the arbitration committee set up by Major League Baseball, and appointed by commissioner Rob Manfred, was impartial in its decision to award the Washington Nationals additional millions of dollars in television rights fees from the Mid-Atlantic Sports Network, which is majority-owned by the Baltimore Orioles.

It’s a fairly significant blow to the Orioles’ protracted legal dispute with the Nationals, which has been ongoing since 2011, when the sides first could not agree on what MASN should pay the Nationals in increasing television rights fees for 2012 through 2016.

Based on the contract originally ratified when the Nationals moved from Montreal and into the Orioles’ designated territory in 2005, MASN would pay both the Orioles and Nationals fair market value for TV rights, an escalating amount that would be agreed to by both sides. The sides, however, were nearly $400 million apart for the first five-year period. Therefore, as the contract required, the sides presented their cases to the MLB-appointed Revenue Sharing Definitions Committee, consisting of members representing several MLB club ownerships. In 2014, the RSDC ruled that MASN owed the Nationals an additional $100 million.

That decision was vacated by New York state courts, which agreed with the Orioles that the law firm representing the Nationals had a conflict of interest because it also had represented Major League Baseball and teams that were associated with the three members of the committee.

The Nationals hired a new law firm for the arbitration hearing and Manfred replaced the previous committee members with three new ownership representatives. That group came to the same conclusion: That MASN owed roughly $100 million more than it had already paid the Nationals for the 2012-16 period.

The essence of this current argument is born from that decision. The Orioles continue to want an independent arbiter because they believe the RSDC and Manfred were partial to the Nationals and that the commissioner has made public comments to that effect in the past.

In a unanimous, 6-0 decision, New York’s highest court Tuesday rejected any partiality on Manfred’s and the committee’s part and refused to alter the original agreement, meaning the committee will remain as the arbiter, as spelled out initially.

Here’s an attempt to answer other questions involving the decision and the path going forward.

What’s the next step?

MASN and the Orioles have one legal recourse remaining for the 2012-16 disputed payment period, and it’s the mother of all appeals: The United States Supreme Court.

The statistics are not in MASN’s favor. Only about 2 percent of all appeals sent to the Supreme Court are heard. So, it’s a long shot that will cost more time and money. From afar, it may not seem worth it, but MASN has taken it this far and may decide to exhaust all options because the network/Orioles are adamant that an independent arbiter should make these financial decisions.

So, the next step is whether MASN and the Orioles decide to appeal to SCOTUS. That has not yet been determined.

Even if the Orioles drop this particular suit, there are two more allocations of payment, for the periods of 2017-2021 and 2022-26, that need to be decided. Those, for now, would be presented before MLB’s committee if an initial agreement isn’t reached. There’s also a question as to whether — or how much — the Orioles must allocate in interest on past payments that weren’t made.

So, this dispute doesn’t appear over. In fact, in Tuesday’s ruling, associate Judge Madeline Singas wrote in the court’s opinion, “While it is unfortunate that our decision may send this protracted litigation into extra innings, that result is necessitated by the settlement agreement’s terms.”

When is the best guess this battle ends?

There is no real answer at this time. Orioles CEO John Angelos said in February the organization wants to get away from being so litigious. And it’s certainly not good for franchise relations when you are suing another club and the sport’s governing body. That said, the Orioles feel they will get a fair shake only when a non-baseball entity acts as the independent arbiter.

Will the Nationals get their MASN money soon?

If the Orioles don’t continue to appeal, then yes. But, because the appeals court vacated the specific award Tuesday, exactly how much will be sent to the Nationals is also in question. MASN has $105 million in escrow that was earmarked to change hands when this particular matter is resolved. But the network hopes the final amount owed for the 2012-16 period will be significantly less than the amount set aside in escrow. Again, that money owed is considered separate from the next two payments, which have not been negotiated while the first payment has been in dispute. Also, remember, MASN pays the Nationals annual TV rights, just not as much as the Nationals — or MLB’s committee — believe they should receive.

How would additional large payments to the Nationals affect the Orioles’ business situation?

It’s uncertain, but it surely won’t help. The money put in escrow, at least a portion of it, is likely going away, but the Orioles don’t know yet how much it will cost to resolve future payments. The team already operates as if cash is short with the majors’ second-lowest payroll, no guaranteed, multi-year deals awarded to recent free agents and no extensions given to homegrown players on this roster.

In an amicus brief filed in the New York appellate court in December, Baltimore City Mayor Brandon Scott wrote that the court’s decision could have a “direct impact on the long-term viability of the Baltimore Orioles to remain in Baltimore City.”

Perhaps that is true. However, Angelos has stated repeatedly that the franchise is not leaving the city. It is fair to wonder, however, how profitable MASN is considering its own lack of programming — besides Orioles and Nationals games — and the uncertainty surrounding regional sports networks throughout the country as more and more consumers turn to streaming services. Diamond Sports Group, the umbrella that runs the largest RSN in the United States, Bally Sports, filed for bankruptcy in March.

MASN clearly has been focused on keeping its expenses down recently. It was the last network to send its on-air talent on the road after pandemic restrictions eased and it aired the fewest number of spring training games this year of any franchise (three each for Orioles and Nationals that were produced by MASN from Florida).

Will this ruling make it easier for the Nationals to be sold?

Doubtful. More money will be coming in — eventually — and so prospective owners should have a fuller picture of the Nationals’ economic landscape. But the MASN deal isn’t going away if the Nationals have new owners.

It was an agreement signed in perpetuity and the Orioles would be foolish to give up their end. The “reparative compensation” deal was afforded to Peter Angelos by MLB to allow the Nationals to enter his team’s territory without potential legal action, because it was inevitable that a team in Washington would erode the Orioles’ fan base south of Baltimore. In retrospect, the RSN deal has become a negatively impactful one for the Nationals. But it is ironclad. Sure, new owners could attempt to buy their way out, but good luck negotiating that one.

What are the sides saying?

Not much. The Orioles, Nationals and Major League Baseball all declined to comment Tuesday. MASN is expected to issue a statement later Tuesday.

(Photo: Joy R. Absalon)

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