While the Baltimore Orioles and Washington Nationals play separate spring training exhibition games Tuesday, their attorneys will face off in a pivotal financial dispute worth more than either team’s 2023 payroll.
More than 1,000 miles north of the teams’ training camps in Florida, the New York Court of Appeals — the highest in that state — will hear arguments in the most recent installment of a yearslong dispute over what the Mid-Atlantic Sports Network (MASN) owes the Nationals for television rights fees.
At the crux of Tuesday afternoon’s arguments will be the idea of a fair arbitration. Hanging in the balance — or waiting in escrow, rather — is $100 million.
MASN, the regional sports network, has aired both Orioles’ and Nationals’ games since 2005. It’s co-owned by the two clubs, with the Orioles controlling a majority stake. More than a decade ago — in late 2011 — the teams could not agree on how much in TV rights fees the Washington club should receive for a five-year window from 2012 to 2016.
MASN paid the Nationals $198 million for those five years, but the Washington club argued it should have been $475 million.
The disagreement headed to an arbitration committee of three MLB executives, a forum the clubs had agreed on. The panel ruled in 2014 that the Nationals should actually have received $298 million ($100 million more than they got). The Orioles appealed that decision and it was thrown out by a New York Supreme Court judge based on “evident partiality” (or bias).
A second panel, composed of three different league executives, decided upon essentially the same number in 2019 ($297 million). The Orioles again appealed. So far, lower courts have upheld the panel’s decision.
Now, the appeal is in New York’s highest court.
The Orioles are not seeking a third arbitration under the system that uses three MLB executives to address disputes. Instead, they’re arguing that system isn’t fair.
The court must decide whether the arbitration forum has been unfair and, if it has, if the court has the authority to order an arbitration hearing in a forum that is different from the one the two clubs previously agreed to use.
In a brief filed with the New York court last year, Orioles attorneys argued that MLB commissioner Rob Manfred publicly sided with the Nationals in the dispute and is thus biased. The Baltimore club wants an independent, neutral arbiter to decide the matter.
The arbitration panel “should have been disqualified” since MLB showed itself to be biased, wrote the Orioles’ attorneys in their 86-page brief.
“MLB’s and Manfred’s conduct proved they could not be trusted to direct a fair rehearing,” they stated.
The Orioles point to Manfred’s statement to reporters in 2015 that “sooner or later MASN is going to be required to pay those rights fees” — and others — as evidence of bias by the commissioner, who they say “hand-picked” the second arbitration panel. The Orioles further say it would be “unthinkable” for a neutral arbiter to take a public position.
The Orioles’ brief went on to call the arbitration decision “so lopsided that it threatened MASN’s viability, the future of the Baltimore Orioles [MASN’s majority owner], and the Orioles’ public-private partnership with Baltimore and Maryland.”
The Nationals don’t see it this way.
Lower courts already have upheld the arbitration decision, the Washington club’s attorneys point out. They further note that the arbitration forum is one that “the parties expressly and unambiguously selected in their governing contract.”
“Over the last eight years of litigation, every court has rejected MASN/Orioles’ request that the parties be ordered to arbitrate their television broadcast rights fee dispute before a tribunal other than the contractually specified [arbiter],” the Nationals’ argument stated.
The Nationals’ attorneys said that the Orioles have not proved that the process was “fundamentally unfair” and argued that the arbitration decision should be affirmed. That would award the Washington team the roughly $100 million which has been disputed for years; MASN put that amount in escrow in 2019.
“MASN/Orioles are sniping about the arbitration venue and process to which they agreed,” the Nationals’ attorneys wrote in their 70-page brief.
In a 43-page reply, the Orioles argued, in part, that MLB and Manfred have been “evidently partial.”
In the dueling documents, each side vehemently pleads its side and Tuesday’s hearing marks a critical juncture in the decadelong case.
Even for baseball teams worth more than $1 billion, the $100 million in dispute is significant. It’s more than each team’s 2023 player payroll: The Orioles are expected to spend $51 million on their roster, while the Nationals will spend $78 million, per Spotrac.com, a website that tracks contracts.
The city of Baltimore even involved itself in the dispute, filing an amicus brief in favor of the Orioles. Noting the outcome could “have a direct impact on the long-term viability of the Baltimore Orioles to remain in Baltimore City,” the city argued that “the impact of the [Orioles’] absence would be difficult to contemplate.”
The Nationals filed a response that called the city’s argument “not only speculative, but far-fetched and contrary to all known facts.”
The Orioles received further support in the form of an amicus brief from Kenneth Feinberg, a renowned mediator who oversaw the September 11th Victim Compensation Fund.
In a previous brief filed in 2016, Feinberg wrote that the MASN dispute “may be the poster child for everything that an arbitration should not be.” In this more recent appeal, he filed a brief arguing that MLB and Manfred are “evidently partial in this dispute.”
“The appropriate remedy in this case is to refer the dispute to a neutral arbitrator unaffiliated with MLB,” he wrote.
Feinberg is also a longtime friend of Orioles owner Peter Angelos and his wife, Georgia. He worked as an “expert consultant” with Georgia Angelos as she tried to sell her husband’s law firm after Peter Angelos became incapacitated several years ago. Feinberg’s roles were described in a countersuit Mrs. Angelos filed last summer against her son, Louis Angelos, after he sued her and his brother, Orioles CEO John Angelos. The cases were settled out of court earlier this year.
The Nationals’ attorneys wrote that Feinberg’s MASN brief is “strikingly unmoored from established facts and legal precepts on which this appeal turns.”
The result of Tuesday’s hearing could have consequences beyond the $100 million in dispute, such as how the clubs divide future revenues from MASN.
Nothing, however, will be decided immediately Tuesday. The court will issue a ruling later, likely in April.
Slightly complicating the decision is the fact that the seven-seat New York Court of Appeals has operated without a chief judge since a resignation in September. If the court splits evenly on the case, it would have to be reargued on a later date.
If the Orioles win, the dispute likely will return to arbitration, but this time, in a forum independent of MLB. If the Nationals win, the Orioles could in theory attempt an appeal to the U.S. Supreme Court, but it’s unlikely the court would accept the case.
Baltimore Sun reporter Jean Marbella contributed to this article.
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