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MASN Fee Dispute: Orioles get initial court victory, injunction against MLB arbitration panel's ruling for Nationals

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The Orioles received a temporary victory in the MASN rights fee dispute with the Nationals on Thursday, as the New York State Supreme Court issued an injunction against the MLB arbitration panel that ruled MASN would have to pay the Nationals more.

Rob Carr

A week ago, when the news broke that the Orioles, through the proxy of MASN, were headed to court over their dispute with the Nationals regarding rights fees, there was also an indication that baseball commissioner Bud Selig sternly warned all parties that he would take the "strongest sanctions available" against any party initiating a lawsuit.

If Selig thought he was going to scare Orioles owner Peter Angelos out of suing to get an outcome that Angelos thinks he deserves, it brings to mind a classic Bugs Bunny cartoon: "He don't know me very well, do he?"

Eric Fisher of the Sports Business Journal reported on Twitter that MASN has received a temporary restraining order in New York State Supreme Court (which is not, despite its name, the highest court in New York) against the initial arbitration decision handed down by an MLB panel. That is pending the result of a hearing to be held later this month, according to Fisher. It's no guarantee that they will win the later hearing, but MLB would have preferred the suit to be dismissed entirely, so the fact that things are moving on is a blow to Selig. No one has ever done this before, so no one can be sure what is going to happen as a result.

The genesis of the dispute lies in the favorable terms given to Angelos in creating a regional TV network as part of the agreement that he would allow the then-Montreal Expos to take up residence in Orioles territory. To offset the lost revenue from that second franchise in the territory, the Orioles were given a significant stake in the Mid-Atlantic Sports Network, declining by 1% per year until they would eventually have a 66% stake. That's not for another 20 years - the Orioles currently have an 86% stake in MASN.

That initial settlement, according to last week's Hollywood Reporter story, provided that the Nationals would have their rights fee set at "fair market value" in 2012. MASN - that is, the Orioles, who own most of it - has been keeping that fee lower than it should have been, according to the Nationals. They argue it's significantly lower, in fact: a Washington Post article from 2013 indicated that the Nationals would receive a $37 million rights fee for that year. The Nationals are seeking a rights fee in the range of $100-120 million, which could triple the amount they currently get.

In the current contract, according to the Post, the Orioles are to be paid the same rights fee as the Nationals. So what's the problem? If the Nationals make $70 million more, so do the Orioles. That sounds pretty good. The answer to that lies in the ownership stake. If money from MASN's current profit has to go to paying the Nationals, that's less money that the O's get from their stake in the network. If the Orioles were getting 86% of that $70 million that could go to the Nationals, that's nearly $60 million per year less in the Orioles coffers.

A secret MLB arbitration panel consisting of one representative each from the Rays, Pirates, and Mets had previously ruled in favor of the Nationals wanting more money, which MASN has refused to pay to this point. In the Hollywood Reporter story, a lawyer for MASN was quoted in a letter indicating the arbitration panel had a "lack of procedural fairness" and that it was not binding on the Orioles.

It's all very complicated, and now it's in court, which is where people get paid a lot of money to argue such complicated things. Maybe the Orioles are in the right as far as the law is concerned, in which case they will win. Maybe the Nationals are in the right, in which case the Orioles will lose.

Maybe now that the Orioles have demonstrated they are willing to go to court and have won the preliminary hearing for an injunction on the arbitration award, they will secure a more favorable settlement from MLB in order to drop the pending case before the court. Selig has failed to keep the matter out of court. That's too bad for him. It could end up being good news for the Orioles.