D
iamond Sports Group is anticipated to file for bankruptcy protection by Friday, March 17, which impacts its 19 regional sports networks. Most observers anticipate the filing to occur as quickly as March 16. The days major up to the anticipated filing will be intense, with Diamond executives negotiating with every person from leagues to creditors to distributors as they attempt to enter bankruptcy with a restructuring program that could be accepted by a judge.
Right here are the most important storylines that will create by way of the week.
1. What occurs?
Do not anticipate large modifications when Diamond files for bankruptcy. Any bankruptcy filing marks the start out of a procedure. By all accounts, the Bally Sports-branded channels will continue making and carrying games. Diamond executives have told most of the teams and leagues that it will continue paying its rights charges, even when in bankruptcy.
two. What do you imply “most” teams?
Diamond currently is late on 1 rights payment — to the Arizona Diamondbacks — according to numerous sources. Diamond carries Diamondbacks games on Bally Sports Arizona as aspect of a deal that largely is regarded exceptionally favorable to the group and runs by way of 2035.
Diamond has a grace period exactly where it can make the payment without having penalty, but that grace period ends at 11:59 p.m. on Thursday, March 16. If Diamond fails to make its payment by then, anticipate MLB to attempt to get the team’s linear tv and digital rights back.
Diamond Sports is currently late on a rights payment to the Arizona Diamondbacks, according to sources.usa now pictures
three. Are other teams in peril?
So far, Diamond has paid all of its rights charges on time, except for the Diamondbacks. A number of sources point to 3 other MLB clubs that have rights offers that are regarded exceptionally favorable to the teams and could face the very same predicament as the Diamondbacks. A single is the San Diego Padres, which has a deal with Bally Sports San Diego that pays the group an typical of $60 million annually by way of 2032. The Cleveland Guardians and Cincinnati Reds, which have rights offers with Bally Sports Ohio, also have offers that drastically favor the teams, sources mentioned. Sports Business enterprise Journal has not been capable to decide the worth of these two offers.
Diamond released this statement: “We’ve been generating our rights payments to teams with the exception of the Diamondbacks, exactly where we have exercised a contractual grace period in order to maximize flexibility, specifically offered that we do not have DTC rights. We are continuing to broadcast games and are operating our enterprise as usual.”
four. Are Diamondbacks fans in danger of not getting capable to see their team’s games on Television this season?
The Diamondbacks’ rights do not automatically revert to the group or MLB if Diamond misses a payment. MLB will attempt to get these rights back by way of the bankruptcy court, which would take an unknown quantity of time. When beneath bankruptcy protection, sources anticipate Diamond to continue making and carrying these games so that it continues to be paid by cable and satellite distributors.
five. In a worst-case situation, what occurs to Bally Sports Arizona if it does not carry Diamondbacks games?
The RSN, which nonetheless has rights to Arizona Coyotes and Phoenix Suns games, would have to renegotiate its offers with cable and satellite distributors. In some instances, rebate clauses currently are constructed into these offers that spell out how a lot significantly less the distributor should spend the RSN if it loses 1 of its teams. If the contract does not have that language, the RSN will attempt to renegotiate a new price.
six. How does Diamond stand with its distributors?
A single of the largest concerns Diamond faces is that it has to renegotiate 4 of its largest distribution offers inside the subsequent 12 months, according to numerous sources. Diamond’s existing offers with Comcast and DirecTV expire in the fall. Its deal with Charter extends into early subsequent year. A single of Diamond’s largest assets in this location is the truth that it now has David Preschlack operating the enterprise. Preschlack reduce his teeth in the enterprise performing these kinds of offers when at ESPN and has deep relationships all through the cable and satellite neighborhood.
7. What about the NBA and NHL? Are their teams at threat?
NBA executives have been operating with Diamond to figure out a program to move forward. The NBA desires to make confident that its teams continue to get their neighborhood rights charges payments for, at least, the subsequent two years when the league goes to industry with its national rights. It is in the NBA’s greatest monetary interest to attempt to maintain Diamond afloat till that time. The NHL also is operating with Diamond to attain a option. At the finish of 2021, the NHL was the initial league to reduce a digital rights deal with Diamond, and sources say the league is hunting to accommodate the corporation. Of all the leagues, the NHL is, possibly, in the greatest position in the unlikely occasion that Diamond fails to carry its games. The NHL currently has a deal that makes it possible for ESPN to carry the league’s out-of-industry games on ESPN+. The league could style a deal that would give ESPN the in-industry rights, as well.
John Ourand can be reached at jourand@sportsbusinessjournal.com. Comply with him on Twitter @Ourand_SBJ and study his weekly newsletter and listen to his weekly podcast.