Sinclair, the owner of Diamond Sports Group and its subsidiary Bally Sports, the nation’s largest regional sports network, expect the RSN’s to liquidate their operations at the conclusion of the 2024 MLB season next September. The financially strapped Bally Sports has been in bankruptcy protection since last March. An end date would also bring closure to the bankruptcy procedures.
At a U.S. bankruptcy court hearing on November 15, Judge Christopher Lopez endorsed a proposed settlement plan from Diamond Sports with NBA, NHL and MLB franchises moving forward. On November 6, Diamond Sports had reached an agreement with the NBA, which can now go forward. Under the agreement, Diamond Sports will televise live in-market games for 15 teams throughout the 2023-24 season. This provides assurances to the NBA that, as in the past, games will be available locally on Bally Sports through mid-April.
Afterwards, the 15 franchises and NBA would then own the local broadcast and streaming rights. This is regardless of the length of each franchise’s current contractual agreement with Diamond Sports. The agreement is also contingent upon Diamond Sports reaching a renewal agreement with Spectrum, an MVPD, due next February. Prior to the start of the regular season, the NBA’s Phoenix Suns and Utah Jazz changed their distribution model from RSN’s to local over-the-air broadcast stations and streaming.
Diamond Sports is also in discussions with the NHL, with a similar agreement anticipated. Diamond Sports televises in-market games for 11 NHL teams.
The decision is facing some challenges with two motions, from MLB and Sinclair. After the hearing, Judge Lopez commented on the settlement, “I get it that may blow up the entire cooperation agreement, but that’s the way the parties have set it up.”
MLB is seeking more clarity on the local broadcast agreements and revenue. During the 2023 season, Diamond Sports had defaulted on payments which resulted in the loss of the distribution rights to MLB’s Arizona Diamondbacks and San Diego Padres. Hence, MLB took over in-market distribution for both franchises midseason. Also, during the 2023 season, the RSN had also sought to reduce its rights fees payments to the Minnesota Twins, Cincinnati Reds, Cleveland Guardians and the eventual World Series champion Texas Rangers. A bankruptcy court ordered full payment to all four franchises. The Minnesota Twins contract with Diamond Sports expired with the 2023 season.
Heading into the 2024 season, Diamond Sports retains the local television agreements with 11 MLB teams. There have been reports Diamond Sports could forego Cleveland and Texas. In that event, the in-market rights would revert back to both franchises. In its motion, MLB noted Diamond Sports could drop additional teams before the end of the 2024 season. The Athletic reported, in 2023, the Guardians got $55 million in fees. The Rangers have a 20-year agreement (begun in 2011 with Fox Sports), at an average annual cost of $111 million. A sudden loss in payments would impact the payroll of both clubs.
An MLB attorney James Bromley said, “There is a deal with the NBA. And that’s great. We’ve been hearing that one might be coming for quite a while and there is not one yet with the NHL. We understand it’s on its way, but we have not seen it. And there is no deal with Major League Baseball. And there are a number of issues that need to be addressed.”
MLB has been pressuring Diamond Sports into making a decision on the agreements with the remaining 11 MLB teams. In the upcoming weeks, MLB is expected to send Diamond Sports an offer for next season. At the November 15 hearing, a Diamond Sports attorney said, “Our intention is to broadcast almost all of (our) Major League Baseball teams next year. There are a few, a very few, for which we do not have agreements in place. And that, frankly, at this point, is too expensive for us to broadcast without concessions. I am told that those discussions are taking place, there have been reach-outs to both [Cleveland and Texas] of the teams involved.”
In their motion, Sinclair, which has separated itself from Diamond Sports, claimed they are owed $250 million in management fees by the end of the 2024 MLB season. Sinclair claims the agreement does not take that into account.
On the hand, Diamond Sports Group is suing its parent company for a reported $1.5 billion citing, “fraudulent transfer of assets, unlawful distributions and payments, breaches of contracts, unjust enrichment and breaches of fiduciary duties.” Judge Lopez has tentatively set December 8 to hear both motions.
Nonetheless, to quote Yogi Berra, “It ain’t over till it’s over.” Cord Cutters News reports, Bally Sports still sees a path forward to excite bankruptcy without shutting down. A lot can change between now and the end of the 2024 MLB season. A sale, new contracts, or new funding could all result in Bally Sports remaining active, but for now, the talk in court today was of a final end for Bally Sports in 2024.
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