The Diamond Sports Group (the parent company for the Bally Sports regional sports networks) bankruptcy has seen a lot of twists and turns, and some of the most notable so far have been about them not making rights payments to three of the 14 MLB teams they have rights for. Much of the discussion ahead of the bankruptcy suggested they would continue to make payments despite those proceedings, and they’ve done that in 11 cases, but not with the Arizona Diamondbacks, Cleveland Guardians, and Minnesota Twins. That’s now led to MLB filing an emergency motion with the bankruptcy court:
— Daniel Kaplan (@KaplanSportsBiz) April 6, 2023
That motion asks for a court order by April 13 that would either force Diamond to pay the Guardians and Twins or turn over their rights. (The missed payment to the Diamondbacks actually came before the Chapter 11 bankruptcy filing, so they are listed as a creditor there instead.) The motion also saw the Diamondbacks, Detroit Tigers, Milwaukee Brewers, Tampa Rays and Texas Rangers specifically note that they reserve the right to join this petition if payments to them (future payments, in the Diamondbacks’ case) also are missed.
This comes with Bally Sports Great Lakes (Guardians) and Bally Sports North (Twins) still broadcasting those teams’ games as usual despite the missed payments. MLB cites that as an issue in this motion, and also indicates they’re ready to step in and broadcast games if the rights are turned over to them. Here’s more from Daniel Kaplan’s above-linked piece on this at The Athletic:
“Just one day prior to the April 1 due date for the first 2023 installment of the fees due to the Clubs, the Debtor RSNs informed the Guardians and the Twins that the Debtor RSNs would not be making the required payments,” MLB’s lawyers wrote in its motion (the Debtor RSNs refers to Bally Sports). “The Debtor RSNs made this decision even though they continue to use the Clubs’ valuable intellectual property every day. By continuing to broadcast Guardians and Twins games, they generate postpetition revenue, yet boldly refuse to pay the Clubs.”
…In the motion, MLB’s counsel wrote the clubs are prepared to take over the broadcasts if needed.
“With the 2023 season underway, the Clubs are navigating a complicated and fragile situation without certainty in their ability to consistently provide games for the millions of fans who follow professional baseball through daily televised broadcasts,” MLB’s lawyers wrote.
The MLB team payment discussions have been an extremely thorny part of this bankruptcy, and one that’s changed rapidly throughout the process. In December, when Josh Kosman of The New York Post wrote bankruptcy would mean “Diamond’s slew of unprofitable broadcasting contracts will likely be rejected,” Diamond spokesman Paul Caminiti said “The idea of rejecting MLB contracts is unequivocally false. DSG is committed to enhancing and strengthening our relationships with the MLB, NBA and NHL by fulfilling our contractual obligations and acquiring more rights.” Well, that obviously didn’t happen, with these missed payments to these three teams.
But even there, there’s been a lot of uncertainty. Kosman wrote last month (ahead of the official bankruptcy filings) that Diamond was “expected to use the bankruptcy proceedings to reject the contracts of at least four teams to which it pays more in rights fees than it collects back through cable contracts and ads,” specifically identifying the Diamondbacks, Guardians, Cincinnati Reds, and San Diego Padres as per one source (and saying MLB would step in and stream those teams’ games for free). The missed payments happened with the Diamondbacks and Guardians, but not the Reds and Padres, and they also happened with the not-cited-there Twins.
So there are definitely still some questions on if other teams will wind up with missed payments and wind up joining this emergency motion. There are also questions on if MLB’s motion will find success here, and if so, which way it will go: it could produce either a compelled payment or the turnover of those rights. And the latter could get really interesting, and lead to some short-notice juggling in terms of how broadcasts are produced and where they air.
[The Athletic; top photo of the Guardians’ home park of Progressive Field from Jeff Lange/The Akron Beacon-Journal, via USA Today Sports]