A view of the Spalding logo and the Bally Sports logo before the game between the Dallas Mavericks and the Milwaukee Bucks at the American Airlines Center. Credit: Jerome Miron-USA TODAY Sports

Half a loaf is better than nothing and that’s what Major League Baseball got in bankruptcy court Friday.

Whether that will be enough to prevent MLB from protesting Bally Sports Regional Networks’ reorganization plan, which may help shape the structure of live local sports in years to come, is still unknown.

The federal bankruptcy judge overseeing the plan granted MLB’s request to see crucial clauses in contracts between Bally Sports and cable distributors like Charter, Cox, and DirecTV, which strenuously opposed that for privacy concerns. But the judge remained steadfast that MLB could not see a breakdown of revenues that have come in and in the future into Bally Sports from individual distributors, only a sum that aggregates the payments.

“MLB and the Clubs simply cannot conduct the required scenario analyses of likely business outcomes if the Debtors provide access only to information about aggregate revenues projected to be generated,” MLB outside counsel Jim Bromley wrote the judge last night, to apparently no effect. “This level of detail is necessary to examine how revenues might be impacted by, for example, the loss of a Distributor.”

MLB wants to know, for example, how much Comcast paid Bally Sports before the two sides failed to renew on May 1. MLB has cited Comcast’s absence as a major headwind blowing against confirmation. For now, it will not get to see how much Comcast paid Bally Sports.

Bally Sports parent Diamond Sports Group filed for Chapter 11 in March 2023 and had planned to wind down operations at the end of 2024. At its peak, Bally Sports had 19 RSNs and 42 NBA, NHL, and MLB teams (it is down to 17 RSNs and 12 MLB teams while talks are ongoing with the NBA and NHL) In January it pivoted to a reorganization plan after securing new financing, a settlement with parent company Sinclair, and a new distribution deal with Amazon Prime Video.

The Amazon contract was also the source of a discovery dispute with MLB, but the parties told Judge Chris Lopez they had settled that disagreement.

All discovery material–documents and answers to questions–are due next week, and depositions are scheduled for early July. Judge Lopez said earlier this week that if MLB after deposing Bally Sports executives still did not have the information it wants–which seems clear will happen as it wants a distributor-by-distributor breakdown of revenue into DSG–the league can come back to him.

That does not leave much time as the confirmation hearing is scheduled for July 29. MLB is concerned that it is not viable for DSG to exit Chapter 11, and if it does so and falters, MLB will again be left scrambling to find alternative broadcast options for the Bally teams as it did last year for the San Diego Padres and Arizona Diamondbacks when their contracts were terminated.

The NBA and NHL have similar concerns about DSG, but their counsels have largely taken a back seat to MLB this week.

MLB did score one win today. The league will get to see the most favored nations (MFN) clauses in the distribution contracts, something the distributors had generally opposed. These clauses say if another provider signs a deal with DSG that offers friendlier terms, then those terms also apply to it.

MLB’s concern is DSG will strike a new deal with Comcast that puts the RSNs on a sports tier, and that will trigger similar moves by the other providers.

“With respect to the MFN Clauses, common sense dictates that the application of these MFN Clauses would impact a broad range of contractual terms, such that overall financial performance of the Debtors under each distribution agreement could change based on whether or not the clauses are triggered,” Bromley wrote the court yesterday. “In order for MLB and the Clubs to assess the veracity of the Debtors’ projections and whether or not the Plan is feasible, we need to know how and when such clauses might be triggered, the terms of other contractual provisions affected, and the impact on the Debtors’ revenues if this were to occur.”

The distributors have called the MFNs a trade secret not eligible for disclosure. But Judge Lopez disagreed, saying today, “The debtor cannot be hamstrung.”

By that, he means the debtor, DSG, will be putting on a case at the confirmation hearing about why its reorganization plan is viable. To do so, it must be able to cite the MFN provisions and why they allegedly don’t pose a threat to revenues moving forward.

While MLB will know those terms, it apparently won’t have the breakdown of distributor by distributor revenue, which the league has argued is crucial. But Lopez ruled he is confident MLB can make it work, something Bromley this week made clear he disagrees with. And so the clock remains ticking toward July 29 and the confirmation hearing while MLB remains unhappy for the moment.

About Daniel Kaplan

Daniel Kaplan has been covering the business of sports for more than two decades. A proud founding reporter of SportsBusiness Journal, he spent the last four years at The Athletic.