The Dispute

The dispute focuses on the original Settlement Agreement (“the contract”) that was signed by the Washington Nationals, Major League Baseball (MLB), the Mid-Atlantic Sports Network (MASN) and the Baltimore Orioles when the Nationals team moved to Washington in 2005. The Nationals and MLB are attempting to deviate from the terms of the contract in order to have a larger share of MASN’s profits.


Court Documents


The Facts

  • The Settlement Agreement between the Baltimore Orioles, MASN, MLB, and the Washington Nationals is a binding contract signed by willing parties who fully understood its terms. Both teams benefited from the terms of the Agreement and that’s why they signed it.
  • The terms of the Agreement were determined based on a financing formula used and upheld by other baseball franchises on 19 previous occasions in MLB history.
  • Prior to the formation of the Nationals, the Orioles provided MLB with financial impact studies evidencing that the harms caused, and to be caused, to the Orioles and television revenues could well exceed $40 to $50 million annually.
  • The terms of the Agreement reflect the expected – and realized – financial damage the Orioles suffered when the Nationals entered Baltimore’s once-exclusive market.
  • For three decades before the Nationals’ arrival, and at MLB’s urging, the Orioles expended considerable resources to cultivate and grow fan loyalty and commercial support for the Orioles and Baseball throughout the Washington, D.C. area.
  • The Orioles franchise has lost 35 percent of its fan base since the Nationals entered the Baltimore-Washington market. The terms of the Agreement partially compensate the Orioles for that loss.
  • Orioles had offered to accelerate the Nationals’ equity interest by nearly 17 years, but the Nationals rejected that offer.
  • MLB is asking that MASN accept only a five percent profit margin when other Regional Sports Networks enjoy profit margins above 20 percent.
  • The Office of the Commissioner is not an independent party in this issue. In fact, MLB has a direct financial stake in supporting the Nationals because it shares in that team’s profits from MASN.
  • MASN and the Orioles remain open to negotiating a reasonable settlement. Both parties hope for an amicable resolution to the matter and will do everything in their power to achieve it.

FAQs

What happened last week?

The Supreme Court of New York agreed with MASN’s contention that MLB’s arbitration award in favor of the Nationals was in Baseball’s own vested interest. MLB, in effect, was attempting to be judge and jury on a contract it created and signed. The judge ruled that the Nationals could not take any action on its television license with MASN until the issue is decided further by the Court.

Why are the Orioles preserving their right to file suit when the two parties agreed to revisit the agreement in 2012?

Per the terms of the contract, the Orioles and the Nationals were entitled to review fair market value using a consistent formula employed my Baseball. Baseball set aside this formula and this was the foundation of the 2005 Settlement Agreement.

Why did the Orioles agree to an arbitration but then object to the ruling of that panel?

The Orioles maintain that the MLB arbitration panel lacked procedural fairness and its decision was biased by Baseball’s financial interest in the matter.

Why isn’t MLB enforcing the contract?

That is an excellent question. MLB is not a neutral party in this issue by virtue of its financial interest in the success of the Nationals, formerly the Montreal Expos. MLB receives 34 cents of every dollar paid to the Nationals.