Notice of Appeal: Tcr Sports Broadcasting Holding, Llp v. Wn Partner Llc, Nine Sports Holding Llc, Washington Nationals Baseball Club, Llc, The Office Of Commissioner Of Baseball, Allan H. (Bud) Selig, As Commissioner Of Major League Baseball, The Baltimore Orioles Baseball Club Nominal Respondent, Baltimore Orioles Limited Partnership Nominal Respondent

On January 01, 2014 a Notice of Appeal was filed involving a dispute between Tcr Sports Broadcasting Holding, Llp, and Allan H., Baltimore Orioles Limited Partnership Nominal Respondent, Nine Sports Holding Llc, The Baltimore Orioles Baseball Club Nominal Respondent, The Office Of Commissioner Of Baseball, Washington Nationals Baseball Club, Llc, Wn Partner Llc, for Commercial Division in the District Court of New York County.

Preview
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 805 RECEIVED NYSCEF: 05/14/2019

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
TCR SPORTS BROADCASTING HOLDING, LLP,

Petitioner,

-against- Index No. 652044/2014

WN PARTNER, LLC; NINE SPORTS HOLDING,
LLC; WASHINGTON NATIONALS BASEBALL
CLUB, LLC; THE OFFICE OF COMMISSIONER
OF BASEBALL; and THE COMMISSIONER OF NOTICE OF APPEAL TO THE
MAJOR LEAGUE BASEBALL, COURT OF APPEALS PURSUANT
TO CPLR 5601(d)
Respondents,

-and-

THE BALTIMORE ORIOLES BASEBALL CLUB
and BALTIMORE ORIOLES LIMITED
PARTNERSHIP, in its capacity as managing partner
of TCR SPORTS BROADCASTING HOLDING,
LLP,

Nominal Respondents.

PLEASE TAKE NOTICE that, Petitioner TCR Sports Broadcasting Holding, LLP, and

Nominal Respondents the Baltimore Orioles Limited Partnership, in its capacity as managing

partner of TCR Sports Broadcasting Holding, LLP, and the Baltimore Orioles Baseball Club,

hereby appeal under CPLR 5601(d) to the Court of Appeals of the State of New York from the

final arbitration award of Major League Baseball’s Revenue Sharing Definitions Committee

(“RSDC”) dated April 15, 2019, entered in the offices of Major League Baseball on April 15,

2019, and duly filed in the Office of the New York County Clerk on May 14, 2019 (the “April

15, 2019 RSDC Award”, Ex. 1), and seek review of the Decision and Order of the Supreme

1 of 138
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 805 RECEIVED NYSCEF: 05/14/2019

Court, Appellate Division, First Department, entered on July 13, 2017 (the “First Department

Order”, Ex. 2), which necessarily affected the April 15, 2019 RSDC Award.

DATED: New York, New York
May 14, 2019

By: /s/ Jonathan D. Schiller
Jonathan D. Schiller
Joshua I. Schiller
Thomas H. Sosnowski
BOIES SCHILLER FLEXNER LLP
55 Hudson Yards
New York, NY 10001
Tel: (212) 446-2300
Fax: (212) 446-2350

Carter G. Phillips
Kwaku A. Akowuah
Tobias S. Loss-Eaton
Sidley Austin LLP
1501 K Street NW
Washington D.C. 20005

David C. Frederick
James M. Webster, III
Kellogg, Hansen, Todd, Figel
& Frederick, P.L.L.C.
1615 M Street NW, Suite 400
Washington, D.C. 20036

Counsel to Mid-Atlantic Sports Network, the
Baltimore Orioles Limited Partnership, and the
Baltimore Orioles Baseball Club

2 of 138
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 805 RECEIVED NYSCEF: 05/14/2019

TO: Stephen Neuwirth, Esq.
Cleland Welton, Esq.
Joseph Kiefer, Esq.
Kathryn Bonacorsi, Esq.
Quinn Emanuel Urquhart & Sullivan, LLP
51 Madison Avenue, 22nd Floor
New York, NY 10010

Attorneys for WN Partner, LLC, Nine Sports Holding, LLC,
and the Washington Nationals Baseball Club

John J. Buckley, Jr., Esq.
C. Bryan Wilson, Esq.
Williams & Connolly LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005

