On the verge of retirement, Major League Baseball commissioner Bud Selig probably doesn't want baseball fans to read this story. In fact, he's threatened to "impose the strongest sanctions available" on two team owners for what's about to be detailed.
In 2005, the Montreal Expos relocated to the nation's capital to become the Washington Nationals. At the time, Baltimore Orioles owner Peter Angelos was furious at the prospect of another ball club taking market share in the same geographical region. But nerves were settled thanks to a settlement agreement whereby the Mid-Atlantic Sports Network (MASN) &mdash in which the Orioles hold a majority partnership profit interest &mdash got to telecast Nationals games at a substantial discount from 2005 until 2011.
PHOTOS THR's Sports Issue
But what the settlement agreement had to say for the years beginning in 2012 is what's now got professional baseball in open court.
Per the terms of the settlement, MASN had to begin paying the Nationals "fair market value." The TV station balked. And so, an arbitration hearing commenced in April before a panel comprised of the chief operating officer of the New York Mets, the president of the Pittsburgh Pirates and the owner of the Tampa Bay Rays. Some of this has been previously reported. The Nationals reportedly got $29 million per year under the old TV contract and wanted it bumped up to somewhere between $100-120 million per year.
What's been untold until now is that on June 30, the MLB committee adjudicating the dispute issued its decision. The award favored the Nationals. That prompted attorneys for the parties to swing into high gear and Commissioner Selig to attempt to get out in front of the situation.
"I am deeply saddened by the fact that you have not been able to resolve amicably the pending broadcast rights dispute," wrote Selig in a letter to Angelos and Nationals owner Ted Lerner, obtained by The Hollywood Reporter.
The commissioner spoke about expending extensive time and resources towards preserving the value of sports TV network serving both clubs. "Unfortunately, these efforts have come to naught solely due to your unfathomable inability to agree on a fair division of that value," he wrote. "In my view, neither of you has approached this negotiation with the best interest of the game paramount in your mind.
Selig, who owned the Milwaukee Brewers before becoming commissioner and whose efforts to keep this all under wraps has included sending the Nationals money, then advises about the consequences about taking the dispute beyond the inner sanctum of baseball:
"Both the Orioles and the Nationals have at various times made threats to institute litigation in connection with this dispute, despite my office's extended, good-faith efforts to have this matter resolved by agreement. On a personal note, I owned a Club for decades and I can honestly say that under no circumstances would I have threatened, let alone commenced, litigation against Baseball. Please be advised that nothing in the Agreement authorizes the parties to file any lawsuit... I want there to be no doubt that, if any party initiates any lawsuit, or fails to act in strict compliance with the procedures set forth in the Agreement concerning the [Revenue Sharing
> Definitions Committee of Major League Baseball]'s decision, I will not hesitate to impose the strongest sanctions available to me under the Major League Constitution."
Despite Selig's stern warning, and notwithstanding confidence he projected publicly, the attorneys for the parties began firing off shots at each other, with Selig cc'd.
PHOTOS ESPYs 2014: Dwayne Johnson, Richard Sherman, Michael Sam Honor Sports' Big Night
The same day Selig's letter came, Pamela Marple, an attorney at Chadbourne & Parke representing MASN, wrote a letter to the Nationals that slammed the MLB arbitration panel's "lack of procedural fairness," noted that the ruling "does not end this matter," argued that it wasn't binding on the Orioles, and stated, "Please also be reminded that your client's privilege to have its games telecast throughout the Orioles' Television Territory arises solely and exclusively under the Settlement Agreement and related Partnership Agreement. Your client has no right to access the Orioles' Television Territory for the telecast of its games independent of those agreements."
On July 1, Stephen Neuwirth, an attorney at Quinn Emanuel representing the Nationals, responded by telling MASN that thanks to the decision, the club was owed an additional $10 million for rights fee payments due on April 1 and June 1 and warning of an impending deadline of default.
Two days later, Neuwirth provided formal notice of defaults and warned MASN to cure the defaults lest the team "seek all appropriate remedies for nonpayment, including (without limitation) termination of MASN's license to telecast National games."
His threats didn't work so on July 7, the Nationals petitioned the MLB Commissioner's Office to confirm and enforce the June 30 decision.
The following day, Thomas Hall, another attorney at Chadbourne & Park representing MASN (and by extension, the Orioles), responded in letter by describing the petition as "nothing more than to further the illicit arrangements and misconduct undertaken by the Nationals, Major League Baseball and the Commissioner to wrest from MASN and [the Baltimore Orioles] the compensation guaranteed to them."
Hall then accused Selig and MLB of improper financial motives. "Not only does Baseball have approximately a 34 percent financial interest in every dollar steered toward telecast rights fees and away from MASN's profits under the Revenue Sharing Plan, but also, in 2013, ... the Commissioner privately paid $25 million to the Nationals, entering into an agreement with the Club, through which Baseball would recoup those funds from the monies to be paid under the RSDC award at issue here."
This letter challenged Selig's jurisdiction and impartiality and despite Selig's threats of sanctions, spoke about being "entitled to obtain the impartial review afforded by the courts."
PHOTOS ESPYs 2014: Best and Worst Moments
By that time, MASN had filed a summons in New York court that provided notice that it was seeking to modify or vacate the arbitration award.
Last Thursday, the Nationals responded in court to what it saw as its adversary's step "in direct contravention of the Commissioner&rsquos instruction, ... for the apparent purpose of further delaying MASN&rsquos payment of the fair market value of the Nationals&rsquo telecast rights fees."
The team noted that Selig hadn't responded to its July 7 letter by confirming the arbitration award or imposing sanctions on MASN . The team stated that it was "clear" that the MLB commissioner didn't intend to follow up on his threats. In short, the Nationals felt it got the opening to go to open court with its own petition to confirm the arbitration award.
All this means that secrets have been spilled with ramifications to be determined at a moment when the value of TV rights deals is skyrocketing and the league is dealing with a TV carriage impasse involving the Los Angeles Dodgers and Time Warner Cable.
We've asked MLB whether Selig intends to follow up on his "strongest sanctions" threat. According to Article II of the MLB Constitution, the MLB Commissioner's powers include "suspension or removal of any owner, officer or employee of a Major League Club." The league once basically forced former Dodgers owner Frank McCourt to sell the team. If MLB chooses to respond to THR's inquiry, we'll update.
> Twitter: @eriqgardner