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MASN dispute update

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2 hours ago, weams said:

 

That's not an additional $296.8M

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MASN paid the Nationals for 2012-16 what the Orioles proposed: $197.5 million. 

That leaves $99.3M still to be paid for 2012-16.   One wonders how much was paid out in legal fees on each side to get to this point.   

What is not known is how much has been paid and will be owed for 2017-21.   2021. hmmm that's also the year the OPACY lease expires.

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1 hour ago, hoosiers said:

It all feels to unfair - MLB bullies its way to a win with the Nats over the Os, are show to be fundamentally unfair, though the entire unfair process provided a roadmap to victory for subsequent re-dos. 

Still, the Os have themselves to blame - not specifically calling out the Bortz formula in the contract, not calling out a minimum profit margin for MASN in the contract, not presenting a reasonable argument for the value of the rights fees in the original hearing - presenting instead a bs low number that the Nats deserved (just like the Nats asked for a bs number.  If the Os had offered something credible, but low in that hearing, they might have won.  And that the original MASN contract called for equal rights fees for the Os and Nats is a big part of the issues faced today.  Remember, in all of this "fairness" for the Os that PA/MASN sought, MASN owners were guaranteed in the ballpark of $150M-$200M in profits in the early years of MASN - and still the Os/MASN pressed hard for equal footing - despite the massive difference in market capacity between the two franchises.  It all seems so strange the mistakes in the MASN contract given PA's acumen as an attorney.

This is a personal opinion so take it as such. PA was very good in going after people. Not as good at protecting his interests. Interesting to see how the transfer of Ownership was done, if any, and how that relates to further proceedings.

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1 hour ago, weams said:

On another note, the Orioles have retained the right to appeal this ruling. 

Yeah until this hits the Supreme court I don't see the Nationals getting anything. 

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3 minutes ago, atomic said:

Yeah until this hits the Supreme court I don't see the Nationals getting anything. 

Zero chance that the US Supreme Court will hear this case.   Slight chance that MASN/the Orioles would ask the Supreme Court to hear the case once the NY appeals are over, just because they're ridiculously pugnacious.    But the Supreme Court would never take the case.

For those who would like to read Justice Cohen's 27-page opinion, here it is: https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=3qoObmdzSa_PLUS_vVExf1Q1mjg==

The most notable part of the opinion is the introduction:
 

Quote

 

In many cases, arbitration is a quick and efficient way to resolve disputes with little or no court involvement. Stolt-Nielsen S.A. v. Animal Feeds International Corp., 559 U.S. 662 (2010). This is not one of those cases.

This is a dispute between the Washington Nationals Baseball Club ("the Nationals") and the Baltimore Orioles Baseball Club ("the Orioles") and related entities regarding the division of television revenues and profits through their jointly owned television network MASN. As required by their contract, the teams submitted the dispute for resolution by Major League Baseball’s Revenue Sharing Definitions Committee ("RSDC") in January 2012.1

The RSDC issued its decision two years later. It was promptly challenged in court by the Orioles. After three years of litigation, the arbitration award was vacated on the ground that the law firm that represented the Nationals in the arbitration concurrently represented Major League Baseball (MLB) and the three arbitrators’ teams in other matters, resulting in "evident partiality." The Orioles’ request to have the second arbitration shifted to a non-MLB tribunal was denied. Then came another year of arbitration with a different RSDC panel, which rendered an award that was nearly identical in dollar terms to the first one five years earlier.

And now, more than seven years after the arbitration process began, the parties are back in litigation. The Nationals (again) ask the Court to confirm the RDSC arbitration award. In response, the Orioles (again) ask the Court to vacate the award on the ground of MLB and RSDC bias and remand for a third arbitration before a non-MLB arbitration panel.  With a nod to Yogi Berra, it’s like déjà vu all over again.

For the reasons that follow, the Court grants the Nationals’ motion, confirms the RSDC’s award, and terminates this proceeding.

 

The court rejected various arguments that the proceeding was biased, finding them to be a rehash of arguments that Justice Marks had rejected in the original court decision.   The court also found that "[t]he 48-page [new RSDC] decision is extraordinarily detailed and thorough."

As to the issue that has been referred to the Special Referee Clerk, I was right that this just relates to interest due on the award.   The interest only begins to run from the date the arbitration award was made (April 15, 2019), so it isn't a huge sum, although New York statutory interest runs at the high rate of 9%.   The interest accrued right now is probably in the ballpark of $3 mm.   Interest will continue to accrue during the time elapsed as MASN/the Orioles appeal the ruling.   

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13 minutes ago, Frobby said:

Zero chance that the US Supreme Court will hear this case.   Slight chance that MASN/the Orioles would ask the Supreme Court to hear the case once the NY appeals are over, just because they're ridiculously pugnacious.    But the Supreme Court would never take the case.

 For those who would like to read Justice Cohen's 27-page opinion, here it is: https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=3qoObmdzSa_PLUS_vVExf1Q1mjg==

The most notable part of the opinion is the introduction:
 

The court rejected various arguments that the proceeding was biased, finding them to be a rehash of arguments that Justice Marks had rejected in the original court decision.   The court also found that "[t]he 48-page [new RSDC] decision is extraordinarily detailed and thorough."

