When the Orioles and Nationals sought to decide how much each club would receive from their shared television station — the Mid-Atlantic Sports Network — for the years from 2012 to 2016, the litigation and dispute spanned more than a decade and required several trips to court before a resolution this summer.
For the next installment in fees, a five-year period lasting from 2017 to 2021, it appears as if the teams have quickly decided on a deal. MASN, which is majority owned by the Orioles, will pay $304 million to each team for that five-year span, according to a stipulation signed by both teams’ attorneys Dec. 8.
The Orioles and Nationals have a complex and contentious agreement, stemming from the Montreal Expos’ move into Baltimore’s media territory in 2005, to split rights fees and profits from MASN. For every five-year period, the teams must agree how much each is owed in television rights fees. Because the Orioles receive the bulk of MASN’s profits, as outlined in the 2005 agreement, it benefits the Orioles for the rights fees to be low — which would mean higher profits. Conversely, it benefits the Nationals for the figure to be high.
Thus, the teams disagreed on the appropriate figure. In July, they argued in front of an MLB arbitration committee, just as they did for the previous five-year span. The panel, which met with the teams in Washington, consisted of Boston Red Sox Chairman Thomas Werner, Milwaukee Brewers owner Mark Attansio and co-owner of the Colorado Rockies Richard L. Monfort.
The three-person panel revealed in a 46-page decision, which was included as an exhibit in New York court, on Nov. 8 that MASN owed each team $304 million over the five years, or $60.8 million a year.
On that same day, the Nationals submitted a petition against the Orioles in New York court, arguing for the arbitration award to be confirmed.
Given that the Nationals filed shortly after the arbitration decision, “they expected this to become a battle,” said Dan Wallach, a sports law attorney. Wallach first drew attention to the public filings with social media posts Thursday night.
In a 17-page filing, Nationals attorneys from Quinn Emanuel Urquhart & Sullivan said that “MASN/Orioles have indicated on multiple occasions that they will move to challenge” the panel’s decision.
The Orioles had not formally challenged the decision and, a month after the November petition, the teams agreed to confirm the arbitration panel’s decision. Attorneys for MASN and the Orioles, from Boies Schiller Flexner, denied all of the “contentions in the Nationals’ petition” but agreed with the arbiters’ figure.
The stipulation means that there will be no protracted litigation over this installment of rights fees. Instead of a decade of dispute, which has irked both Nationals and Orioles fans, it took just a month for the teams to agree on this arbitration amount.
An attorney for the Orioles declined to comment Friday. An attorney for the Nationals did not reply to a request for comment.
Marty Conway, former vice president of marketing with the Orioles and an adjunct professor at Georgetown University, hypothesized that the Nationals filed their petition to prevent the Orioles from challenging the award in a court outside of New York. Given that the Nationals had previously had success litigating in the state, perhaps the Orioles would seek to challenge the decision elsewhere, he suggested.
The MLB arbitration panel found the rights fees to be worth more from 2017 to 2021 than in the previous five-year period, which surprised Conway, given that cord-cutting has cost many regional sports networks subscribers in recent years. The figure is evidence, he said, that owners still very much see value in media rights.
“For me, it was a recognition by MLB and their owners that the value of these rights continue to go up, regardless of the facts on the ground, which are RSNs are losing their subscribers,” Conway said.
Both Conway and Wallach, the sports law attorney, found it notable how quickly the teams compromised after a decade of contention. It could indicate other business factors pressuring one or both teams to avoid litigation.
Since 2011, the two beltway teams have fought over MASN revenues — which has made, for example, a potential sale of either team to be challenging. Without litigation, a sale would likely be easier.
“You can now get a much cleaner look at a valuation for these teams,” Conway said. “Is that a coincidence? Maybe, but maybe there’s also some intentionality about clearing these things up.”
The Nationals, owned by the Lerner family, have reportedly been for sale in recent years. The Orioles, owned by the Angelos family since 1993, are not for sale, but a Bloomberg report last week said billionaire David Rubenstein was “in talks” to acquire the Orioles.
A sale of the Orioles at this moment would make little sense, given that the family would owe hundreds of millions in capital gains taxes if the team was sold while incapacitated Peter Angelos, 94, is alive. The family would owe significantly less in taxes if there was a sale after his death.
The Orioles are on the verge of a lease deal formally committing them to state-owned Camden Yards for at least the next 15 years and potentially more than three decades. The long-awaited lease — which has the support of the ballclub and key elected officials, including Gov. Wes Moore — will seek approval from the appropriate boards Monday.