Court Enjoins Yankees from Creating its Own TV Operation

Concludes that set-up violated MSGN's right of last refusal clause

New York, July 31, 2000 -- A state judge barred the Yankees from proceeding with a plan for a new cable television network because the team failed to give its current rightsholder a legitimate chance to retain its right to carry future games beyond this season. A preliminary injunction was granted to Madison Square Garden Network (MSGN), a subsidiary of Cablevision to prevent the Yankees and International Management Group ( IMG) from forming the New York Sports Network, an entity owned by the team. However, the injunction does not prevent the Yankees from making different deals with IMG or anyone else that would comply with MSGN’s contract. MSG has the right of last refusal to match any offer the team receives from another source.

The Yankees offered MSGN a 5 percent share that Trans World International, a division of IMG would own. Under this plan the Yankees would own the remaining 95 percent and receive $899 million for a period from 2001- 2010. The amount includes $65 million next year.

Manhattan Judge Barry A. Cozier ruled that the Yankees offer violates MSGN’s rights to continue to exploit 100 percent of the 150 games they telecast. Furthermore, Cozier stated " The ruling is a blow to the long term plans of the Yankees, which are now part of a venture called YankeeNets business venture. If the Yankees make an offer that complies with MSGN’s rights, then its is up to MSG to accept or reject it.

After the decision was reached Lonn Trost, the Yankees general counsel believed that Judge Cozier found an amicable solution. Trost, quoting Cozier said " the Yanks were free to exploit their rights as they saw fit and were free to launch their own network, however the only issue was that MSG had to receive 100 percent of what was initiated not 5 percent."

If MSGN matches the 100 percent value, it would own the network outright and the Yankees would emerge with far more than the $486 million they collected under their MSG deal, which began in 1989. Since 1988 when MSG acquired the right to televise Yankee games subscribers have increased from 2.3 million to close to 7 million, and revenues have risen tremendously from $39.6 million in 1988 to $219 million last year.

Brad Berfas