One front where the Diamond Sports Group (parent of the Sinclair-owned Bally Sports regional sports networks) bankruptcy proceedings have been strangely quiet until now is in Cincinnati. Ahead of Diamond’s official bankruptcy filing last month, the Reds were listed in a New York Post report by Josh Kosman as one of four specifically-named MLB teams where Diamond was expected to use bankruptcy proceedings to exit their contract (along with the San Diego Padres, the Arizona Diamondbacks, and the Minnesota Twins). But that’s actually played out quite differently; Diamond has been paying the Padres, didn’t pay the Diamondbacks or the Twins, and also didn’t pay the Cleveland Guardians, but it’s been quite quiet on the Reds’ front. Now, as per John Ourand of Sports Business Journal, Diamond has missed a payment to the Reds (although they still have a grace period to rectify that):
Diamond Sports did not pay the Reds rights fee, starting a 15-day grace period.
The latest in SBJ Media.
https://t.co/hH9rfbwFXi— John Ourand (@Ourand_Puck) April 18, 2023
The proceedings here are going to be different than the ongoing ones with the Twins and Guardians. In those cases, MLB is trying to get the bankruptcy court to force Diamond to pay or to turn over the rights, but has not yet been successful there. (The Diamondbacks’ proceeding is also different, as that missed payment came before Diamond’s bankruptcy filing, putting them in as a creditor in the filing.) But the Reds own a stake in Bally Sports Ohio, unlike those other three teams, where the networks in question are fully owned by Diamond.
That came out of the Reds exploring starting their own RSN last decade, but deciding instead to take an equity stake (how much of a stake they have has not been specified) in the then-Fox Sports Ohio. They did so as part of a new 15-year-deal with that network that runs through 2032. And, as Ourand writes, that could see them getting their rights back faster than some of these other teams:
If Diamond does not pay within that grace period, MLB believes that the team will get its rights back, expected to happen during its early May series with the White Sox. The May 5 White Sox-Reds game is scheduled for AppleTV+. The Saturday night May 6 one is where the Reds could see MLB take over production.
The Reds situation is different from those in Cleveland and Minnesota, two other markets where Diamond has not made rights fees payments on time. That’s because the Reds own part of Bally Sports Ohio, and the presence of that joint venture has kept that RSN separate from the bankruptcy proceeding.
…If it gets back the Reds’ rights, MLB’s plan is to use many of the same behind-the-camera crew and trucks that currently work on the games for Bally Sports Ohio. That because most of those staffers are freelancers, and Mobile TV Group owns the trucks, sources said. The announcers work for the team, including John Sadak on play-by-play with analysts Chris Welsh and Barry Larkin.
So there wouldn’t necessarily be major changes to what games look like if MLB and the Reds do get back their rights, with many of the same crew and the same on-air team likely still involved. And the MLB league office has been preparing for increased broadcasting involvement amidst the Diamond Sports bankruptcy (and amidst the ongoing, but non-bankruptcy-related, plans to shut down the WBD Sports RSNs or transfer them to teams), including by hiring experienced executives, so there are reasons to think this transition could go relatively smoothly if the rights are turned over. There would be changes to where to find games, with Ourand writing they’d be carried on a different channel, but Ourand also notes that a sources says MLB has handshake agreements with both DirecTV and Spectrum to carry games in the event of a rights turnover.
The Cincinnati situation may well be the first case where we see rights actually turned over to teams and MLB, but it may not be the last. The rights of the Guardians and Twins could be turned over as well, but that’s pending a judge’s ruling next month thanks to the 100 percent Diamond-owned nature of their associated networks. However, the Padres, the Kansas City Royals, the St. Louis Cardinals, the Miami Marlins, and the Los Angeles Angels all have some level of equity in their associated networks, so they’re in situations more similar to what’s going on with the Reds. No payments to those teams have reportedly been missed yet, but if they are, analogous proceedings may play out there.
There are several further things worth noting with the Reds specifically. One is that the team has not been very good; they have just three seasons with a .500-plus winning percentage in their last 10 (with one of those being the pandemic-shortened 2020 season) and just two playoff appearances in that time, both wild-card round losses. After a historically bad beginning last year (and a 62-100 record overall, tied with the Pittsburgh Pirates for third-worst in MLB) They’re off to a 7-9 start this year, and just announced the smallest crowd in the 20-year history of their ballpark (7,375 fans, a number below even the times they were capped at 30 percent attendance due to COVID-19 in 2021) for Monday night’s game against the Tampa Bay Rays (although they did set an attendance record for their opener).
Another element of note is that the Reds have often declined to spend much, which has taken criticism from fans and ex-players. And team president Phil Castellini’s “Well, where you gonna go?” response to fans last year didn’t win many over. Along those lines, it’s interesting to reread coverage of that 2016 deal with Bally Sports Ohio, including Castellini’s comments to Zach Buchanan of The Cincinnati Enquirer of how it would set the team and the network up for future success:
About three or four years ago, as Phil Castellini tells it, the Cincinnati Reds began researching an eye-opening idea. With their broadcast deal with Fox Sports Ohio set to expire after the 2017 season, baseball’s oldest franchise began looking into the notion of cutting out the middle man by establishing and operating their own regional sports network.
The Reds hired a consulting firm to explore that avenue, but ultimately decided they were better served by sticking with FSO. On Wednesday, the network and the Reds cemented a new 15-year pact that will run through the 2032 season, and comes with an equity stake in the network for the Reds.
The size of that ownership stake was not disclosed, nor were any other terms of the deal. Castellini, the organization’s chief operating officer, said it represents a “nice increase” in yearly television rights fees, but is still a small-market deal when compared to other recent TV deals. The Reds’ current deal has guaranteed them $30 million a year since 2007.
…“We’re very pleased with our deal, especially with the uncertainty in the marketplace,” Castellini said. “It’s all relative to our market size. As such, we’re very pleased with the deal we have with Fox, and I think our timing was excellent.”
…Ultimately, the task was deemed too difficult, especially in terms of negotiating distribution fees from cable providers and putting their network in enough homes within the market. By re-upping with Fox Sports Ohio, the Reds can take advantage of its parent company’s large distribution network and experience running regional sports networks across the country. Adding an ownership stake gives both parties “skin in the game,” Castellini said.
…“We will continue to reinvest all topline revenues back into the product, and we define the product as player development, scouting and the major-league payroll, everything that goes into what (general manager) Dick (Williams) does to put the team on the field as well as the game-day experience at Great American Ball Park. The partnership with Fox is really going to help us continue that work.”
All of that was at least somewhat fair at the time. Launching a new RSN has always been difficult, and there were plenty of cases of RSN problems around that point, including the CSN Houston bankruptcy and the distribution challenges for Spectrum Sportsnet LA. The Reds might not have been any better off if they had gone that route. But it is interesting to read about how excited they were about their deal at that time, and the importance they attached to getting equity in the RSN. And that now is part of why they might wind up being the first test case for MLB-produced and distributed games. If they do, it will be interesting to see how that goes and how it’s received.
[Sports Business Journal; photo of the Reds’ Great American Ballpark ahead of an April 15 game against the Philadelphia Phillies from David Kohl/USA Today Sports]
