Orioles wins the TV rights court case battle against the Nats and MLB

[weams]

BaltSun

http://www.baltimoresun.com/business/bs-bz-masn-court-decision-20151104-story.html

In 2014, MASN filed a complaint with the arbitration association, seeking at least $800 million in damages for breach of contract if Major League Baseball's decision were enforced. The claim was placed on hold while the court case proceeded.

Marks also said the parties "may wish to meet and confer" about whether the Nationals would retain different counsel and return the case to Major League Baseball. But MASN and the Orioles have called repeatedly for an "independent" tribunal.

"As we argued, Major League Baseball's arbitration over the rights fees lacked the fundamental fairness that the Orioles had a right to deserve," said Arnold Weiner, counsel for the Orioles. "We are hopeful that this fairness will be achieved in a future and independent process."

Weiner said he had never heard of another case where a Major League Baseball arbitration ruling "was overturned in this manner."

"Analysts say regional sports networks typically maintain profit margins of at least 20 percent. MASN's current profit margin has not been made public."

[Can_of_corn]

BaltSun

http://www.baltimoresun.com/business/bs-bz-masn-court-decision-20151104-story.html

I hear it isn't good when they can't even find a precedent.

[mcgraw238]

I give the MASN counsel credit for raising the conflict issue early and often as that is the issue that ultimately won the day. It will be interesting to see where this goes from here. We will have to wait a few weeks to see whether the Nats/MLB files for an Appeal of this ruling.

[weams]

I give the MASN counsel credit for raising the conflict issue early and often as that is the issue that ultimately won the day. It will be interesting to see where this goes from here. We will have to wait a few weeks to see whether the Nats/MLB files for an Appeal of this ruling.

I would be shocked to see them not at least file, but this will in no way be fast tracked. If they want more money, they will have to negotiate. In the short term. The attempt to bankrupt MASN and negotiate their own rights deal has failed.

[spiritof66]

Bottom line: The Orioles didn't win much, but the arbitration award they and MASN are fighting is gone for the time being, and the process of determining the rights fees to be paid by MASN has been disrupted. In addition, the decision is extremely unflattering to MLB. It's not at all clear to me what will happen next.

In the decision, Justice Marks considered and rejected a number of the Orioles' arguments. (I think he covered all of them, but I haven't gone back and checked.) That includes the Orioles' two "money" arguments: (1) that the MLB arbitrators' setting of the rights fees to be paid by MASN in a way that did not provide it with the standard 20% operating margin brought the arbitration award outside the scope of the arbitrators' authority under the 2005 agreement and manifestly disregarded the terms of that agreement, and (2) because of the partiality of the MLB arbitrators and the unfairness of the process before the MLB arbitrators, the Court should, upon vacating the the arbitration award, direct that the rights fees be decided by a neutral, non-MLB panel.

Justice Marks vacated the arbitration award (that is, ruled in favor of MASN and the Orioles, and against MLB and the Nats), solely on the ground that there was "evident partiality" in the arbitration based on the simultaneous representation by the Proskauer law firm of (a) the Nats in the arbitration and (b) MLB and the MLB arbitrators (the principal owners of the Mets, Rays and Pirates) in dozens of other cases. This point is discussed, in detail, on pages 20-28 of the decision.

While he wrestled with some technical issues presented by the unusual circumstances, Justice Marks made it clear that his decision to vacate the award on this ground was motivated principally by the fact that MLB had not "taken MASN's objections [to Proskauer's representation of it and the Nats] seriously" and had taken no action at all to allay that problem. The Court listed a number of "reasonable steps to protect the arbitral process" that MLB (and, to a lesser extent, the arbitrators and the Nats) could have taken. The Court added that "[h]ad MLB, the arbitrators, the Nationals and/or Proskauer taken some reasonable step to address [MANS's and the Orioles'] concerns . . . -- or indeed any step at all" (emphasis in the original), it might have rejected the Proskauer/partiality argument. Instead, MASN's and the Orioles' "well-documented concerns fell on entirely deaf ears." That is -- surprise! -- MLB acted like arrogant, imperious jerks. And, although he is only indirectly implicated by name in the decision, calling the shots for MLB in the arbitration was Rob "Mighty" Manfred, now the Commissioner.

That all sounds pretty good. The problem for the Orioles is that all this decision gets them is a do-over of the arbitration before whichever three MLB team owners are now on the Revenue Sharing Definitions Committee. They may render a fairer decision by decreasing the Nats' and Orioles' rights fees so as to increase MASN's profit toward the standard 20% -- but I wouldn't bet on it. They might even punish the Orioles further for their insubordination by making those rights fees even higher than the original arbitrators did. But I would think there will be plenty of pressure to come out exactly the same way, so that the Orioles will have gained nothing. As noted above, Justice Marks rejected the argument that the dispute should be heard by neutral arbitrators because going back before MLB arbitrators would be futile.