Attorneys for the Office of the Commissioner of
Major League Baseball and the Commissioner of
Major League Baseball

3 of 138
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 805 RECEIVED NYSCEF: 05/14/2019

EXHIBIT 1

4 of 138
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
TCR SPORTS BROADCASTING HOLDING, LLP,

Petitioner,

-against- Index No. 652044/2014

WN PARTNER, LLC; NINE SPORTS HOLDING,
LLC; WASHINGTON NATIONALS BASEBALL
CLUB, LLC; THE OFFICE OF COMMISSIONER
OF BASEBALL; and THE COMMISSIONER OF NOTICE OF FILING
MAJOR LEAGUE BASEBALL,

Respondents,

-and-

THE BALTIMORE ORIOLES BASEBALL CLUB
and BALTIMORE ORIOLES LIMITED
PARTNERSHIP, in its capacity as managing partner
of TCR SPORTS BROADCASTING HOLDING,
LLP,

Nominal Respondents.

PLEASE TAKE NOTICE that attached hereto as Exhibit 1 is a copy of the final

arbitration award issued by Major League Baseball’s Revenue Sharing Definitions Committee,

dated April 15, 2019, duly filed in the above-captioned action, on May 14, 2019.

51 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

DATED: New York, New York
May 14, 2019

By: /s/ Jonathan D. Schiller
Jonathan D. Schiller
Joshua I. Schiller
Thomas H. Sosnowski
BOIES SCHILLER FLEXNER LLP
55 Hudson Yards
New York, NY 10001
Tel: (212) 446-2300
Fax: (212) 446-2350

Carter G. Phillips
Kwaku A. Akowuah
Tobias S. Loss-Eaton
Sidley Austin LLP
1501 K Street NW
Washington D.C. 20005

David C. Frederick
James M. Webster, III
Kellogg, Hansen, Todd, Figel
& Frederick, P.L.L.C.
1615 M Street NW, Suite 400
Washington, D.C. 20036

Counsel to Mid-Atlantic Sports Network, the
Baltimore Orioles Limited Partnership, and the
Baltimore Orioles Baseball Club

62 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

TO: Stephen Neuwirth, Esq.
Cleland Welton, Esq.
Joseph Kiefer, Esq.
Kathryn Bonacorsi, Esq.
Quinn Emanuel Urquhart & Sullivan, LLP
51 Madison Avenue, 22nd Floor
New York, NY 10010

Attorneys for WN Partner, LLC, Nine Sports Holding, LLC,
and the Washington Nationals Baseball Club

John J. Buckley, Jr., Esq.
C. Bryan Wilson, Esq.
Williams & Connolly LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005

Attorneys for the Office of the Commissioner of
Major League Baseball and the Commissioner of
Major League Baseball

73 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

EXHIBIT 1

84 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

Revenue Sharing Definitions Committee
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
:
Hearing on Rights Fees Under March 28, :
2005 Agreement amongst Major League :
Baseball, TCR Sports Broadcasting :
Holding L.L.P., Baseball Expos, L.P. :
D/B/A Washington Nationals Baseball :
Club, and the Baltimore Orioles Limited :
Partnership :
:
:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

FINAL DECISION OF THE REVENUE SHARING DEFINITIONS COMMITTEE

95 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

TABLE OF C ONTENTS

Page

I. Background ............................................................................................................................... 2

A. Structure of the 3/28/05 Agreement ........................................................................... 3

B. History of the Dispute ................................................................................................. 4

II. Discussion ................................................................................................................................. 8

A. Applicable Law ............................................................................................................ 8

B. “Established Methodology” ...................................................................................... 10

C. Rights .......................................................................................................................... 12

D. Territory...................................................................................................................... 14

E. Prejudgment Interest .................................................................................................. 15

F. What Is the RSDC’s “Established Methodology?” ................................................. 18

G. What Is the Fair Market Value of the Rights? ......................................................... 29

1. The Bottom-Up, Bortz Methodology ........................................................... 29

2. The Comparable Teams Approach............................................................... 37

3. Conclusion on Fair Market Value ................................................................ 46

III. Conclusion .............................................................................................................................. 48

106 of 54
138
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

On November 15–16, 2018, the members of the Revenue Sharing Definitions Committee

(the “RSDC” or “Committee”) met in Atlanta, Georgia, to hear the dispute between the

Baltimore Orioles (the “Orioles”) and Mid-Atlantic Sports Network (“MASN”) (collectively,

“Orioles/MASN”) and the Washington Nationals (the “Nationals”) concerning the value of the

license fee to be paid by MASN for the right to telecast games of the Nationals for the years

2012 through 2016. In accordance with the agreement between the Baltimore Orioles

Partnership Limited and Major League Baseball (“MLB”) dated March 28, 2005 (the “3/28/05

Agreement” or “Agreement”), OMX 1, 1 the Committee has determined those license fees

“using the RSDC’s established methodology for evaluating all other related party telecast

agreements in the industry.” Id. at § 2.J.3.

