A lengthy statement from Nationals attorney Stephen Neuwirth on today's ruling in the MASN case
The New York State Commercial Division Court has today vacated an arbitration award by Major League Baseball’s Revenue Sharing Definitions Committee (the “RSDC”) that had determined the rights fees to be paid by the regional sports network MASN to the Washington Nationals for the television broadcast of Nationals games. MASN is majority owned and controlled by the Baltimore Orioles. In the underlying contracts establishing MASN in 2005, it was agreed by MASN, the Orioles, Major League Baseball and the Nationals that beginning in 2012, MASN would pay the Nationals rights fees at market value, and that any dispute as to the market value would be decided by the RSDC.
The Court vacated the award only on the basis that the Washington Nationals were represented in the arbitration by a law firm, with which the Nationals have had a long relationship, that also has represented Major League Baseball and teams whose owners were members of the RSDC. The Nationals are presently reviewing this element of the decision and evaluating whether to appeal.
In all other respects, the Court rejected MASN’s and the Orioles’ arguments for vacating the award:
The Court rejected MASN’s and the Orioles’ request that any further arbitration proceedings be conducted before a different arbitral tribunal. Instead, the Court contemplated that further arbitration proceedings may be conducted before the RSDC, with the only change being that the Nationals should be represented by a different law firm.
The Court rejected MASN’s and the Orioles’ arguments that MLB had acted with fraudulent intent to ensure the arbitration favored the Nationals.
The Court rejected MASN’s and the Orioles’ arguments that the parties’ underlying agreement required the RSDC to permit MASN an operating margin of at least 20%, finding that the RSDC here “set forth an extensive explanation of their determination of the appropriate methodology to apply” in calculating the market value of the rights fees owed to the Nationals.
The Court also rejected MASN’s and the Orioles’ arguments that Major League Baseball and the RSDC engaged in procedural misconduct, finding that “Petitioners have not shown any denial of fundamental fairness based on MLB’s support role or the informality of the procedures used, and, therefore, they have not established prejudicial misconduct warranting vacatur” under the Federal Arbitration Act.
The case is TCR Sports Broadcasting Holding, LLP v. WN Partner, LLC, et al, Index No. 652044/2014 (Sup. Ct. N.Y. Co.).