MASN loses in NY Court of Appeals

[spleen1015]

Just now, Ripken said:

"Sorry O's fans.  I wanted to extend Adley but I had to give all my money to the Nats."

-- John Angelos probably

If the O's/MASN were smart, there would already be money set aside for this. I think there is, at least this 2012-2016 period anyway.

If you're the partners in the Orioles/MASN ownership, you make sure the money is set aside and not put in your pocket. You screw the O's if you don't.

[backwardsk]

2 minutes ago, Sports Guy said:

I haven’t followed it that closely to be honest. 

What I have gathered from it is the Nats now don’t think it’s fair and TV rights have gone crazy, so they think they are entitled to more.

But that’s the Os fault. This was an agreement. That’s how these things work.  Why should the Os acquiesce to this?

That’s not entirely correct. The agreement back in 2005 was that the Nationals would get a certain percentage of the rights fees (maybe there is a more precise term) and each year they would get an additional 1% until 2012.  Then in 2012 the two sides would negotiate the rights fees for 2012-2016.  Then repeat that process every five years.  That was the agreement for the Nats to move in.

In 2012, they could not agree on a fee. The Nationals said that they were owed, for illustrative purposes, $400.  The Orioles said, “No way. Have you seen how shitty this MASN product is? You are owed $100.”  As the 2005 agreement stated, they were to go before an arbitration panel created by MLB.  That panel said, “Nationals, that $400 number is way too high, you’re not getting that.  But, Orioles, $100 is way too low.  The rights fees awarded to the Nats for 2012-2016 is $200.”

The Nationals say that’s bullshit.  If we had our own network we would bring in so much more.  MLB said, sorry, rules are rules. You get $200.

The Orioles (Angelos) says, No! That is not fair! The arbitration panel is mean! I will not pay $200.  I will pay $100 because I say so. 
 

MLB said, well alright. But you have to put that remaining $100 in escrow when we figure this out. 
 

The Nationals said, wait, we don’t even get that $200? We only get $100 until it’s figured out.  
 

MLB said, yes, that’s right. Even if it is a decade from now. (Which is what today’s decision says).

Oh, and there will be no negotiating of the 2017-2022 rights fees until this is settled.

[Aglets]

It just seems unavoidable that the O's are doomed to be bargain basement hunting, penny pinching scavengers until this thing gets resolved.  (Or Angelos sells....hah).

And the O's will delay for as many years as possible to keep it from ever resolving.   Sigh.

[Too Tall]

Would be interested in what the lawyers on here think happens next re this drama? All I know is MASN sure isn't The Love Boat. 

[Sports Guy]

7 minutes ago, backwardsk said:

That’s not entirely correct. The agreement back in 2005 was that the Nationals would get a certain percentage of the rights fees (maybe there is a more precise term) and each year they would get an additional 1% until 2012.  Then in 2012 the two sides would negotiate the rights fees for 2012-2016.  Then repeat that process every five years.  That was the agreement for the Nats to move in.

In 2012, they could not agree on a fee. The Nationals said that they were owed, for illustrative purposes, $400.  The Orioles said, “No way. Have you seen how shitty this MASN product is? You are owed $100.”  As the 2005 agreement stated, they were to go before an arbitration panel created by MLB.  That panel said, “Nationals, that $400 number is way too high, you’re not getting that.  But, Orioles, $100 is way too low.  The rights fees awarded to the Nats for 2012-2016 is $200.”

The Nationals say that’s bullshit.  If we had our own network we would bring in so much more.  MLB said, sorry, rules are rules. You get $200.

The Orioles (Angelos) says, No! That is not fair! The arbitration panel is mean! I will not pay $200.  I will pay $100 because I say so. 
 

MLB said, well alright. But you have to put that remaining $100 in escrow when we figure this out. 
 

The Nationals said, wait, we don’t even get that $200? We only get $100 until it’s figured out.  
 

MLB said, yes, that’s right. Even if it is a decade from now. (Which is what today’s decision says).

Oh, and there will be no negotiating of the 2017-2022 rights fees until this is settled.

This reminds of the scene in Lethal Weapon when Murtaugh is outling what happened to Amanda Hunsacker and he goes “they said sh!t”.  And Riggs said yes, they actually stopped and said “sh!t”!  Lol. Good stuff

 

Thanks for this. Honestly I wasn’t aware of this but it is basically a continuation of what I said. The Os feel they are gettin screwed with DC having a team and it’s hurting their revenue and feel they should get a much bigger piece of the MASN pie because that’s how they agreed for this to happen to begin with.

That said, i have no doubt that the Os are being more unreasonable than they should be.

[Frobby]

1 hour ago, clapdiddy said:

I don't understand, nor care to, all of the legal points of the MASN saga.  In simple terms, I thought the reason a team was put in DC was because the Orioles agreed to it and that they would be the beneficiary of  the lion's share of MASN revenues since their market had been "invaded" by the Nats.

All of this is likely a moot point anyway as I'm sure MASN will likely go the way of the T-Rex soon.

I would appreciate it if someone could explain in dumb-downed terms (@Frobby?) if my assumption above is inaccurate or had been replaced.

 

There are two revenue streams to the Orioles and the Nats:

1.  Rights fees paid to the teams for the rights to broadcast games.  Those are to be “market value” and be equal for both teams.   The arbitration has been all about what the market value of the rights fees was in 2012-16.

2.  Profits after the rights fees and all other expenses are paid.  The Orioles own the majority of MASN and therefore get a majority of the profits.  Under the MASN contract, the Orioles started with a 90% share of MASN and that ownership drops by 1% per year until it bottoms out at 67% in about 10 years from now.  