In reaching its conclusions, the Committee has benefited from the excellent oral and

written advocacy of counsel for the parties throughout these proceedings. Based on all of the

files, records and proceedings herein, including the testimony presented at the hearing, the

parties’ expert reports and witness statements, the voluminous exhibits offered into the record,

and the parties’ pre- and post-hearing briefs and other submissions, and drawing on the

experience of the Committee’s members, the RSDC has determined, and hereby finds, that the

license fees to be paid by MASN to the Nationals for each of the years 2012–2016 are:

Year License Fee
2012 $54,878,272.63
2013 $57,767,546.52
2014 $60,410,594.11
2015 $61,363,965.13
2016 $62,414,285.75
Average Annual Value $59,366,932.83

1 “OMX” refers to Orioles/MASN exhibits. “NX” refers to Nationals exhibits.

117 of 54
138
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

The Committee’s determinations as to fact and law are set forth below. To the extent that

the Committee’s recitation of facts differs from any party’s position, it is the result of

determination as to credibility, relevance, burden of proof, and weight of evidence. Any

summary of any party’s position is meant to be illustrative rather than exhaustive.

I. Background

The 3/28/05 Agreement, among other things, sets forth the license fees that MASN, a

regional sports network (or “RSN”) was obligated to pay, and did pay, the Nationals and the

Orioles for the years 2005 through 2011. Agreement (OMX 1) § 2.G. The Agreement further

provides that, for the years following 2011, the parties must negotiate the license fees for five-

year blocks, with the first starting on 2012. Id. § 2.I. The Agreement describes a dispute-

resolution mechanism for determining license fees if the parties cannot agree. Id. § 2.J.

Much of the current dispute between the parties concerns the method that the Committee

should use to value the rights at issue. The Orioles/MASN favor a bottom-up analysis that

calculates license fees based on the income statement of MASN, while assuming a specific

operating margin and specific percentages of revenue and expenses attributable to baseball. See

Post-Hearing Submission of Mid-Atlantic Sports Network and the Baltimore Orioles

(“Orioles/MASN Final Brief”) at 2 (Dec. 14, 2018). The Nationals favor an analysis placing

considerable weight on comparable teams and deals. Post Hearing Submission of the

Washington Nationals Baseball Club (“Nationals Final Brief”) 1–2, ¶3 (Dec. 14, 2018). This

dispute is central to what “established methodology” means in § 2.J.3—each side contends that

its preferred methodology is the “established methodology.” Orioles/MASN Final Brief at 2;

Nationals Final Brief at 1–2, ¶3.

128 of 54
138
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

A. Structure of the 3/28/05 Agreement

Under the Agreement, MASN has the sole and exclusive right to broadcast all Nationals’

and Orioles’ games not retained or reserved by MLB’s national rights agreements. Agreement

(OMX 1) §§ 2.A, 2.D. License fees for the years 2005–2011 were set forth in the Agreement.

Id. § 2.G. The Nationals, the Orioles, and MASN are to negotiate the license fees that MASN

will pay the two teams starting on 2012 “using the most recent information available which is

capable of verification to establish the fair market value of the telecast rights licensed to the

RSN.” Id. § 2.I. If the parties cannot agree upon the license fees that MASN should pay, § 2.J

explains what must be done.

