Cable Operator Files Suit Against Yankees

Cable Operator Files Suit to Maintain Rights to Yankee Broadcasts

Alleges breach of contractual matching rights; bad faith by team

New York, July 22, 2000 -- Madison Square Garden Network, the cable broadcast partner for New York Yankee baseball, has filed suit with the State Supreme Court against the baseball club for violating the "last refusal" clause in their contract. With the current 12-year, $486 million contract between MSG and the Yankees set to expire at the end of the season, attorneys for the cable network are asking the court to issue an injunction to prevent the Yankees from entering into a new broadcasting agreement with Trans World International (TWI) and to honor the contractual matching rights. The provision in question specifically grants MSG the right to match any offer by a third party for Yankee TV rights.

According to the New York Daily News, the suit alleges that while the Yankees presented MSG with a chance to match TWI's offer, it was done perfunctorily, as the bid came from a company, "Newco," which will be 95-percent owned by the Yankees, not a third party. The lawsuit claims that TWI, which would provide the production services to the Yankees, would have a 5-percent equity interest in the aptly named Newco-the managing company behind the new YankeeNets regional sports network. Newco, not TWI, would pay the Yankees a $65 million fee in the first year of operation.

In order to match Newco's offer, MSG would be forced to purchase an equity interest in YankeeNets and pay the Yankees at least 25-percent of parent company Cablevision's net income from all of its other regional sports networks. According to the lawsuit, "The so-called 'offer' is a sham, and is designed to prevent MSG from availing itself of its right of last refusal - a right MSG bargained for carefully and paid for handsomely."

Jeremy Eichel