Yankees Barred From Forming Company

Monday, July 31st 2000, 12:00 am
By: News On 6

NEW YORK (AP) — The New York Yankees were barred Monday from forming a new company with a division of the International Management Group to broadcast the team's games starting next season.

A preliminary injunction was issued at the request of Madison Square Garden, which claimed the agreement violated its right of last refusal, contained in a $486 million, 12-year contract to broadcast Yankees games, a deal that expires after this season.

Yankees and IMG's Trans World International division agreed July 5 to form a new company, 95 percent owned by the team, which would have paid the Yankees $838 million for TV rights from 2001-2010.

After hearing arguments from lawyers Monday morning, New York Supreme Court Justice Barry Cozier spent more than 30 minutes reading his decision from the bench.

``This case is not even about half a loaf,'' he said. ``The Yankees have offered 5 percent and attempted to disguise that as a full loaf. ... Clearly what he have here is not a bona fide offer.''

Cozier said the injunction would remain in force until a trail this fall, but he left the Yankees free to negotiate other proposals and present them to MSG.

Yankees lawyers said they may appeal Cozier's ruling, but preliminary injunctions are rarely overturned. Lonn Trost, the Yankees' chief operating officer, declined comment.

As part of the deal, the Yankees-TWI network would pay YankeeNets, the parent company of the baseball and basketball teams, $96.7 million for rights to televise New Jersey Nets' games for 10 years starting with the 2001-02 season.

``MSG cannot be made to pay to acquire benefits or obligations unrelated to the television exploitation of Yankees' games,'' the network said in court papers.

MSG Network also objected to a clause that would force its parent company, Cablevision Systems Corp., to pay the Yankees if MSG matched the offer. A clause in the Yankees-TWI deal would give the team a minimum 25 percent of net income from all its sports networks in the United States owned by any Yankees' TV partner.

``From a commercial standpoint, the exclusivity agreed to by TWI may be difficult — though not impossible — for an existing network with other sports team alliances to match,'' YankeeNets chairman Harvey Schiller said in an affidavit.

He said, however, that MSG still could match the proposal but never discussed it with the Yankees.

Former MSG head Bob Gutkowski has sided with the team in the dispute.

``At no time did I believe (nor do I now believe) that the Yankees Partnership was somehow forbidden from forming a new network in which the Yankees Partnership would hold the sole, or any equity stake, and on which the Yankees' games would be televised,'' Gutkowski said in an affidavit signed July 24 and obtained by The Associated Press.

On behalf of MSG, Gutkowski negotiated the contract with the Yankees in 1988.

``Mr. Gutkowski is a disgruntled former employee of MSG, who was fired in 1994,'' MSG said in a brief to the court Friday. ``Since his termination, Mr. Gutkowski has solicited business from and provided consulting services to the Yankees Partnership.''