The Nationals and Orioles dispute over TV money is about to explode

For years now, the Nationals and Orioles have been at odds over TV revenue. It’s about to explode.

The back story: in order to allow the Nationals to start up business in Orioles territory back in 2005, the Orioles got a sweet TV deal. They got (a) majority ownership of the network, MASN, that broadcasts both Nats and Orioles games; and (b) they got way more in rights fees from the network for their games than the Nats got for theirs. Indeed, the Nats got a pretty undervalued amount, per the deal.

Starting in 2012, that undervalued piece ended and the Nats were to begin receiving rights fees from MASN that represented “fair market value.” They still haven’t received it as MASN -- which, again, is controlled by Peter Angelos and the Orioles -- has repeatedly balked. To placate the Nationals, Major League Baseball has been kicking back money to the Nats. Bud Selig also set up an arbitration, with a panel made up of other baseball owners and executives to determine what “fair market value” is.

The Hollywood Reporter has a bombshell of a story today in which it notes the following:

• That arbitration panel ruled in favor of the Nationals;
• The Orioles/MASN have still ignored it and haven’t paid;
• The Nationals and Orioles/MASN have each started getting testier with one another via attorney letters;
• Bud Selig wrote both clubs -- and Hollywood Reporter has the letter -- warning them that if they sue over this they’re in DEEP TROUBLE suggesting that they may have “the most severe sanctions” leveled against them if they do; and
• Both the Nats and Orioles seem to be ignoring Selig and are on a collision course in court.

This is a huge story inasmuch it (a) involves something huge like broadcast rights fees at a time when such fees dictate almost everything about the game; (b) shows that Bud Selig’s greatest strength as Commissioner -- keeping the peace among clubs -- is failing him in this case; and (c) we have the distinct possibility of club vs. club litigation, which means actual financial and business information in open court and THAT JUST DOESN’T HAPPEN IN MAJOR LEAGUE BASEBALL.

Oh, and those “most severe sanctions” Selig threatened the O’s and Nats with? Those include the sorts of sanctions that cost Frank McCourt ownership of the Dodgers. Of course McCourt was a wounded animal at the time. Would Selig dare try to go after Peter Angelos or the Lerners like that?

A big, big story. Great work by the Hollywood Reporter to get this out there when Major League Baseball’s m.o. is to never air its dirty laundry in public.

UPDATE: The Orioles and Attorneys for MASN just contacted me with official comments on the matter. From the Orioles:

“As those who follow the Clubs are aware, the Settlement Agreement between Baseball, the Orioles, and the Nationals established MASN to compensate the Orioles for the loss of market share and other damages caused by the relocation of the Nationals to Washington, D.C. Contracts are meant to be honored and the Orioles have every expectation that this contract will also be honored. The Orioles continue to work with the Office of the Commissioner to try and resolve this dispute.”

And from Thomas J. Hall, counsel for MASN:

“MASN has honored the terms of the Settlement Agreement, including the formula in that contract for resetting the Nationals’ telecast rights fees and expects all parties will do the same. That contract specifically includes an agreed upon and historically applied formula for resetting the Clubs’ telecast rights fees that has been applied by Baseball to virtually every other club-owned regional sports network. MASN is confident its contract will be honored and looks forward to further discussions with all parties to try and resolve this matter amicably. Our loyal viewers should understand this is a business dispute and will have no impact on the telecast of the Clubs’ games.”

Note the complete lack of reference to the arbitration Selig put together? Did the Orioles not participate in it, or are they just refusing to acknowledge its legitimacy now that it has resulted in a decision they don’t like?

One thing I do know: Peter Angelos is, more than anything, an able lawyer. And if he’s not running the show himself, he has people in place that are running it the way he’d like it to be run, and he has never feared going to court. Meanwhile, the Lerners did not get rich by being walked-over rubes. They are as litigious and determined as the next high-powered businessman, and likely more so.

Buckle your safety belts.