The Phoenix Suns and Mercury’s new media rights deals are no more.
This week, a federal bankruptcy judge voided the team’s deals with Gray Television and Kiswe. Per The Athletic, the judge ruled that the deals “violated the rights of the incumbent regional sports channel under the bankruptcy code.”
Bankruptcy judge Christopher Lopez ruled that by agreeing to the deals with Gray and Kiswe, the Suns violated the automatic stay put in place when Diamond entered bankruptcy proceedings.
“What I find is that the Suns are saying one thing outside of this court and another thing inside it,” Lopez said after a nearly five-hour hearing, with the first two hours consumed by ultimately fruitless settlement talks between the parties.
In court, the Suns and Gray argued their deal was conditional on reaching a resolution on the right of first refusal. But Lopez noted that such language was not included in the first communications the Suns sent to Diamond on April 19, and only after Diamond protested in a series of letters did the basketball team add a line to the April 28 press release announcing the media deal that the arrangement was conditioned on the incumbent regional sports channel’s approval.
“There’s no real response to (Diamond’s) April 25 or April 27 letters, instead the Suns go on an all-out media blitz about the new agreement lauding its benefits,” he said.
Diamond’s lawyer, Brian Hermann of Paul, Weiss, using the term “insidious,” argued essentially the Suns tried to slip one by Diamond with the April 19 notification of the media agreement because the correspondence did not include a concession that Bally Sports SW had a right of first refusal. It had five days from notification to execute its right of first refusal rights. It was a line of argument Judge Lopez agreed with.
“This is undisputed, the Suns sent Diamond Arizona a letter informing them about what we will call an offer from Gray and Kiswe,” Lopez said. “I would note and I state it on the record that the document attached … doesn’t say that the agreement is subject to any rights for Diamond, Arizona under the existing agreement. That language we know now was intentionally omitted.”
While specific rights fees are unknown, Diamond’s lawyer Brian Hermann argued that the existing Diamond deal pays the Suns more than the new Gray deal, and that the company has matching rights.
And now, we’ll be going back to the drawing board.
This doesn’t mean that Suns games will be on Bally Sports Arizona next year. We’re still a long way away from Diamond’s bankruptcy proceedings being finished. But this ruling does throw a wrench into the Suns getting their new media deal off the ground, adding even more confusion to fans attempting to watch the team’s games next fall. If Diamond is able to match the money on the Gray/Kiswe deal, lack of carriage be damned, there are going to be a whole lot of upset people out there, despite the franchise getting more money from their media rights agreement.