Judge Won't Halt Arbitration Between Two MLB Teams Over TV Money

Red Sox vs. Orioles MLB Sept. 28th - H 2011
Rob Carr/Getty Images

Red Sox vs. Orioles MLB Sept. 28th - H 2011

Baltimore Orioles owner Peter Angelos now has done something this season that the team's first baseman Chris Davis has yet to do — get a hit. On Wednesday, the Orioles convinced a New York judge not to halt an arbitration with the Washington Nationals over payouts from MASN, a regional sports television network that televises the games of both clubs.

The Orioles have a majority ownership stake and complete management control over MASN, while the Nationals have only a minority stake. For years, MASN got to broadcast Nationals baseball games at a substantial discount. It was the price that the Nationals paid when the team moved from Montreal to the Beltway. In recent years, the two teams have been engaged in a legal war over TV money, and last year, the Orioles stopped making cash flow payments to its MASN partner.

The latest dispute was brought to MLB Commissioner Rob Manfred, but in late March, just days before this current season began, the Orioles commenced arbitration before the American Arbitration Association. The team claimed that the MLB held a financial interest in the Nationals thanks to a $25 million advance at a prior phase of the legal game. The Orioles essentially challenged MLB's neutrality.

On Monday, the Nationals went to New York Supreme Court and demanded a restraining order against allowing the arbitration to proceed. The Nationals argued that it hadn't agreed to arbitrate before the AAA and wanted the matter kicked back to the MLB for internal deliberation. The team also objected to the notion that MLB had any stake in its financial affairs.

New York judge Barry Ostrager now says the gateway decision about arbitrability belongs at AAA. He points to the partnership agreement governing MASN that provides that disputes will be arbitrated before the Commissioner provided the MLB does not have an ownership or financial interest in any of the parties. In such event, the contract states that disputes shall be resolved by AAA.

Ostrager says that AAA is thus empowered to determine its jurisdiction over the dispute.

"This result makes eminent sense as it would be illogical to allow MLB — a potentially conflicted party — to determine whether MLB itself had a financial interest in one of the parties to the dispute at the relevant time," writes Ostrager in a short ruling.

Jonathan Schiller at Boies Schiller Flexner, who represents the Orioles and MASN, says he is "grateful" for a decision "dispatching the Nationals’ efforts to take away [the Orioles'] right to an independent AAA tribunal to resolve the parties’ current dispute."