The RSDC typically reviews related-party transactions to see if the revenues that teams

declare in the form of license fees are at market value or too low. See, e.g., 16th Report 2 (OMX

4) at 5 (“Under the Revenue Sharing Plan, the Administrator is required to review all related

party transactions (‘RPT’) to determine whether the Clubs are reporting revenues from such

transactions ‘as if' [the transactions] were entered into on an arm's length basis’” (quoting August

29, 1997 Revenue Sharing Definitions Subcommittee Report at 7) (alterations in original)); 39th

Report (NX 47) at 2 (“[T]he Committee reviewed whether the rights fee received by the

Indians . . . was consistent with fair market value.”). 3

2
References to “Reports” are to Reports of the RSDC.
3
Each of the Reports on which the parties rely echoes this. 18th Report (OMX 3) at 1 (“As
such, the Revenue Sharing Definitions Committee (‘RSDC’) is charged with the responsibility of
making a recommendation to the Administrator of the Revenue Sharing Plan on the question of
whether the revenue generated by the Red Sox under the NESN agreement is the same as would
have been produced by an arm's length transaction.”); 34th Report (NX 3) at 1 (“The Committee
has adjusted a Club’s Net Local Revenue if it determined that the Club received less than fair
market value for its local media rights during any Revenue Sharing Year.”).

139 of 54
138
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

This makes sense because the Orioles control the majority of MASN’s profit interest.

See 3/28/05 Agreement (OMX 1) § 2.N. The Orioles also control MASN “as managing partner

of the RSN” and “have the full authority to manage operate all of the business affairs of the

RSN.” Id. § 2.O. Any team with some ownership and control of an RSN may find itself with an

incentive to takes its portion of the revenues of the RSN as profit from the enterprise rather than

as license fees because the former are not subject to revenue sharing. See 18th Report (OMX 3)

at 2 (“In contrast, the RSDC’s concern is that NESN might underpay the Red Sox and thus

increase the value of NESN to the benefit of both the majority and minority owners of the

broadcasting entity and the detriment of the 29 other Major League Clubs.”); see also Expert

Analyses and Opinions of Chris Bevilacqua (“Bevilacqua Report”) at 9, ¶25 (Aug. 10, 2018);

Joint Pre-Hearing Submission of Mid-Atlantic Sports Network and the Baltimore Orioles

(“Orioles/MASN Opening Brief”) at 17–18, ¶30 (Aug. 10, 2018). Here, the Orioles are

incentivized to prefer a higher profit dividend from MASN and a lower license fee, and the

Nationals to prefer the opposite. While rights fees to the two teams are to be equal, see 3/28/05

Agreement (OMX 1) § 2.J.3, the profits of MASN are split such that a super-majority goes to the

Orioles. See id. § 2.N. The RSDC is tasked with determining that MASN pay market-level

license fees, rather than sub-market fees with correspondingly higher MASN profits.

B. History of the Dispute

In 2004, MLB decided to move the Montreal Expos (the “Expos”) to Washington, D.C.

See TCR Sports Broad. Holding, LLP v. WN Partner, LLC, 153 A.D.3d 140, 144, 59 N.Y.S.3d

672, 674 (1st Dep’t 2017) (plurality opinion). When MLB voted to move the Expos to

Washington, D.C., the Orioles dissented. “In an effort to resolve several issues associated with

the Expos’ relocation,” the Orioles and MLB settled and entered into the 3/28/05 Agreement.

14
10 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

TCR Sports Broad., 153 A.D.3d at 144, 59 N.Y.S.3d at 674 (plurality opinion). The Nationals

were later purchased by the Lerner family, in 2006. See Orioles/MASN Final Brief at 4;

Nationals Final Brief at 4, ¶9. Thus, MLB owned the Nationals at the time the 3/28/05

Agreement was negotiated and signed.

The Agreement was negotiated in 2005, with multiple drafts exchanged. See, e.g.,

3/23/05 Draft of Agreement (NX 89); 3/26/05 Draft Agreement (OMX 46). 4 The Agreement

was signed by Peter Angelos on behalf of the Orioles/MASN and Commissioner Selig for MLB.

3/28/05 Agreement (OMX 1) at 18–19. After the Agreement was signed, there was apparently a

carriage dispute between MASN and Comcast, during which Comcast actually took MASN off

the air (at the time, MASN was broadcasting only Nationals’ games). This led to an FCC

complaint by MASN. The FCC sent the matter to arbitration, and it settled. See Richard

Sandomir, Beltway Cable Dispute: Fans Paying the Price, N.Y. TIMES (June 28, 2005),

https://www.nytimes.com/2005/06/28/sports/baseball/beltway-cable-dispute-fans-paying-the-

price.html; Arshad Mohammed, FCC Finds Possible Bias Against MASN by Comcast, WASH.

