Major League Baseball announced Tuesday an eight-year, $5.6 billion television deal with ESPN through 2021 to continue broadcasting America’s national pastime on Mondays, Wednesdays, and Sundays, as well as show game highlights. One source knowledgeable of the agreement, which is the largest in MLB history, says that Covington & Burling is advising MLB through corporate partner Peter Zern in Washington, D.C.
Zern, who did not respond to a request for comment, has previously represented MLB on its launch of the MLB Network in 2009, as well as negotiations of joint venture arrangements with various distributors for minority ownership in the baseball-centric cable channel. The latest deal between MLB and ESPN, the nation’s largest cable sports broadcaster, begins in 2014 as an extension of a current agreement between both parties.
ESPN will spend roughly $700 million a year in annual rights fees to MLB, roughly double the $360 million that it pays the New York–based league under its current deal, reports the Sports Business Daily, which first had news of the deal Tuesday morning. According to MLB.com, ESPN will also have increased digital and international rights, and gain the ability to air one of two wild card playoff games and all regular season tie-breaker games, in return for a commitment to broadcast at least one game from every one of the league’s 30 teams during the season. (Previous broadcast deals by MLB and ESPN had been criticized for favoring games featuring more popular teams like the New York Yankees and Boston Red Sox, likely due to their presence in larger media markets.)
The New York Times reported in July that MLB was poised for a windfall from its TV negotiations with ESPN, Fox Broadcasting Company, and Turner Broadcasting System, all of whom have contracts up for renewal to show different packages of games. The league’s deal with ESPN means that each of its 30 teams stand to reap the benefits in future years from revenues generated by the extended ESPN contract.
To reach that agreement, MLB turned to Covington, a firm well versed in high-profile media deals involving major professional sports leagues. MLB’s negotiations with ESPN were the latest assignment in that realm for Zern, who has been busy over the past year clinching similar deals for sporting clients.
Zern advised the National Hockey League last year on a $2 billion TV deal with NBC and its Versus cable network—now called the NBC Sports Network—to broadcast games through the 2020–21 season. That deal was only a few months after Zern advised sports media and marketing agency IMG on its work for the University of Texas in reaching a 20-year, $300 million deal with ESPN to create the school’s own 24-hour network. In 2010 Zern was part of a Covington team that represented Turner Broadcasting on a $10.8 billion deal to broadcast the NCAA’s annual March Madness postseason men’s college basketball tournament.
Zern’s collegiate sports work doesn’t stop at the TV screen. In December, former Big East commissioner John Marinatto publicly praised Zern and Covington for their work in advising the athletic conference on its addition of five schools to offset a series of departures, according to our previous reports.
Of course Zern hasn’t been the only lawyer active in Covington’s robust sports practice. Douglas Gibson, a corporate partner at Covington who frequently teams up with Zern on sports media matters, took the lead earlier this year in serving as special counsel to the Los Angeles Dodgers as the bankrupt baseball team negotiated with Fox and others on a deal for the team’s media rights. (That deal, which has yet to be announced, could approach $8.5 billion, according to a report earlier this month by The Hollywood Reporter.)
Gibson also took the lead advising the National Football League last September on its $15 billion agreement with ESPN extending the Bristol, Connecticut–based network’s right to broadcast Monday Night Football through 2021 and develop studio shows based on game highlights. That deal also increased ESPN’s international rights and broadband rights for mobile platforms, and granted it the option to televise a future wild card playoff game.
ESPN deputy general counsel Diane Morse, who led an in-house team handling the contract extension negotiations with the NFL, did not immediately respond to a request for comment about the network’s legal team advising on its latest deal with MLB. ESPN’s general counsel is David Pahl, while Marie Donoghue, a former in-house lawyer, serves as senior vice president of global strategy, business affairs, and business development and often takes the lead on programming negotiations.
MLB’s own executive office in New York is home to lawyers from several Am Law 100 firms. Daniel Halem, a former partner at Proskauer Rose, serves as general counsel for MLB, while former Kelley Drye & Warren associate Tim Brosnan is the league’s executive vice president of business.
Jimmie Lee Solomon, a former partner at Baker & Hostetler who worked at the league for 21 years, most recently as executive vice president for baseball development, was fired in June. His departure followed the resignation in early 2011 of former COO Robert DuPuy, who subsequently rejoined Foley & Lardner’s sports industry practice, according to our previous reports.
MLB’s current executive vice president for economics and league affairs is former Morgan, Lewis & Bockius partner Robert Manfred Jr. Last year, Manfred, who is responsible for labor relations issues at the league, worked in tandem with Proskauer in advising MLB on a new collective bargaining agreement with players. The deal, which will last through 2016, ensures a period of labor peace that will make MLB’s broadcast partners like ESPN happy that players remain on the field instead of the courtroom.