Much has been made about the possibility of Diamond Sports terminating rights agreements with teams during its Chapter 11 bankruptcy. But on Wednesday, an interesting development emerged from the other side.
The Athletic reports that the Texas Rangers let Diamond know last week that they would be terminating their media rights agreement “in the event of its insolvency.”
In a declaration filed Wednesday, Diamond objected to the filing, stated that it has never missed a payment to the team, and intended to fight the Rangers’ potential exit.
“On March 11, 2023, Rangers Baseball LLC (Rangers), the owner and operator of the Texas Rangers MLB team, delivered a ‘Notice of Default and Termination,’” in the event Diamond is insolvent, the company’s chief operating officer David DeVoe, Jr. stated in a 35-page declaration filed in court Wednesday.
“In the Termination Notice, the Rangers asserted that an event of default on account of ARC Holdings’ alleged insolvency had occurred under the Rangers Agreement,” he continued, referring to ARC Holdings, the Diamond unit that oversees the Rangers RSN, Bally’s Sports Southwest. “The Rangers purported to terminate the Rangers Agreement, effective March 15, 2023, unless certain conditions were met. ARC Holdings has never missed a payment to the Rangers and made a substantial payment to the Rangers in February pursuant to the Rangers Agreement. ARC Holdings and Diamond dispute the Rangers’ assertions in the Termination Notice and are prepared to take all legal actions to protect ARC Holdings’ rights under the Rangers Agreement, which Diamond maintains remains in effect.”
The Rangers’ current agreement with Diamond, signed when Fox Sports still owned the RSNs, started in 2015 and runs for a total of 20 years. At the time of the extension, the Houston Chroncile reported the value of the deal at $1.6 billion over those 20 years. USA Today reported the value at $3 billion at the time, which was called “wildly inflated” by a spokesman for the RSN. The Athletic reported that the team earns an average of $111 million per season through its rights deal.
If the Rangers do manage to get out of their deal with Diamond, I’d really love to know where they think they’re going to pull $111 million per year from. The Dallas Fort-Worth market is huge, but if they even got half a million people (which seems like quite an optimistic number) to pay $200 per year for a streaming service, they’re still short of the $111 million being paid out by Diamond.