Manhattan Supreme Court Justice Lawrence Marks on Monday halted the Washington Nationals from stripping a Baltimore Orioles-controlled sports network of its game telecast rights pending the outcome of an arbitration ruling challenge.
Following nearly a full day of oral arguments in Manhattan’s Commercial Division, Marks granted a preliminary injunction in TCR Sports Broadcasting v. WN Partner, 652044/2014, in which the Mid-Atlantic Sports Network seeks to vacate a 2014 arbitration ruling by a Major League Baseball committee to settle a dispute over the amount of telecast rights fees.
Marks’s ruling, which was delivered from the bench, halts enforcement of the arbitration decision until a final disposition is reached. The three-member arbitration panel ordered the network, known as MASN, to pay an additional $20 million a year in telecast rights fees to the Nationals – or roughly $60 million. MASN refused, citing a biased panel plagued by a conflict of interest. The Nationals threatened to pull the network’s telecast rights pursuant to a “bargained-for” contractual option in a 2005 settlement agreement.
As a condition of the injunction order, MASN will be required to post a $20 million bond within five days.
In its Article 75 petition, MASN argues that Proskauer Rose represented Major League Baseball and The Nationals at the same time it was representing one of the arbitrators –New York Mets’ Chief Operating Officer Jeffrey Wilpon – in a class action suit concerning his family partnership, Sterling Equities. MASN claims that this information was never disclosed and created an appearance of impropriety that should render the arbitral ruling void. (See CLI story, “Network Challenges Arbitral Ruling on Baseball Telecast Fees,” August 11.)
In his remarks to the parties Monday morning, Marks raised the failure to disclose issue and referred to “basic, fundamental notions of fair play.”
“Wouldn’t that disturb you greatly, if I hadn’t disclosed that to you?” the judge posed to Stephen Neuwirth, a partner at Quinn Emanuel Urquhart & Sullivan and lead counsel to the Nationals. “Isn’t that what happened here?”
Marks used the word “blackmail” to portray the actions the Nationals threatened to take against MASN in light of its refusal to pay the additional $20 in telecast rights fees.
“You can’t legally blackmail them like that, can you?” he asked Neuwirth.
The 2005 settlement agreement, which gave competing MLB team the Baltimore Orioles a majority percentage stake in the network, enabled MASN to air the games for reduced fees from 2006 to 2011. It was the fair market value of those rights from 2012 to 2016 on which the teams disagreed.
The Nationals, which entered the Washington, D.C. baseball market in 2005, claimed the telecast rights’ value was an average $118 million per year. MASN argued the value should scale no higher than $46 million.
Although Neuwirth argued that the Nationals do not “love this deal,” meaning the arbitration panel’s ruling, Marks noted to the attorney, “It was a decision, on its face, that was favorable to the Nationals.”
Thomas Hall, a partner at Chadbourne & Parke who is counsel to MASN, said in a statement, “MASN deserved a fair and impartial proceeding, particularly from [Major League] Baseball. We made that case today in court. We continue to hope that, on reflection, all parties will redouble their efforts toward reaching an amicable resolution.”
Arnold Weiner, the Baltimore-based trial attorney and civil practitioner, said in a statement on behalf of the Baltimore Orioles Limited Partnership, he was “pleased by the court’s decision” and that the arbitral ruling was “fundamentally flawed in process and result.”
“The  settlement agreement and the formula for setting the telecast rights fees should have been honored,” he said. “Hopefully, during this standstill [MLB] and the Nationals will join MASN’s and the Orioles’ efforts to reach an amicable resolution.”