The higher the rights fees, the lower the profits of MASN.  Since the O’s essentially split the rights fees 50/50 but have 67-90% of the profits, it’s in their interests for the rights fees to be as low as possible, even though they receive rights fees just like the Nats do.  Also, rights fees are subject to MLB revenue sharing, while MASN profits are not, so that’s another reason the O’s want the rights fees low.  
 

[Going Underground]

5 minutes ago, Frobby said:

There are two revenue streams to the Orioles and the Nats:

1.  Rights fees paid to the teams for the rights to broadcast games.  Those are to be “market value” and be equal for both teams.   The arbitration has been all about what the market value of the rights fees was in 2012-16.

2.  Profits after the rights fees and all other expenses are paid.  The Orioles own the majority of MASN and therefore get a majority of the profits.  Under the MASN contract, the Orioles started with a 90% share of MASN and that ownership drops by 1% per year until it bottoms out at 67% in about 10 years from now.  

The higher the rights fees, the lower the profits of MASN.  Since the O’s essentially split the rights fees 50/50 but have 67-90% of the profits, it’s in their interests for the rights fees to be as low as possible, even though they receive rights fees just like the Nats do.  Also, rights fees are subject to MLB revenue sharing, while MASN profits are not, so that’s another reason the O’s want the rights fees low.  
 

The  revenue sharing is huge.  The  rights fee go up for both teams and less for MASN profits. We will see how much it hurts the Orioles when John opens the books 

[Sports Guy]

9 minutes ago, Going Underground said:

The  revenue sharing is huge.  The  rights fee go up for both teams and less for MASN profits. We will see how much it hurts the Orioles when John opens the books 

I’m sure that will be any day now.

[Frobby]

39 minutes ago, Too Tall said:

Would be interested in what the lawyers on here think happens next re this drama? All I know is MASN sure isn't The Love Boat. 

As Going Underground said, MASN could petition for review by the US Supreme Court.   The Supreme Court has discretion which cases to hear, and they only grant a petition for a further hearing about 1% of the time.  Based on those numbers and the stated criteria for when such petitions will be granted, there is zero chance the Supreme Court would agree to hear this case.  But, I wouldn’t put it past MASN and the Orioles to file a petition anyway, just to further stall the case.  It would take 3-6 months from now for the petition to be rejected.  

Putting that to one side, there remain questions as to (1) calculating the profit sharing for 2012-16 now that the rights fees are determined, and (2) whether MASN owes interest on the sums they haven’t paid for 7-11 years.  Under the MASN contract, if the parties can’t agree on that, then the dispute goes to arbitration before the American Arbitration Association. That process could be done pretty quickly IMO (by which I mean 6-12 months).  Any AAA decision can be appealed on very limited grounds.  It could take a year or two to resolve those appeals.  

As I’ve said, the remaining issues are not complicated, and in most situations, I’d expect the parties to resolve them quickly without needing to have a AAA proceeding.  But MASN and the Orioles pretty much foreshadowed in the court oral argument that they’ll drag everything out as long as possible.  

 

[Going Underground]

12 minutes ago, Frobby said:

As Going Underground said, MASN could petition for review by the US Supreme Court.   The Supreme Court has discretion which cases to hear, and they only grant a petition for a further hearing about 1% of the time.  Based on those numbers and the stated criteria for when such petitions will be granted, there is zero chance the Supreme Court would agree to hear this case.  But, I wouldn’t put it past MASN and the Orioles to file a petition anyway, just to further stall the case.  It would take 3-6 months from now for the petition to be rejected.  

Putting that to one side, there remain questions as to (1) calculating the profit sharing for 2012-16 now that the rights fees are determined, and (2) whether MASN owes interest on the sums they haven’t paid for 7-11 years.  Under the MASN contract, if the parties can’t agree on that, then the dispute goes to arbitration before the American Arbitration Association. That process could be done pretty quickly IMO (by which I mean 6-12 months).  Any AAA decision can be appealed on very limited grounds.  It could take a year or two to resolve those appeals.  

As I’ve said, the remaining issues are not complicated, and in most situations, I’d expect the parties to resolve them quickly without needing to have a AAA proceeding.  But MASN and the Orioles pretty much foreshadowed in the court oral argument that they’ll drag everything out as long as possible.  

 

That didn't seem like much of an argument. If you side with the Nationals, we will drag this out for as long as we can. Seems as frivolous as when the city filled their brief and said this ruling could hurt the city. These seem to me not really agreements to the case.

[Jammer7]

@Frobby or anyone else who may know, is there a particular reason this case was filed in the State of NY? Is it because MLB main offices are in NYC? Or was this strategic on the part of the Nats?

[interloper]

32 minutes ago, Frobby said:

As Going Underground said, MASN could petition for review by the US Supreme Court.   The Supreme Court has discretion which cases to hear, and they only grant a petition for a further hearing about 1% of the time.  Based on those numbers and the stated criteria for when such petitions will be granted, there is zero chance the Supreme Court would agree to hear this case.  But, I wouldn’t put it past MASN and the Orioles to file a petition anyway, just to further stall the case.  It would take 3-6 months from now for the petition to be rejected.  

 

Oh, I think it's all but guaranteed the Orioles petition the Supreme Court if, like you say, it would stall things another 6 months potentially. Unless there's some downside that isn't immediately apparent. 

[Can_of_corn]

1 minute ago, interloper said:

Oh, I think it's all but guaranteed the Orioles petition the Supreme Court if, like you say, it would stall things another 6 months potentially. Unless there's some downside that isn't immediately apparent. 

Is there a mechanism in place to punish frivolous appeals so this type of behavior has a downside?

[dystopia]

3 hours ago, interloper said:

I can think of one justice who'd accept! 

I can think of nine

[UMDTerrapins]

I am what I am……first thing that occurs to me is does this clear a hurdle that’s previously held up the sale of the team?