The National Hockey League told a bankruptcy court this morning that if negotiations don’t resolve quickly with Diamond Sports Group over broadcasting the 12 hockey teams it has rights to, the league may come back to the court asking for emergency relief. That could mean asking the court to free the teams from the Bally Sports Regional Network contracts. DSG is Bally Sports’ parent company.
The warning comes as the judge agreed to extend by 80 days to September 30 the deadline for DSG to file a reorganization plan, which would be when the company needs to decide whether to excise or keep team contracts. That is a shorter extension than DSG wanted, but one it worked out with the various creditor committees.
DSG, which filed for Chapter 11 on March 14, burdened by $9 billion in debt and a wave of cord-cutting, has ferociously battled MLB over the rights fee to its teams. First DSG stopped paying four of the then 14 teams it covered, before the bankruptcy judge ordered the company to pay half, then all of it. Meanwhile, DSG excised two contracts, with the San Diego Padres and Arizona Diamondbacks.
Lurking in the background are the 27 NHL and NBA teams that Bally Sports also broadcasts, and whose seasons are rapidly approaching. After the bankruptcy, DSG pledged to pay off the remaining NBA and NHL fees for the dwindling 2022-’23 season but made no such commitment for the 2023-’24 season.
“The NHL has been in ongoing constructive discussion, and we continue to have constructive discussions with others on our potential go forward business relationship, ” Shana Elberg, the NHL’s outside counsel, told a status conference today in the Texas bankruptcy court. “We remain hopeful. And we will continue our efforts to get to a place that works for all parties as debtors (Diamond) continue to negotiate with us and a number of their other key stakeholders.
“Having said that, we recognize there’s a risk that might not happen. And as we think all parties in the court appreciate time is of the essence to the NHL and its clubs. It’s critical that we have certainty as we prepare for the 2023 24 NHL season, our preseason starts on September 23. And our regular season starts on October 10. To be transparent to avoid surprises to the court. We just wanted to make sure the court was aware of if we don’t have any reasonable certainty in the near future, we may be coming back to the court on potentially short notice to request any appropriate necessary relief.”
The NBA did not appear to have an attorney on the call or in the court, although it could be their counsel may just not have spoken.
A lawyer for Diamond Sports Group pledged in the bankruptcy court to try to quickly let the 27 NBA and NHL teams it televises know whether it will continue broadcasting their games. But Brian Hermann, the lawyer, did not commit to doing so. DSG has already excised one contract with the Phoenix Suns.
“We understand that this case has to move quickly,” he said. “And the reason for that is because…we’re near completion of the baseball season. But we have an NBA and NHL season that’s coming right around the corner. And the NBA and the NHL fairly wants to make sure that Diamond Sports can broadcast their games. And we want to give them the assurance that we can broadcast their games. And the only way to do that is to try to come to a resolution quickly, hopefully in advance of those seasons, so that everybody can feel comfortable.”
Diamond is trying to re-negotiate some of its deals to televise the teams. The clubs need to gauge whether taking less from DSG is still better than they could get on their own.
A lawyer for DirecTV, which filed a motion objecting to the extension of the time to file a Chapter 11 plan, said talks continue with DSG on distribution. The satellite company’s deal with Diamond expires soon, and without an extension, it is hard to see a Chapter 11 plan working. But the lawyer noted DirecTV is still negotiating with DSG over offsets for the loss of the three teams the RSN company walked away from this summer.
“We continue to have discussions with the debtor on the disputes we’re having relating to the… credit that DirecTV is owed as a result of a debtor not providing certain teams,” said Ronit Berkovich, “due to their voluntary relinquishment of those teams.”
Sports business reporter Daniel Kaplan has covered the industry for 25 years at Sports Business Journal and The Athletic. He can be reached on Twitter @KaplanSportsBiz.
