The Orioles plan to appeal a decision ordering their team-controlled regional television network to pay the neighboring Washington Nationals tens of millions of dollars more in broadcast rights fees, according to a court document.
In the appeal to New York State’s highest court, the Orioles and the Mid-Atlantic Sports Network — which broadcasts both teams’ games — intend to argue that Major League Baseball had a conflict of interest when its arbitration panel recently awarded the Nationals nearly $100 million in additional rights fees, the document said.
The panel’s award was sealed after Stephen R. Neuwirth, an attorney for the Nationals, argued in an April court filing to the New York Supreme Court that certain documents fell under a nondisclosure agreement between the parties.
The Baltimore Sun, citing sources, reported last week that the award amounts to about $20 million in additional fees to the Nationals for each of five years — 2012 through 2016.
The Orioles’ decision to appeal was disclosed in a letter from Neuwirth to the court’s commercial division that was dated Monday and appears in the court’s online database. His letter does not reference the amount of the arbitration award.
Neuwirth wrote that the Orioles and MASN revealed in an email May 2 that they “intend to move for a stay of proceedings” on the Nationals’ efforts to confirm the award.
A court-issued stay would mean that the money the Nationals are awaiting would continue to be held up.
“The Nationals have an intense interest in receiving prompt payment of the sums they are owed, which may be invested in player contracts and other significant cash expenses that the Nationals must bear,” Neuwirth wrote.
The attorney went on to write that counsel for the Orioles and the network disclosed May 3 “that the basis for their proposed motion to stay is that they intend to take an appeal to the Court of Appeals.”
Attorneys for the Orioles and Nationals did not immediately respond to requests for comment.
The Orioles and MASN have indicated that they plan to argue that the arbitration award — made privately by a panel of three MLB team officials — reflects “conflicts of interest” based at least partly on a loan that MLB made to the Nationals, according to the letter.
MASN attorneys argued in 2014 that MLB compromised its impartiality in the rights fees dispute when it made the $25 million loan in 2013, giving it a financial stake in the outcome.
According to earlier court filings, MLB designed the loan to make up the difference between what MASN was paying the Nationals in rights fees and the higher amount that an earlier MLB arbitration panel had privately decided Washington should be getting. The panel began hearing the case in April 2012, but didn't issue a decision until June 2014. That decision — very similar in its bottom line to the one just awarded — awarded the Nationals about $60 million per year instead of the $40 million they were receiving. The decision was tossed out by a judge in 2015 on grounds that MASN did not receive an impartial hearing.
In a 2014 court statement, MLB commissioner Rob Manfred defended the $25 million. "These advances were fully justified, were done with the Orioles' and MASN's knowledge and encouragement, and were intended to allow additional time for the parties to negotiate a settlement," Manfred wrote.
MASN and the Orioles maintain they knew there was to be an advance, but the amount and repayment terms were kept secret from the club and the team.
In court documents, they said they learned the details when the Nationals produced an August 2013 letter from Manfred to Edward L. Cohen, a principal owner of the Nationals.
The rights fee dispute dates to 2012, when the Orioles and Nationals could not agree on TV rights fees, which MASN — which is about 80 percent owned by the Orioles and 20 percent by the Nationals — pays equally to both clubs. The Nationals, who occupy one of the largest and most lucrative markets in baseball, initially contended that their rights were worth more than $100 million.
The most recent arbitration award, if paid to the Nationals, would fall short of $100 million. That’s because MASN must restate its financial results for those five years, reducing its profit to pay the higher TV rights fees. The more money MASN pays in rights fees, the less it has available for profits to the clubs.
After those and other adjustments are made, the Nationals would net somewhere from $60 million to $70 million from the decision, according to people familiar with the case.