The Orioles have been locked in a financial battle with the Washington Nationals for nearly a dozen years. It started before Manny Machado played his first game for the Orioles in 2012 and extended into the past when Trey Mancini played his last game for the club in 2022.
Perhaps it could end while Adley Rutschman — the team’s current star — remains in a Baltimore uniform.
The New York Court of Appeals ruled 6-0 in favor of the Nationals on Tuesday, perhaps the most important decision yet in the saga pitting the Orioles and Mid-Atlantic Sports Network (MASN) against the Nationals. The court ruled that an arbitration committee of MLB executives was proper and not partial when deciding how much each team should receive from MASN for the five-year period from 2012 to 2016.
The decision by New York’s highest court essentially closes the door on what the Orioles have argued for years: that MLB and its arbitration committee — the Revenue Sharing Definitions Committee — were biased against the Baltimore club and not were suitable for making decisions about a key income. flow for the team.
The dispute, however, did not end.
While the court upheld the arbitration panel’s decision on the fair market value of the team’s rights fees, there are complications. The committee exceeded its power and lacked the ability, the court found, to set the fees for non-payment.
The arbitration panel ruled that the Nationals were owed about $100 million, money that MASN had set aside in escrow. Now, that number will have to be revised and instead decided “by a different provision of the settlement agreement” between MLB, the Orioles and the Nationals, the court said.
“While it is unfortunate that our decision may send this protracted litigation into extra innings, this result is required by the terms of the settlement agreement,” Judge Madeline Singas wrote in the opinion.
Kenneth Feinberg, a noted mediator who filed an amicus brief in support of the Orioles, continued the baseball metaphor in an interview with The Baltimore Sun.
“The final home game hasn’t happened yet. There’s still quite a long debate, I think, about the nature of the award, the terms of the award, the amounts to be paid and when, under what circumstances,” said Feinberg, who is a friend of longtime Orioles owner Peter Angelos. ” The last batter hasn’t hit the plate yet.”
Exactly how those “extra innings” will play out remains to be seen. MLB and the Orioles declined to comment, and the Nationals, as well as lawyers for both clubs, did not respond to requests for comment.
This installment of the seemingly never-ending dispute was pivotal enough that the city of Baltimore wrote in an amicus brief in support of the Orioles that the court’s decision would likely impact “The Long-Term Viability of the Baltimore Orioles Remaining in Baltimore City.” However, Democratic Mayor Brandon Scott said at the time that he remained “fully confident” in the Orioles’ commitment to the city.
“The city is disappointed by the decision of the New York Court of Appeals,” a mayor’s spokesman wrote in a statement Tuesday, “but remains steadfast in its support of the Orioles and grateful for the team’s impact on the city.”
The court’s decision could make it easier to sell the Nationals – which have been for sale since last year.
But it also has significant long-term effects on the Orioles. Money from regional television shows is a critical revenue stream, and Tuesday’s decision could affect not only the five-year period in question, but could set a precedent that hurts the Orioles’ finances going forward.
“I think this decision will have an impact not just this year, but for the next five years, and it sets a precedent for the five years after that,” said Ellen Zavian, a professor of sports law at George Washington University Law School.
MASN was created in 2005 as a by-product of the Montreal exhibitions moving to Washington. The Orioles and Nationals jointly own the network, which airs both teams’ games, with the Orioles controlling a majority stake and receiving most of the profits as compensation for relocating the Nationals to their home turf.
Before the Nationals’ move, the Orioles had been the only MLB team in the mid-Atlantic region since the Washington Senators became the Texas Rangers in 1972. The Expos’ move—bringing the Orioles a neighbor just 35 miles south—entered Baltimore . the club’s fan base and cost the club financially.
To ease the Orioles’ losses, MLB and the two teams reached an agreement. The teams split the rights fees paid by MASN, but 90% of the network’s profits initially went to the Orioles (compared to 10% for the Nationals). The Orioles share began to decline annually by 1% in 2010 and will finally settle in 2032 at 67% for the Orioles and 33% for the Nationals.
However, revenue sharing is not as cut and dry as those simple percentages.
The teams have argued vehemently for years about how much each should collect from MASN. In 2011, the teams could not agree on how much they should be paid for the five-year span from 2012 to 2016. MASN paid the Nationals $198 million over the five years, but the Washington club maintained that it should have been $475 million.
This huge disparity went before an arbitration committee consisting of three MLB executives – the Committee’s forum for revenue sharing definitions that clubs have agreed upon. The committee ruled in 2014 that the Nationals should have received $298 million, $100 million more than MASN paid them.
The Orioles appealed, and that arbitration decision was thrown out by a New York judge based on “obvious bias” in the lawsuit because the Nationals’ law firm during the arbitration — Proskauer Rose — had previously represented MLB, as well as each team with a executive. in the committee.
Then a second panel of three different MLB executives ruled on almost exactly the same number, $297 million, in 2019. The Orioles also appealed that decision, saying MLB was biased against the Baltimore club. Attorneys for the Orioles and Nationals argued the case in March in Albany, New Yorkwhich led to the recent decision of the State High Court.
“By affirming the second arbitration award and ordering that the money award be vacated, we hold the highly sophisticated parties to the terms of their agreement,” Singas said.
The Nationals’ lawyers argued that MLB’s arbitration committee is “exactly what Baltimore signed up for” in the 2005 agreement, and Singas seemed to agree. The Orioles “cannot now complain” about the arbitration forum they had previously agreed to, she wrote.
The court essentially said, “Don’t complain to us,” said Mark Conrad, who directs the sports business concentration at Fordham University’s Gabelli School of Business.
The Orioles’ attorneys centered their arguments on evidence that MLB was biased against them and in favor of the Nationals. A $25 million loan from MLB at Nationals pair with Commissioner Rob Manfred’s public comments illustrated that the league was biased against the Baltimore club, Orioles lawyers said, which would make the league’s arbitration committee (“hand-picked” by Manfred, they said) partial and unable to rule properly.
The court did not find the Orioles’ argument persuasive.
“There is no evidence that MLB or Manfred had any undisclosed influence over the panel members other than what the parties bargained for in the settlement agreement,” Singas wrote.
It’s not easy for a court to overturn a previously agreed upon arbitrator, Conrad said. He was not surprised by the unanimous decision.
“It’s not like he’s supposed to be clean,” he said of the referee. “It has to be appropriate.”
The Orioles could theoretically appeal to the U.S. Supreme Court, but such a request would face long odds. The nation’s high court hears only about 2 percent of the cases it is asked to review each year. The Court generally focuses on cases with significant constitutional issues, others with national implications, and those where appellate courts have issued differing opinions on the same issue.
“I think the Supreme Court is busy enough,” Zavian said.
While the unanimous decision of the New York court — “There were no dissents; The court spoke with one voice,” Feinberg pointed out — likely nullifying the Orioles’ recent legal argument, the Orioles and Nationals will now fight over the amount owed to the Nationals. Royalty fees have been decided, but other monies such as prejudgment interest have not.
The The Orioles beat the Nationals twice last week (1-0 and then 4-0), but they haven’t had the same success against their Beltway rival in the courtroom this week. How much they lost, however, has yet to be determined.
()
