WASHINGTON 鈥� The Nationals鈥� offseason took another turn for the worse Wednesday when New York Supreme Court Judge Lawrence K. Marks that would have paid the team nearly $300 million in television rights money from the 2012-16 seasons. This is just the latest twist in a yearslong legal battle that could have ramifications for the team鈥檚 payroll, as well as its future television home.
For those just getting caught up on the whole affair, we detailed the . The upshot is that Major League Baseball鈥檚 award of backdated licensing fees from the Baltimore Orioles and the Mid-Atlantic Sports Network to the Nationals from the 2012-26 seasons now will not happen, leaving the two sides still at odds and still without a solution to either鈥檚 liking.
Significantly, the primary reason Marks tossed the decision was that he ruled there was a conflict of interest in the way it came about. The law firm Proskauer Rose, which represented the Nats, had also worked at times for Major League Baseball, as well as the three teams represented on the arbitration panel. The fact that these concerns were not seriously addressed served as the crux of Marks鈥� ruling.
鈥淢ASN and the Orioles have established that their well-documented concerns fell on entirely deaf ears,鈥� Marks . 鈥淭he court concludes that this complete inaction objectively demonstrates an utter lack of concern for fairness of the proceeding.鈥�
The Nationals can still appeal the ruling, but that would mean another year or two of court filings and legal fees without any guarantee of an amicable solution. Additionally, this whole affair has dragged on so long, that the next window to renegotiate rights fees (per the original contract) will be upon us in 2017.
鈥淚f the current conflict remains, the parties might meet and confer regarding whether they can 鈥� agree to a different neutral dispute resolution process,鈥� wrote Marks.
鈥淭here are really two choices 鈥� either reach a settlement, or use a third-party arbiter, such as the American Arbitration Association,鈥� says Eric Fisher of the Sports Business Journal,
Considering the acrimony that persists between the sides, the former doesn鈥檛 really seem to be a viable option. That means bringing the issue before another third-party decision maker, which leaves the status of the entire situation just as up in the air as it has always been.
鈥淓verything is kind of status quo for now,鈥� says Fisher. 鈥淭he Nationals will keep getting $40-$43 million per year in the meantime. It鈥檚 really now up to the parties to figure it out themselves.鈥�
That figure is roughly $20 million less per year than the Nationals were due from MLB鈥檚 ruling. It鈥檚 impossible to say whether the Nationals were factoring the expectation of that money into their payroll, which has gone from $112 million in 2013 to $135.5 in 2014 and $168.6 million last year, the fifth highest in baseball. While they鈥檒l clear some big salaries with free agent departures like Ian Desmond ($11 million), Doug Fister ($11.4 million), Denard Span ($9 million) and Jordan Zimmermann ($16.5 million), they still are on the hook for about $90 million in guaranteed contracts for 2016 before even dealing with arbitration-eligible players or potential free agents.
Will the ruling affect their ability to spend as much as they have in recent seasons?
鈥淣ot necessarily,鈥� says Fisher. 鈥淲e鈥檝e never had any sort of conclusive proof that they were hanging their hat on the results of this decision. There are other revenue lines. They鈥檝e had pretty healthy attendance. National media rights, digital media rights are all rising dramatically. So there is some counterbalance to what they may not be getting here.鈥�
From the larger view, should the Nationals ever be able to secure a ruling in their favor that would pay them something close to what they have asked for, the annual number might be more than MASN can afford to pay them. A more reasonable long-term solution may be splitting off into their own network, something it was revealed in court documents that former MLB Commissioner Bud Selig attempted, trying to negotiate a sale to Comcast for more than $1聽billion.
Might there be an alternative to Comcast, though? In his , Washington Wizards and Capitals Owner Ted Leonsis said he hoped to eventually turn his Monumental Network into a broadcast operation capable of airing live games.
鈥淲e know how to broadcast games,鈥� Leonsis said, specifically pointing out that the network already handled preseason games for the Caps and Mystics. 鈥淲e鈥檙e very proud of the work we鈥檙e doing to be ready for one day, if our rights burn off. We want to work with Comcast, but if we can鈥檛, then we鈥檇 launch the Monumental Network. It鈥檚 pretty simple.
Considering that the Lerner Family is an investor in Monumental Network and friendly with Leonsis, the roots for a healthy business partnership seem to be in place. For what it鈥檚 worth, the Caps鈥� contract with Comcast is up after the 2016-17 season as well, the same point as the next renegotiating rights window for the Nats and MASN. Fisher thinks it may be a less likely scenario, though, due to the more centrally operated rights landscape in baseball as compared to other sports, as well as the constantly evolving landscape of regional sports networks.
鈥淚t presents a whole other issue in getting distribution,鈥� Fisher says, pointing to the troubles both the Astros and Dodgers have had in recent years. 鈥淭here鈥檚 not necessarily a ton of room on the dial. People may not want to pay for another channel. 鈥淭hat is tough sledding to try to go out there and get going from scratch.鈥�
Considering the saga they鈥檝e already been through will no tangible progress, though, any alternative to MASN may be a good one.
