Nationals Ask Court to Modify Injunction in MASN Dispute

The legal sparring between the Washington Nationals and Mid-Atlantic Sports Network continued last week, with the Nationals asking the presiding judge in the case to modify the preliminary injunction issued last August. As background, the dispute centers on an arbitration decision issued in 2014 by MLB’s Revenue Sharing Definitions Committee (RSDC), which determined that MASN owes the Nationals roughly $60 million per year in broadcast rights fees (for more on the dispute, click here, here, here, and here).

MASN and the Baltimore Orioles (who own a majority share of the network) appealed this outcome to New York state court, alleging that the arbitration proceedings were biased for a variety of reasons. In August, Judge Lawrence Marks issued a preliminary injunction, blocking MLB from enforcing the arbitration decision until the suit was resolved. This was a modest victory for MASN, allowing the team to continue to pay the Nationals a lower broadcast rights fee pending a final hearing in the lawsuit (a difference of approximately $21 million per year).

Part of the reason that the judge decided to issue the injunction was his belief that the dispute could be resolved “expeditiously.” Originally, the court scheduled a final hearing in the case for December 2014. That date was eventually pushed back to mid-March, and then again recently to May 18, 2015.

The Nationals now contend that this delay has imposed a real hardship on the team, depriving it of the full broadcast rights fee determined by the RSDC for a much longer period of time than the court had originally envisioned. As a result, on Wednesday the team asked the court to order MASN to pay the Nationals the first quarterly installment of the full RSDC-approved broadcast rights fee (an installment of around $15 million, rather than the roughly $10 million MASN intends to pay). Washington justified its request in part by contending that because it is “not receiving fair market value for [its] broadcast rights,” it is being “placed at a competitive disadvantage compared to other teams, and [is] hamstrung in [its] ability to invest in efforts to improve the team and the stadium.”

MASN responded to the Nationals’ request later that same day. The network offered to increase the size of the bond it had secured to ensure that the Nationals would receive the additional broadcast revenues should the court eventually rule in Washington’s favor. But MASN argued that it should continue to be allowed to pay a reduced sum to the Nationals pending a final resolution of the lawsuit. The network also contested the claim that Washington was unable to fully invest in its team’s roster due to the injunction, citing the Nationals’ recent $210 million contract with Max Scherzer as proof that the lawsuit was not hampering the team financially.

Considering that the court was willing to issue a preliminary injunction last August, the odds that the judge will set that ruling aside now to allow the Nationals to collect the full broadcast rights fee authorized by the RSDC are relatively low. However, the court will likely take MASN up on its offer to provide an additional bond to ensure that the extra funds will be available for Washington should the Nationals prevail in the case. In any event, this latest legal maneuvering indicates that the parties are not any closer to a settlement in the case, despite comments by Rob Manfred last week suggesting that the litigation could be resolved in relatively short order.





Nathaniel Grow is an Associate Professor of Business Law and Ethics and the Yormark Family Director of the Sports Industry Workshop at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.

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Positively Half St.
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Positively Half St.

Dear Mr. Angelos-

Those of us who are Nats fans at one time paid attention to the Orioles and would even go to games at your lovely park. You feared that the arrival of the Nats would deprive you of fans and income, but that didn’t have to be so. You made it so with your underhanded moves to cripple or slow down the Nats’ progress. I could happily have kept the O’s as my AL team, but now I despise them, and Northern Virginia wants nothing to do with you.

It’s a pity you are so skilled as a lawyer at draining every possible cent from any situation. You may find a way to win this case. You will never win us back.

jdbolick
Member

The presence of the Nationals negatively affecting the Orioles’ revenue absolutely did “have to be so” given their proximity. It’s fair to criticize how Baltimore has handled the situation and how hard-line they have been with Washington, but it’s an inescapable truth that the existence of another major league baseball team cut very substantially into the Orioles’ attendance, viewership, and revenue.

From 1995 through 2004, the Baltimore Orioles averaged 3,184,589 in attendance per season. From 2005 through 2014, the Baltimore Orioles averaged 2,121,276 in attendance per season. Keep in mind that this loss of a third of the team’s attendance occurred during a period when overall major league baseball attendance has dramatically risen. And to forestall the inevitable rebuttal that the attendance dropped due to the quality of the product on the field, the Orioles have rather depressingly had more winning seasons in the most recent decade (3) than in the previous decade (2). It’s true that the overall attendance had dropped from its regular 3+ million figure before the Nationals came into existence, but MLB allowing another team into one of the Orioles’ most affluent areas had an undeniably drastic effect.

Will
Guest
Will

No, that attendance drop occurred at a time when the Orioles were on a Ripken-esque streak of 14 consecutive losing seasons.

It’s not complicated. The Orioles attendance suffered because they were fielding an awful product. In only three seasons since they turned things around and strung together 3 winning seasons, their attendance has increased by 700,000. If the Orioles continue to win, they will continue to see attendance increase. It’s as simple as that.

Jamesonian
Guest
Jamesonian

Has there been any evidence presented which proved that the Orioles had the rights to the DC market in the first place? Just because a club bought advertising and marketed itself in a non-MLB region does not necessarily mean that it had exclusive rights to that region. I know that the O’s claim to have had such rights but I’ve never seen any documentation from MLB that verified their claim. My understanding of the original agreement is that MASN was created as a way to placate Baltimore ownership to avoid a long court case over this very point. MLB would claim that Baltimre had no exclusive rights to the DC region while Baltimore would claim that they did.

Can you or anyone point me to such documentation, presumably the MLB Constitution from, say, 2004?