The Washington Nationals have operated without the television revenue they think they deserve for so long, they are inured to the relative hardship.
After the owners' meetings wrap up in Atlanta, a Major League Baseball-appointed Revenue Sharing Definitions Committee (RSDC) will hear the Nationals' and Orioles' cases again. That three-person panel will decide how much the Nationals are due in old revenue (2012-2016) and present revenue (2017-2021), at which time the Orioles will be required to pay that sum to the Nationals. The panel could provide a neat and tidy ending to one of the more mind-numbing, aggravating disputes between teams in baseball history. Then again, it was supposed to do that in 2014, too.
That was the year this whole thing started, and it began the same way this week could end — with the RSDC. When the Nationals moved to Washington after the 2004 season, the Orioles (as majority owners of MASN) agreed to pay the Nationals a set price per year to broadcast their games, a price that would increase annually in 2012, when the two sides would negotiate a price according to the value of the Nationals at the time. When 2012 came and went, the sides could not agree. The dispute headed to the RSDC — a three-member panel including owners and executives — for arbitration.
In June 2014, that committee ruled the Nationals were owed around $59 million in television rights money annually from 2012 to 2016. The Orioles (in this case, acting as the managing owners of MASN) refused to pay that money and appealed the RSDC’s decision. They argued that a) payments of those sizes would render the network financially insolvent and b) that the RSDC’s neutrality was compromised because the Nationals were represented by the same law firm, Proskauer Rose, that often represented the league and many of its teams. In retrospect, the Nationals' choice of counsel likely created unnecessary complications in the dispute, which had plenty of complications already.
Over the next few years, that Orioles' appeal and various smaller appeals from both sides drew the process out. The Orioles argued against returning to the RSDC to settle the dispute once and for all. The Nationals argued that the sides had agreed on the RSDC as the forum in which they would settle these disputes when the team moved to Washington in the first place. Absent conflicts of interest that had since been remedied, the Nationals argued, the RSDC should decide the case.
Last year, the New York Appellate Court agreed. A judge ruled that the courts did not have the power to settle the dispute, but only to redirect it back to its original forum — that three-member panel that was supposed to decide those revenue disputes. The original ruling of $59 million per year — or around $298 million for the five-year period from 2012 to 2016 — was vacated by that court in 2015. So the whole thing is beginning anew this week, with a new three-member panel that will include Milwaukee Brewers owner Mark Attanasio, Seattle Mariners CEO Kevin Mather and Toronto Blue Jays CEO Mark Shapiro, according to the Sports Business Journal.
That panel will hear the dispute Thursday and Friday, as far as anyone with the Nationals knows, in a process that has been rather hush-hush — to the point that even league spokesmen would not provide information about the timing of the hearing. It will be asked to determine the rights for the first five-year period (2012-2016) and the current five-year period (2017-2021), at which point the Nationals will be owed those sums immediately.
But the Orioles and MASN can appeal this decision, too. If they do, the money will remain tied up indefinitely, as it has for years, until courts can finally shut down every Orioles avenue of inquiry. The Nationals have changed counsel, and were most recently represented by Stephen Neuwirth of Quinn Emmanuel. The conflict of interest should be gone. As for the solvency of the network, some considered that argument specious in 2014, though perhaps it will come up again.
Even if the Orioles do not appeal the decision made later this week, the Nationals will not necessarily experience the kind of windfall everyone might expect. Because they have not had full television revenue for years, they have not been able to participate fully in revenue sharing. Once a sum is awarded, the league will distribute the amount the Nationals would have been paying annually in one lump sum. They will also need to pay back Major League Baseball, which loaned them money to help the team operate while the revenue in question remained in limbo.
After that money has been allocated, the extent of the Nationals' payroll bump will likely depend on the sum. A massive sum would almost certainly help their payroll moving forward. Still, the Nationals do not want to cross the competitive balance tax threshold for a third straight season, so that lift might not be felt in 2019.
Some have wondered if the money would go back into player acquisition. The Nationals have been able to spend as a top-five payroll team without it. But if the Nationals do get the revenue they are owed, their ability to sign elite free agents will improve, according to those familiar with the organization’s plans. Exactly how much it would improve remains to be seen. The money is, as usual, not theirs yet.
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