A fight between the Orioles and Nationals over MASN’s television rights fees has been brewing for years. MASN (Mid-Atlantic Sports Network) was created as a form of financial compensation to the Orioles when MLB moved the Expos from Montreal to Washington, D.C. to become the Nationals. MASN is majority owned by the Orioles but has exclusive rights to broadcast Orioles and Nationals games. The agreement establishing MASN set a floor for the Nationals’ TV rights fees and a formula for how those rights fees would increase on an annual basis. After five years, the Nationals had the right to petition to reset the formula, and if the parties couldn’t agree, the matter would be taken to arbitration before a panel established by MLB. For more than two years, the teams have been fighting over this new formula. We learned and reported last week that the dispute did go to arbitration and that the MLB-established panel issued a decision in June in favor of the Nationals. The Orioles then filed a lawsuit in New York state court to overturn the arbitration decision and in an initial victory, convinced the court to stay enforcement of the decision until the merits of its claims can be fully explored. A stay order means that the status quo that existed prior to the arbitration decision — with MASN paying the Nationals only $33 million per year in rights fees — will continue for the time being. The court also rejected MLB’s request to keep all documents in the case under seal. MASN’s petition to undo the arbitration decision charges the arbitration panel with a conflict of interest, because it is comprised of representatives of three other MLB teams who would benefit financially if the Nationals receive a larger rights fee, via the league’s revenue sharing system. MASN and the Orioles also claim that the arbitration panel ignored the formula used by MLB for years to determine how to divide a team-owned RSN’s revenues into rights fees (which are contributed to the revenue-sharing system) and profits (which are not). By ignoring that formula, the Orioles, contend, the arbitration decision will leave MASN with very little in the way of profits — in direct contravention to the agreement that created MASN in the first place. You can read MASN’s petition to vacate the arbitration decision here. The court has scheduled a hearing for later this month on whether to permanently enjoin the arbitration decision.
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