POST (Aug. 1, 2006), https://www.washingtonpost.com/archive/business/2006/08/01/fcc-finds-

possible-bias-against-masn-by-comcast/1cbb3ac7-6815-480b-bd3d-5868265d7729/?utm_term=

.a63f0dd52ace; see also Letter of Stephen B. Burke to Allan H. Selig (NX 17) (Apr. 6, 2006).

On April 3, 2012 the RSDC (then composed of different members) convened a hearing to

determine the fair market value of the rights at issue here (the “2012 RSDC Hearing”). See

TCR Sports Broad., 153 A.D.3d at 147–48, 59 N.Y.S.3d at 677 (plurality opinion). This

followed unsuccessful negotiations in which the Orioles/MASN offered the Nationals an average

annual license fee of $34 million, while the Nationals sought more than $110 million annually.

4 The relevant facts and contentions regarding these negotiations are discussed in § II.F.

15
11 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

See id. at 145, 59 N.Y.S.3d at 675. At the 2012 RSDC Hearing, the Orioles/MASN proposed an

average annual license fee of $39.5 million, while the Nationals proposed $118 million. See id.

at 148, 59 N.Y.S.3d at 677. In the summer of 2012, the parties tried to settle the dispute, after

being told roughly where the previous RSDC was likely to come out. See id. In 2012, MLB

made a loan to the Nationals in the amount of $24,574,138. See Letter of Steven Neuwirth to

RSDC (Mar. 12, 2018) at Ex. A.

On June 30, 2014, the previous RSDC issued its final decision (the “2014 RSDC

Decision”). See 2014 RSDC Decision (NX 74) at 20. The previous iteration of this Committee

determined that the fair market value of each team’s telecast rights was:

2012 2013 2014 2015 2016 Average
License Fee (millions) $53.2 $56.3 $59.3 $62.6 $66.7 $59.6

Id. at 19. In September 2014, MASN filed a petition in New York Supreme Court to vacate the

previous Committee’s award. TCR Sports Broad., 153 A.D.3d at 149, 59 N.Y.S.3d at 678. The

plurality opinion of the New York Supreme Court Appellate Division, First Department,

summarized the allegations as follows:

In support of its petition, MASN alleged that MLB had a financial stake in the
outcome of the arbitration due to the $25 million advance it made to the Nationals;
that MLB, the Nationals and the arbitrators all used the same law firm without full
disclosure as to possible conflicts; that MLB controlled the arbitration process; and
that the arbitrators failed to apply the Bortz methodology, as required by the
agreement. MASN further alleged that the RSDC was impossibly tainted by a
conflict of interest because an increase in the rights fees, which are taxed by MLB,
meant that more money would go into MLB’s revenue sharing pool, and the Rays
and Pirates, whose representatives were on the RSDC, were teams that benefited
from revenue-sharing.

Id.

The Supreme Court (the trial court) vacated the 2014 RSDC Decision for the sole reason

that, in connection with the 2012 RSDC Hearing, the Nationals were represented by the same

law firm (Proskauer Rose LLP) that was also counsel to MLB and to some of the teams with

16
12 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

representatives serving on the RSDC. Id. at 149–50, 59 N.Y.S.3d at 678. The Appellate

Division affirmed the vacatur. The plurality agreed that the conflict requiring rehearing arose

from the fact that Proskauer Rose was not only counsel for Nationals in connection with the 2012

RSDC Hearing, but also other attorneys in the firm represented both the MLB and members of

the RSDC. See id. at 151–52, 59 N.Y.S.3d at 679–80. The plurality also held that a second

arbitration under a new Committee was the correct resolution because the 3/28/05 Agreement

showed a conscious intent of the parties “for arbitration before the RSDC, an industry-insider

committee,” whose “members are selected by MLB in its sole discretion” and that it was

appropriate that “MLB staff would provide administrative, organizational and legal support,

including analyzing financial information and preparing draft decisions in accordance with the

instructions of the RSDC members who would make the final determinations.” See id. at 156, 59

N.Y.S.3d at 682–83.

