Orioles, Nationals in court over TV revenue dispute

NEW YORK -- A New York state judge put off a decision in the television revenue dispute between the Baltimore Orioles and the Washington Nationals after listening to four hours of arguments.

Supreme Court Justice Lawrence K. Marks said Monday he will issue a written opinion. Marks put a preliminary injunction in place last August, preventing the Nationals from breaking their deal with the Mid-Atlantic Sports Network, which is controlled by the Orioles.

Baltimore wants Marks to overturn an arbitration decision by a panel of three baseball executives, who said last June the network should pay the Nationals about $298 million for their rights from 2012-16, starting at approximately $53 million for the first year and rising to nearly $67 million for 2016. Washington is asking Marks to confirm the decision.

The Orioles contend the decision was improper because the law firm Proskauer Rose represented MLB and the teams of all three arbitrators, and because MLB gave the Nationals a $25 million loan in August 2013 in anticipation it would be repaid from higher broadcast revenue.

"We believed it's actually poisoned," MASN lawyer Thomas J. Hall said. "The harm is the taint, the suspicions, the lack of an unbiased, impartial panel."

Nationals lawyer Stephen R. Neuwirth said under the deal forming MASN, Baltimore agreed to the procedure and had no right to an independent, pristine group of arbitrators who have no relationship to the parties."

"This was supposed to be an inside baseball arbitration. The Orioles knew that," he said.

With Nationals owner Ted Lerner sitting in the second row of spectator seats, Neuwirth said the lack of increased broadcast revenue caused the team's owners to "dig into reserves" and renegotiate loans.

"They don't have the cash flow," Neuwirth said.

MASN was established in March 2005 after the Montreal Expos relocated to Washington and became the Nationals, moving into what had been Baltimore's exclusive broadcast territory since 1972. The Orioles were given a supermajority partnership interest in MASN, starting at 90 percent, and Washington made a $75 million payment to the network for an initial 10 percent stake.

The agreement called for the Nationals' equity to increase 1 percent annually, starting after the 2009 season, with a cap of 33 percent. The network's rights payments to each team were set at $20 million apiece in 2005 and 2006, rising to $25 million in 2007, with $1 million annual increases through 2011.

After that, the network was to pay fair market value. The settlement agreement requires disputes to be heard by MLB's Revenue Sharing Definitions Committee, and when the parties couldn't agree on what the Nats' rights fees should be for 2012-16, they appeared in April 2012 before Pittsburgh Pirates president Frank Coonelly, Tampa Bay Rays principal owner Stuart Sternberg and New York Mets chief operating officer Jeff Wilpon.

Washington claimed its rights fee for 2012 should be $109 million and MASN said it should be $34 million.

Marks noted the Nationals "asked for more than Yankees and Dodgers."

"They were highballing?" he said to Neuwirth.

Then-Commissioner Bud Selig asked the committee to hold off on its decision in hopes of a resolution or a possible sale to Comcast, but with none in sight he finally allowed the committee to rule last June 30.

Carter G. Phillips, one of the Orioles' lawyers, said Marks should either appoint a new arbitrator or tell the parties to pick someone from the American Arbitration Association to rehear the dispute.

"The one thing you cannot do is send it back to the same group," Phillips said.

MLB lawyer John J. Buckley Jr. asked Marks to confirm the decision and predicted a fight between the teams when it becomes time to determine the Nationals' right fees for 2017-21.