My guess is that the Nats will seek to convene another arbitration immediately; they have little reason to appeal the decision. I would guess that the Orioles will appeal if they can (and I think they can under New York law). While I haven't looked at the cases, I would think there is an appealing argument that MLB's conduct of an evidently partial arbitration, if that determination stands up on appeal, makes repeating that process before the same committee (or even a different one) of its puppets is unacceptable. The interesting question to me is whether MLB will appeal first. If it does, it will be doing so largely to defend itself against the judge's accusations. But if MASN and the Orioles appeal, as I would expect them to do, MLB probably will pursue a cross-appeal.

There's an interesting question as to whether, if MLB and/or the Nats try to require that a new arbitration proceed while appeals are pending, they can compel that arbitration over the Orioles' objection. Of course, there's a possibility that the decision will shake things up in a way that leads to a settlement.

An appeal would be heard by the Appellate Division, First Department, in Manhattan. The conventional wisdom, as of a few years ago, was that an appeal in that court typically takes nine to twelve months, but can run longer. There are 14 justices on the court, and appeals are heard by panels of five. One of the justices, Rolando Acosta, was a standout pitcher at Columbia in the late '70s (where he set school records for season and career wins). He was raised in the South Bronx and Manhattan, and is reported to be a fan of one of the Orioles' AL East rivals.

[mcgraw238]

I would be shocked to see them not at least file, but this will in no way be fast tracked. If they want more money, they will have to negotiate. In the short term. The attempt to bankrupt MASN and negotiate their own rights deal has failed.

I suspect they will appeal as well...And no, it won't be on fast track. However, today's ruling does not address the substantive aspects of the issue and Judge Marks clearly rejected the 20% Operating Margin as a basis for setting aside the award, which is at the heart of the Bortz methodology. Your correct that the Nats will have to negotiate if they want an immediate increase...or perhaps they go through the process once again. I don't know the answer here, but this needs to get resolved. It's a good day for the O's considering what they were up against, but I suspect the they will have to keep fighting.

[mcgraw238]

Great summary Spiritof66. I read things like you do, the O's basically won the right to get back in line and get kicked in the nuts again. It's better than a loss, but the O's still have some work to do. You did the analysis, but I was thinking the O's might be the party to pursue an Appeal as well. I agree the Nats will want to set up a fresh RSDC process ASAP. This does buy some time for fresh negotiations on a resolution, but I suspect that parties are far apart on anything agreeable for both parties. Nevertheless, its an impressive "win" for the O's.

[mdbdotcom]

It the matter is sent bank to the RSDC, no matter who is on the panel they will have just been a party to a suit they lost to the Orioles. Seems to me that would give the Orioles grounds to sue to have that decision thrown out as well.

Unless the Nats are willing to wait several years longer to get their money, they might want to try a different path.

[wildcard]

Do do-a-do do do.

And you don't mess around with Pete.

[weams]

Do do-a-do do do.

And you don't mess around with Pete.

EVERYONE said the Orioles would lose this round. EVERYONE.

[TonySoprano]

It the matter is sent bank to the RSDC, no matter who is on the panel they will have just been a party to a suit they lost to the Orioles. Seems to me that would give the Orioles grounds to sue to have that decision thrown out as well.

Unless the Nats are willing to wait several years longer to get their money, they might want to try a different path.

What path would that be? Under the contract they were within their rights to pursue this action. Why not have Angelos pursue that "different path" instead of kicking this can down the road as long as possible?

[weams]

What path would that be? Under the contract they were within their rights to pursue this action. Why not have Angelos pursue that "different path" instead of kicking this can down the road as long as possible?

From what I had heard it was the Nationals that balked at an interim settlement after MLB gave them the loan. But that might just be trash talk as well. You just never know. It is apparent that the MASN deal never worked out the way the Angelos family envisioned it. And never spent any of the profits on entertainment for you and me. Well, maybe keeping the prices reasonable. There is that. I have had a very fun time in Camden Yards for 7 dollars and $3.40 in light rail.

[mdbdotcom]

What path would that be? Under the contract they were within their rights to pursue this action. Why not have Angelos pursue that "different path" instead of kicking this can down the road as long as possible?

That path would be a neutral party, as the judge suggested. As long as he has everything to lose and nothing to gain, it's in Angelos's interests to kick the can down the road as long as possible.

[weams]

That path would be a neutral party, as the judge suggested. As long as he has everything to lose and nothing to gain, it's in Angelos's interests to kick the can down the road as long as possible.

And hope to get a fair assessment of what was intended originally.

[spiritof66]

Justice Lawrence K. Marks vacated the decision and suggested that the parties settle the matter through a "neutral dispute resolution process."

The above, from the Sun on-line article, is very misleading. Justice Marks suggested, in footnote 21 on page 29, only that the parties might use a neutral dispute resolution if the Nats insist on keeping Proskauer as their counsel while Prosjauer is representing MLB in other matters. Not a real-world possibility.