Judge denies Nats attempt to block MASN dispute arbitrator

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This article was published 10/04/2019 (2719 days ago), so information in it may no longer be current.

NEW YORK – A New York judge has denied the Nationals’ attempt to block the Orioles from having an arbitrator determine whether baseball Commissioner Rob Manfred can decide yet another dispute between the teams over broadcast money from the Mid-Atlantic Sports Network.

Washington’s petition to stop Baltimore from taking the matter to arbitration was turned down Wednesday by Justice Barry R. Ostrager of New York Supreme Court in Manhattan, who ruled the American Arbitration Association can determine whether Manfred can decide the case, which involves a claim MASN failed to distribute cash to the Nationals last year.

The 2005 MASN partnership agreement between the Orioles and Nationals empowered the baseball commissioner to decide disputes between the network’s owners, but only if Major League Baseball did not have an ownership or financial interest in the two teams or the network at the time of the disagreement.

Washington said in its petition to stay the arbitration that MASN, which is controlled by the Orioles, made cash flow distributions from 2009-17 but did not in 2018, and the Nationals invoked the dispute resolution procedure on Sept. 20. The Nationals told Manfred on March 22 that mediation had failed, and the Orioles started an arbitration case with the AAA later that day. The Nationals said the Orioles had not objected previously to Manfred deciding the matter, and sued Monday to block the AAA.

With the sides fighting over how much money Washington was due for broadcast rights from 2012-16, MLB loaned the Nationals $25 million in 2013, money Washington said it paid back with interest last Nov. 5 — 10 days before the primary legal case involving the teams was reheard by a baseball panel. Baltimore claims the loan created a financial interest for MLB and means Manfred should not decide the latest dispute.

Ostrager wrote that it is up to the AAA to decide whether MLB had a financial interest in the Nationals at the time the dispute started.

MASN was established in March 2005 after the Montreal Expos relocated to Washington and became the Nationals, moving into what had been Baltimore’s exclusive broadcast territory since 1972. The Orioles were given a supermajority partnership interest in MASN, starting at 90 per cent, and Washington made a $75 million payment to the network for an initial 10 per cent stake.

The agreement called for the Nationals’ equity to increase 1 per cent annually, starting after the 2009 season, with a cap of 33 per cent. The network’s rights payments to each team were set at $20 million apiece in 2005 and 2006, rising to $25 million in 2007, with $1 million annual increases through 2011.

In November 2015, New York State Supreme Court Justice Lawrence K. Marks threw out a decision by baseball’s Revenue Sharing Definitions Committee that said MASN owed the Nationals $298 million for the team’s 2012-16 television rights. The Orioles argued that the panel, which then included Pittsburgh Pirates President Frank Coonelly, Tampa Bay Rays principal owner Stuart Sternberg and New York Mets chief operating officer Jeff Wilpon, was biased in favour of the Nationals.

The New York State Supreme Court Appellate Division voted 3-2 in 2017 to send the case back to the RSDC. A reconstituted RSDC heard arguments on Nov. 15-16: Milwaukee Brewers chairman Mark Attanasio, Seattle Mariners President Kevin Mather and Toronto Blue Jays President Mark Shapiro comprised the panel. Its decision is pending.

Jonathan D. Schiller, a lawyer for the Orioles and MASN, said his clients are grateful for Ostrager’s decision. Stephen R. Neuwirth, a lawyer for the Nationals, did not immediately respond to an email seeking comment.

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