Five weeks after the Washington Nationals earned a significant court victory over the Orioles regarding television broadcast rights fees, baseball’s bickering neighbors can’t even agree on how much money the judge intended the Washington team to receive.
The confusion represents yet another tangle in a messy, seven-year-old dispute over fees and profits from the Mid-Atlantic Sports Network, which is majority-owned by the Orioles but broadcasts both teams’ games.
The clubs are about $30 million apart in their latest disagreement: how large an award the Nationals should reap from the Aug. 22 decision by New York Supreme Court Justice Joel M. Cohen.
In recent court filings, the Orioles contend that the Nationals are making an “inequitable and unsupported” money grab. The Nationals counter that the Orioles are trying to retroactively tinker with the court’s ruling.
The resolution could be moot because MASN and the Orioles recently filed a notice appealing Cohen’s entire order. His ruling denied the claims of MASN and the Orioles that Major League Baseball has unfairly sided against them in the long-running case.
But, if Cohen’s ruling is sustained, the $30 million would significantly add to Washington’s award at MASN’s expense.
The dispute is over accounting and each team’s share of MASN profits.
Cohen’s 27-page ruling upheld the April decision of an arbitration panel — composed of three MLB team officials — awarding the Nationals nearly $100 million, or about $20 million a year, in additional broadcast rights fees for 2012 through 2016. The $100 million would be on top of the $197.6 million that the Nationals already received from MASN during the period.
The Nationals, who occupy one of the most lucrative markets in baseball, have long argued that they haven’t been receiving fair market value from the network.
While Cohen gave the Nationals a victory on television broadcast rights fees, he didn’t rule specifically on how to divide MASN profits for the five years in question. The matter could be decided by a court-appointed person called a “Special Referee.”
MASN annually distributes profits to both teams based on their stake in the network. Under the 2005 agreement that brought the former Montreal Expos to Washington, the Nationals’ stake in MASN — and the team’s share in its profits — started at 10% and increases by 1 percentage point a year, topping out at 33% in 2032. Washington’s stake is currently 20%.
The agreement set up MASN’s divided ownership structure and called for the rights fees to be reset at “fair market value” every five years to account for ratings and other considerations.
The more money MASN pays in rights fees, the less it has available each year for profits to the clubs. Accordingly, MASN lawyers have argued in court documents that — following Cohen’s decision — the network must recalculate its financial results for those five years, reducing its profit to pay the higher TV rights fees.
The Nationals’ attorneys counter that the “suggestion that profit distributions to the Nationals should be deducted” amounts to an attempt to undo the court’s decision.
“The Nationals argument is simply an attempt to exploit a potential ambiguity in the Court’s order,” MASN attorneys said in their own brief. The attorneys argued that the Nationals are seeking a “windfall.”
According to court documents, the Nationals received $41.5 million in MASN profits during 2012-2016. The Orioles got $234.8 million.
The most the Nationals could have received under the higher rights fees schedule would have been $11.9 million, according to MASN. The network said that the most the Orioles could have earned was $66 million.
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Attorneys for the Orioles and Nationals did not immediately return messages seeking comment.