The concurring opinion pointed out that the parties’ choice of the RSDC as the forum for

arbitration overrode concerns that there could be interference in the RSDC’s decision by MLB,

so the arbitration could not be ordered moved to another forum. Id. at 161, 59 N.Y.S.3d at 686

(concurrence). The Appellate Division opinions were issued on July 13, 2017. On January 18,

2018, the Appellate Division denied leave to appeal to the New York Court of Appeals. See

Notice of Entry, TCR Sports Broad. Holding, LLP v. Wash. Nationals Baseball Club, LLC, No.

652044/2014, NYSCEF Doc. No. 780 (Sup. Ct. N.Y. Cty. Jan. 19, 2018). Preparations for this

hearing soon began. See Letter of Joseph C. Shenker to Counsel for All Parties (Feb. 28, 2018).

Sullivan & Cromwell LLP initially represented the present Committee. On May 1, 2018,

Sullivan & Cromwell stepped down. See Letter of Joseph C. Shenker to Counsel for All Parties

(May 1, 2018). The Committee retained Joseph Hage Aaronson LLC. Letter of Gregory P.

17
13 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

Joseph to Counsel for All Parties (May 7, 2018). The Committee originally scheduled a hearing

for August 2018 but, at the request of the Orioles/MASN, the hearing was postponed to

November 15–16, 2018. See Procedural Orders Nos. 1 and 4.

Throughout 2012–2016 MASN paid to the Nationals the license fees that the

Orioles/MASN had proposed in the 2012 RSDC Hearing:

2012 2013 2014 2015 2016 Average
License Fee (millions) $34.0 $36.6 $39.3 $42.0 $45.7 $39.5

Bortz Media & Sports Group, Report (“2012 Wyche/Bortz Report”) at 1 (Mar. 1, 2012);

Orioles/MASN Opening Brief at 6, ¶9 n.17.

MASN also made profit distributions to the Nationals—and impliedly to the Orioles 5—in

the following amounts:

2012 2013 2014 2015 2016 Average
Nationals’ Profit
Distributions (millions)
Orioles’ Profit
Distributions (millions)

See NX 42; NX 43.

II. Discussion

A. Applicable Law

The 3/28/05 Agreement’s § 2.J.3 directs the RSDC to determine “the fair market value”

of the rights licensed to MASN “using the RSDC’s established methodology for evaluating all

other related party telecast agreements in the industry.”

5 The equity distributions set forth in the accompanying table are drawn from NX 42 and
NX 43. While neither party submitted MASN’s full financial statements itemizing the parties’
equity distributions, NX 42 and NX 43 set forth the Nationals’ equity distributions and calculates
the Orioles’ implied distributions based on the Parties’ relative profit ownership under the
Agreement (OMX 1 at § 2.N). The Orioles/MASN did not dispute the Nationals’ calculations or
offer competing ones.

18
14 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

Maryland law governs. Agreement (OMX 1) § 11.A. Under the law of Maryland, the

Committee will construe the provisions of this Agreement that are unambiguous as a matter of

law, while those that are ambiguous the Committee will construe with reference to extrinsic

evidence. Calomiris v. Woods, 727 A.2d 358, 363 (Md. 1999); Anne Arundel Cty. v. Crofton

Corp., 410 A.2d 228, 232 (Md. 1980). A provision is ambiguous “if, when read by a reasonably

prudent person, it is susceptible of more than one meaning.” Calomiris, 727 A.2d at 363. That

determination “includes a consideration of ‘the character of the contract, its purpose, and the

facts and circumstances of the parties at the time of execution.’” Id. (quoting Pac. Indem. Co. v.

Interstate Fire & Cas. Co., 488 A.2d 486, 488 (Md. 1985)).

The Agreement contains an integration clause providing that the Agreement is “the entire

agreement between the parties with respect to the subject matters herein and supersede all other

oral and written understandings or agreements relating to the subject matters contained herein.”

3/28/05 Agreement (OMX 1) § 11.B. Under Maryland law, an integration clause “can be seen as

wiping clear any prior oral or implied agreements that were not included in the contract.”

Hovnanian Land Inv. Grp., LLC v. Annapolis Towne Centre at Parole, LLC, 25 A.3d 967, 986

(Md. 2011).

