As expected, the Atlanta Braves and Major League Baseball formally objected to Diamond Sports Chapter 11 bankruptcy exit plan in a court filing this afternoon.
Diamond Sports is parent of FanDuel Sports Networks, formerly Bally Sports Regional Networks, which has been in Chapter 11 since March 2023. The Braves are the last of more than a dozen MLB teams that once had long term deals with the regional sports network company that is still under its pre-Chapter 11 contract (Diamond has inked subsequent deals with the Miami Marlins and St. Louis Cardinals).
So what is MLB and the Braves beef? They don’t believe Diamond has a sustainable business plan nor that company has been forthright with its financials.
“Neither the Braves nor MLB should be compelled to partner with a business that does not have a realistic roadmap to future operations,” MLB and the Braves jointly wrote. “Based on the current inadequate record, the Braves and MLB have grave concerns that, if the Plan is confirmed, there is a substantial likelihood that the Debtors will find themselves once again in financial distress and/or bankruptcy court in the near future.”
The objection returns to a persistent theme of MLB’s contentious relationship with Diamond: the league wants internal financials from Diamond to prove its business plan, but the company has not been transparent.
“Despite specific requests, the Debtors have failed to produce any materials concerning their as-yet unsigned Amazon commercial partnership, or its predicted substantial benefits,” MLB and the Braves wrote. “In particular, the Debtors’ refusal to produce information concerning the proposed commercial lynchpin of the go-forward business plan as to DTC (direct to consumer or streaming) subscribers, a subscriber base that the Debtors estimate in the Financial Projections to grow by hundreds of percentage points between now and the end of 2027, by itself justifies a finding that the Debtors cannot meet their feasibility burden.”
MLB and the Braves also complain that Diamond has not produced documents other than those that are public or had previously been shared.
“To date, the Debtors have produced only 20 documents, totaling 181 pages,” MLB and the Braves wrote. “Half of these documents were publicly available reports concerning the sports media world in general, and most of the remaining substantive documents were presentation materials that had already been shared with MLB (whether directly or through its advisors).”
MLB also complains, as it has in the past, that it has been unable to see terms of Diamond’s distribution deals.
How much of an influence the objection will have at next week’s hearing to approve the plan is unclear. MLB has been a thorn in Diamond’s side from before and throughout the Chapter 11, pleading with the judge on numerous issues, often to no avail. Judge Chris Lopez seems predisposed to the Chapter 11 plan, and is unlikely to torpedo it because of one MLB club speculating the exit strategy may not be sound.
Also, two other MLB teams–the Cardinals and Marlins–have willingly inked new deals with the emerging FanDuel Sports Networks, albeit at lower fees than they received previously. Diamond is negotiating with a handful of other MLB teams to go along with its deals with the NBA and NHL. One of those MLB teams will not be the Cincinnati Reds. The Reds and Diamond, according to a late filing today, agreed to dissolve their joint venture, Diamond Sports Net Cincinnati, which had televised Reds games.
Diamond is in Chapter 11 after being crushed by the wave of cord cutting and steep debt payments from its acquisition by parent Sinclair Broadcasting. Sinclair would exit as part of the Chapter 11, with the company then owned by the creditors. Sinclair also filed this week an objection, arguing it is owed payments for managing Diamond’s back office operations.
The U.S. Trustee–a government official tasked with ensuring the nation’s bankruptcy rules are followed–has also filed an objection over procedural issues. It is not uncommon for a Trustee to object, and conversely for the judge to overrule the dissent.
