A New York judge has granted the Mid-Atlantic Sports Network a preliminary injunction barring the Washington Nationals from pulling its games from MASN or otherwise trying to enforce a $10 million arbitration award while the network challenges the award in court.
New York Supreme Court Justice Lawrence Marks accepted arguments made by lawyers for MASN and the Baltimore Orioles that the Major League Baseball-appointed arbitrators may not have been neutral.
Arnold Weiner, a lawyer for the Orioles, praised Marks’ decision and called the arbitration process “fundamentally flawed in process and result.”
“Hopefully, during this standstill, [MLB] and the Nationals will join MASN’s and the Orioles’ efforts to reach an amicable resolution,” Weiner, of Rifkin, Weiner, Livingston, Levitan & Silver LLC in Baltimore, said in a statement.
Marks granted a temporary restraining order earlier this month after MASN’s attorneys argued the Nationals’ threat to terminate broadcast rights would irreparably harm the network.
The June 30 arbitration award followed the Nationals’ threat to terminate MASN’s broadcast license if it did not receive substantially higher licensing fees. On July 2, the team again said it would terminate MASN’s broadcast license if the award was not paid.
The Orioles own a majority share of MASN, while the Nationals are a minority owner.
MASN has argued in court papers that the arbitration panel’s award violated an existing fee agreement with the Nationals, which was reached in part to placate Orioles’ owner Peter G. Angelos as part of the National’s MLB-approved move in 2005 to the Washington-Baltimore media market from Montreal, where the team was called the Expos.
MASN attorneys have argued he arbitration panel made its award based on “artificially inflated numbers” that diverted the networks profits to the Nationals.
The controversial arbitration occurred a month after the Nationals sent MASN a “notice of default,” alleging deficiency in the telecast rights fee payments since 2012. In that letter, the Nationals said they would seek termination of MASN’s telecast rights if the dispute was not resolved by July 2, according court filings.
On that date, the Nationals renewed their threat to terminate the agreement if they were not paid the arbitration award of $10 million.
MASN then filed suit in New York Supreme Court, a trial court, where MLB is based, urging the trial court to vacate the award because the arbitration was “rife with procedural and substantive abuses and deficiencies.”
Specifically, MASN said MLB had a “direct and significant pecuniary interest” in the arbitration’s outcome, as did the three teams that sent representatives to serve on the arbitration panel: the Tampa Bay Rays, Pittsburgh Pirates and New York Mets.
MLB “had a clear financial interest in the outcome of the arbitration,” MASN stated. “MLB receives a share of any funds diverted into telecast rights fees through the revenue sharing tax.”
The Rays and Pirates belong to regional television stations, and thus may favor teams getting a bigger financial cut; the Mets received a sizeable loan from MLB after the team faced financial hardship after investing with fancier Bernard Madoff, who was later convicted of running an illegal Ponzi scheme, according to the filings.
MASN also argues that the arbitration panel did not follow the process laid out in the original 2005 agreement.
The network seeks arbitration with the Nationals under the auspices of the American Arbitration Association.
Major League Baseball has denied any claim of impropriety.
Daily Record legal affairs writer Steve Lash contributed to this report.