The Agreement disclaims the contra proferentem rule, the principle that “ambiguities are

resolved against the draftsman of the instrument.” John L. Mattingly Constr. Co. v. Hartford

Underwriters Ins. Co., 999 A.2d 1066, 1078 (Md. 2010). Section 11.F. provides that “[t]he

parties hereby acknowledge that no provision of this Agreement shall be construed against a

party solely because that party (or that party's counsel) drafted such provision.” 3/28/05

Agreement (OMX 1) § 11.F.

Under Maryland law, extrinsic evidence includes:

19
15 of
of 138
54
FILED: NEW YORK COUNTY CLERK 05/14/2019 01:11
01:26 PM INDEX NO. 652044/2014
NYSCEF DOC. NO. 804
805 RECEIVED NYSCEF: 05/14/2019

• Statements made by the parties during negotiations, Canaras v. Lift Truck Servs., Inc., 322
A.2d 866, 874 (Md. 1974);

• The parties’ construction of the contract, see First Union Nat’l Bank v. Steele Software Sys.
Corp., 838 A.2d 404, 457 (Md. Ct. Spec. App. 2003) (“There was significant extrinsic
evidence offered by both parties. This included evidence as to the parties’ construction of
the contract after its execution.”); Canaras, 322 A.2d at 874 (“In such a case the court may
consider evidence of extrinsic factors, i.e.,. . . the parties’ own construction of the
contract . . . .”); and

• Whether one interpretation of an agreement appears more fair than another, see Calomiris,
727 A.2d at 368 (“A trial court may properly consider the apparent fairness of a given result
when contract language is susceptible of two different interpretations, one of which leads
to a reasonable result and the other to an unreasonable result. ‘Where language of a
contract is open to an interpretation which is reasonable and in accordance with the general
purpose of the part

Case Info

Judge

Joel M Cohen Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

May 14, 2019

Case Filing Date

January 01, 2014

County

Parties

AKOWUAH, KWAKU AFFAWUA Attorney for the Defendants
Allan H. (Bud) Selig, As Commissioner of Major League Baseball Defendant
Baltimore Orioles Limited Partnership Nominal Respondent Defendant
BONACORSI, KATHRYN DELVEAUX Attorney for the Defendants
BUCKLEY, JOHN J. Attorney for the Defendants
FAX, CHARLES SAMUEL Attorney for the Defendants
HALL, THOMAS J Attorney for the Plaintiff
JOYCE, EAMON P Attorney for the Defendants
KIEFER, JOSEPH NICHOLAS Attorney for the Defendants
LOSS-EATON, TOBIAS SAMUEL Attorney for the Defendants
LUPKIN, JONATHAN DANIEL Attorney for the Defendants
NAGIN, BENJAMIN R Attorney for the Defendants
NEUWIRTH, STEPHEN R Attorney for the Defendants
Nine Sports Holding LLC Defendant
PIGNATELLI, CAROLINE MAE Attorney for the Plaintiff
SCHILLER, JONATHAN D. Attorney for the Plaintiff
SCHILLER, JOSHUA IRWIN Attorney for the Plaintiff
SMITHWICK, REBECCA CLAIRE Attorney for the Defendants
SOSNOWSKI, THOMAS HENRY Attorney for the Plaintiff
TCR Sports Broadcasting Holding, LLP Plaintiff
The Baltimore Orioles Baseball Club Nominal Respondent Defendant
The Office of Commissioner of Baseball Defendant
THORN, RACHEL WOODBURN Attorney for the Plaintiff
Washington Nationals Baseball Club, LLC Defendant
WELTON, CLELAND BURWELL Attorney for the Defendants
WN Partner LLC Defendant
ROBERT MANFRED Attorney
ARNOLD WEISS Attorney
ALAN RIFKIN Attorneys for Defendants
JENNIFER BISHOP Attorney
JULIA PECK Attorney
DEBORAH EDELMAN Attorney
BARRY SIMON Attorney
PATRICK HOULIHAN Attorney
DANIEL HALEM Attorney
DAVID FRIEDRICKS Attorney
BENJAMIN BLEIBERG Attorney
ARNOLD WEINER Attorney
CANDICE BRYAN Attorney
JAMES PECK Attorney
BRENDAN SULLIVAN Attorney
MICHAEL MICHAEL Attorney
CHRISTOPHER PARK Attorney
STEVEN GONZALEZ Attorney
THOMAS OSTERTAG Attorney

For full print and download access, please subscribe at https://www.trellis.law/.

Preview

Related Topics

Case Info

Parties