The Regional Sports Network Crisis: Will Diamond Sports Drop More MLB Teams? When?

By Phillip Swann
The TV Answer Man – @tvanswerman

TV Answer Man, Diamond Sports lost the case to Major League Baseball so are they going to drop more teams like they did with the Padres? What’s the latest on this? — Edgar, Palo Alto, California. 

Edgar, Diamond Sports, which declared bankruptcy in March, notified the bankruptcy court this week that it is considering ending its TV rights deals with more teams. The company, which owns 18 Bally Sports regional sports networks, dropped the rights to the San Diego Padres games on May 30 when it decided to stop paying the team. Major League Baseball took over the broadcasts, starting with the team’s May 31 game against the Miami Marlins.

Before I explain further about Diamond Sports’ disclosure, a little background is needed:

Judge Chris Lopez, who presides in the Diamond Sports bankruptcy case, on June 1 ruled against the company’s motion to reduce the payments it makes to four MLB teams (Twins, Guardians, Rangers, Diamondbacks) for the rights to carry their games. The company could have used a favorable ruling as precedent to seek reduced payments to other teams whose games it carries. (Diamond Sports’ channels have the regional TV rights to 13 MLB teams, 16 NBA teams and 12 NHL teams.)

Judge Lopez did not set a date in its initial ruling for when Diamond Sports must make its full payment to the four teams. Before the June 1 ruling, the company paid 75 percent of its most recent quarterly fee as ordered by the judge until a final verdict on the reduced payments motion.

In a motion filed this week, Diamond Sports has asked the judge for an emergency clarification on his June 1 ruling. The company acknowledges that it’s considering dropping more teams but wants to know that if it does, will it be reimbursed for payments already made. For example, if Diamond Sports decided to reject the Twins agreement on August 5, would it receive a portion of the payment it made on July 1. This is a key point because the agreement requires the RSN company to pay in advance for the games it will broadcast. Diamond Sports wants to be assured that it will get its money back if it pulls the plug before it broadcasts all the games it paid for.

“The Debtors (Diamond Sports) respectfully seek clarification regarding the treatment of amounts paid (or to be paid) by the Debtors to the Clubs pursuant to the June 2 (June 1) order in the event the Debtors determine to reject one or more of the Agreements and cease broadcasting a particular Club’s games,” Diamond Sports states in this week’s clarification request.

Diamond Sports does not specifically say which teams it could drop, but the Twins, Guardians, Diamondbacks and Rangers are likely candidates due to their involvement in the June 1 ruling. If Diamond Sports were to reject their contracts, Major League Baseball has said it would take over the broadcasts, as it did for the Padres.

Judge Lopez has set a virtual ‘status conference’ this afternoon to review the new motion. It’s unclear what could happen after that. The judge could delay the team payments decision by allowing for time to review this latest motion after hearing from the teams.

Bottom line: As Diamond Sports examines how it can emerge from bankruptcy court as a profitable company, the termination of more team contracts is a real possibility.

(Update: A subsequent filing on June 2 by the judge says Diamond Sports has five business days from the order to make the payments. The company’s motion for clarification could pause the clock.)

Edgar, hope that helps. Happy viewing and stay safe!

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