As to the issue that has been referred to the Special Referee Clerk, I was right that this just relates to interest due on the award.   The interest only begins to run from the date the arbitration award was made (April 15, 2019), so it isn't a huge sum, although New York statutory interest runs at the high rate of 9%.   The interest accrued right now is probably in the ballpark of $3 mm.   Interest will continue to accrue during the time elapsed as MASN/the Orioles appeal the ruling.   

Yeah that is why I didn't say the Supreme Court hears the case.  I think they will appeal to it.  Can't they appeal on other reasons as well? Like go back to the lower court with another reason to appeal? 

I own a lot of Chevron stock and they were involved in a big lawsuit after buying Texaco.  The suit took 25 years to finalize with award being thrown out at the end.  

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This is a bare knuckle brawl that I don't see us winning or settled fairly for us.

Did/does anyone really see this going in our favor?  Come on.  Once the talk of the Expos being permitted to move started  and the negotiations began to put them in DC, the Expos/Nats owners would have agreed to ANYTHING to get it done.  Shaking hands, signing contracts, relinquishing their first born sons...  All the while with one hand behind their back with their fingers crossed KNOWING they were going to get into this blood-sport to wrestle market share and tv rights from the Orioles.  It was part of the long-range game plan.  Had to have been.

What's going to be interesting is to hear what Frobby has to say about the market share aspect.  With where we are as a rebuilding franchise, slumping attendance, and having an owner who is ailing, we are ripe to be taken advantage of, imo.

The Nats argument:  We are the regional leader in attendance and fan loyalty, we deserve a greater percentage of the market and majority control of any TV deals in the region.

The Orioles argument:  Nuh uh.  (Judge asks why...)  umm, because.  

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5 minutes ago, atomic said:

Yeah that is why I didn't say the Supreme Court hears the case.  I think they will appeal to it.  Can't they appeal on other reasons as well? Like go back to the lower court with another reason to appeal? 

I own a lot of Chevron stock and they were involved in a big lawsuit after buying Texaco.  The suit took 25 years to finalize with award being thrown out at the end.  

I’m aware of the Chevron case; in fact, I was involved in it indirectly for a period of time.   

No, they can’t do anything further in the lower court.    Their best shot is going to be in the New York Court of Appeal.   Remember, the intermediate appellate court was split 3-2 on the question of whether the second arbitration should have gone to a non-RSDC panel.    The NY Court of Appeal declined to hear that issue for procedural reasons, but will be able to take up that issue when the matter comes before them this time.   Since it was a close call on that issue in the Appellate Division, it’s conceivable that the Court of Appeal could go the other way.    But I doubt it, and I really doubt any of the other grounds are going to work.    

One thing the O’s and MASN have to think about now is the 9% interest that’s accruing.    Let’s say they drag this out for another two years — that would mean owing an extra $20 mm or so in interest, at a time when market interest rates are running way lower than 9%.    Up to the second arbitration award, no interest was accruing, so all the delay was working in their favor.    Now it’s not, and they’ll need to think hard about whether the cost of the appeal (in terms of accruing interest) is worth the somewhat unlikely chance of overturning the award.

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36 minutes ago, Frobby said:

I’m aware of the Chevron case; in fact, I was involved in it indirectly for a period of time.   

No, they can’t do anything further in the lower court.    Their best shot is going to be in the New York Court of Appeal.   Remember, the intermediate appellate court was split 3-2 on the question of whether the second arbitration should have gone to a non-RSDC panel.    The NY Court of Appeal declined to hear that issue for procedural reasons, but will be able to take up that issue when the matter comes before them this time.   Since it was a close call on that issue in the Appellate Division, it’s conceivable that the Court of Appeal could go the other way.    But I doubt it, and I really doubt any of the other grounds are going to work.    

One thing the O’s and MASN have to think about now is the 9% interest that’s accruing.    Let’s say they drag this out for another two years — that would mean owing an extra $20 mm or so in interest, at a time when market interest rates are running way lower than 9%.    Up to the second arbitration award, no interest was accruing, so all the delay was working in their favor.    Now it’s not, and they’ll need to think hard about whether the cost of the appeal (in terms of accruing interest) is worth the somewhat unlikely chance of overturning the award.

Maybe they could settle the suit with the Nationals now.  

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3 hours ago, atomic said:

Maybe they could settle the suit with the Nationals now.  

That would probably be the best solution for a number of reasons. We'll see what they do.

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On 8/23/2019 at 9:54 AM, atomic said:

Maybe they could settle the suit with the Nationals now.  

Why would the Nationals be inclined to do so?  I don’t know how bitter the Lerners are, but if they want to stick it to Angelos they’ve got the means to do so by simply pushing for higher broadcast fees to both teams in order to crush MASN.

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47 minutes ago, Beetlejuice said:

Why would the Nationals be inclined to do so?  I don’t know how bitter the Lerners are, but if they want to stick it to Angelos they’ve got the means to do so by simply pushing for higher broadcast fees to both teams in order to crush MASN.

I think if this award survives all appeals, future debates will be limited to nibbling at the edges.    The award sets the methodology for determining rights fees and any future adjustments in that methodology will be minor.    

To me the big misconception is that “the Nats won.”    No they didn’t.   They had an arbitration, the panel made a compromise award, and the Nats decided to accept it while the Orioles didn’t.    I doubt the Nats liked the initial decision any more than the Orioles did.   But they made the strategic decision to live with it and align itself with MLB.    

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