The Other Drama at Fenway Park This Fall
Red Sox owner John Henry has been fighting to avoid testifying in a lawsuit that takes aim at MLB's blackout policy.
The Red Sox winning the World Series wasn’t the only drama unfolding at Fenway Park this fall: Owner John Henry has been fighting to avoid testifying in a high-stakes class-action lawsuit against his fellow baseball owners.
The suit takes aim at Major League Baseball’s decades-old blackout policy, which requires fans living in cities without a team to buy a pricey MLB-owned game bundle to watch their home team play ball. But there may be something else at play, according to Roger Abrams, a onetime Major League Baseball salary arbitrator and now a Northeastern University Law professor. Abrams believes Henry may be targeted to testify in a deposition to reveal closely guarded financials to show the sport’s anti-trust exemption is bad for consumers.
“It might be a Trojan horse,” Abrams said. “Baseball’s management, or baseball central, or any of the 30 clubs like to keep their books private, and maybe that’s why they’re resisting [the subpoena]. The deposition might reveal the real profit and loss statements baseball doesn’t like to reveal.”
Red Sox spokeswoman Zineb Curran declined comment.
Henry was served with a nine-page subpoena at Fenway Park on September 30, just as the Sox prepared for their playoff run. Henry was expected to turn over nearly seven years of files containing detailed financial analyses of the Red Sox, New England Sports Network, and MLB operations.
On October 14, a day after the Sox evened their series against the Tigers, Henry’s lawyers fired off an angry letter protesting the “breathtaking scope” of the request after MLB and some 23 defendants had already turned over more than 300,000 documents. They denounced the subpoena as “an unwarranted fishing expedition into his files and viewpoints.” On November 4, they filed a motion in federal court in Boston that put the brakes on the next morning’s testimony.
Edward Diver, an attorney with Langer, Grogan & Diver PC, the Philadelphia law firm driving the class action, declined to comment.
However, in a November 8 court filing, Diver and his colleagues said the fishing expedition claim “rings hollow.” They added that, as principal owner of the Sox, Henry is a baseball bigwig who holds leadership posts throughout the sport, and he has an ownership stake in a broadcaster whose rights “lie at the center of the litigation.” Henry sits on the executive council of defendants Major League Baseball and the board of MLB Advanced Media LP.
The May 2012 suit names the Red Sox and NESN as “co-conspirators,” although they’re not defendants. It alleges MLB and the TV providers violated the federal Sherman Anti-Trust Act by entering into “agreements to eliminate competition in the distribution of games over the Internet and television,” according to court documents. They did this by “agreeing to divide the live-game video presentation market into exclusive territories, which are protected by anticompetitive blackouts.”
According to court records, MLB carves up parts of the country without home teams and then assigns teams to those territories. The league then blacks-out a fan’s ability to watch those teams’ games unless they subscribe to Internet-only or TV services, the suit alleges. In 2011, a premium subscription to MLB.TV, the internet product, cost $119, according to the complaint against MLB.
In Las Vegas, for example, six ball clubs call the city home because there is no Major League team based there. A Las Vegas resident suing is a New York Mets fan and can only get Mets games by purchasing the cable product MLB Extra Innings—you have to purchase the entire slate of major league games—for $200.
Confused? You’re in good company. Commissioner Bud Selig, who once said he backs changing the blackout policy, doesn’t get it, either:
“I don’t understand (blackouts) myself,” Selig said at a luncheon with the Baseball Writers Association of America. “I get blacked out from some games.”
Andrew Zimbalist, a Smith College sports economist, said the consumers filing the suit “have a tall mountain to climb.” Any attack on MLB’s anti-trust exemption is likely to wind up before the U.S. Supreme Court. Also, he said it’s worth noting other leagues have similar policies, an argument that has to be overcome in court.
The plaintiffs argue prices would fall if teams could package and sell the broadcast of their games a-la-carte. For instance, the Red Sox would market their ball games anywhere in the country, say in New York against the Yankees and Mets—something they can’t do now.
But there would be consequences, Zimbalist said. Let’s say NESN is $4 on top of your cable bill, or $48 a year. That’s $48 that would go straight to the Red Sox, not the current 1/30 split of the MLB.TV revenue with the other teams. If every team got to keep its TV revenue, that would prompt revenue sharing. The Red Sox, which Forbes pegs as the third most valuable team in baseball, might not want to give up that advantage, he said.
But the clock is ticking. The court set a November 29 discovery deadline for both sides to dig up evidence for trial.
Source URL: http://www.bostonmagazine.com/news/blog/2013/11/21/john-henry-testify-class-action-lawsuit-mlb-teams/