By Phillip Swann
The TV Answer Man –@tvanswerman
TV Answer Man, I read that Bally Sports didn’t make their payment to the Reds. What does that mean? The games are still on so I don’t understand the issue here. Can you explain? — Joe, Covington, Kentucky.
Joe, Diamond Sports, the owner and operator of the 19 Bally Sports regional sports networks, last month declared bankruptcy in a Texas court. The company is trying to restructure its debt and it has filed a motion seeking to reduce its payments to the teams whose regional TV rights it holds. (Bally broadcasts the games of 14 MLB teams, 12 NHL teams and 16 NBA teams.)
As part of this maneuvering, Diamond has missed payments to MLB’s Minnesota Twins, Texas Rangers, Cleveland Guardians and Arizona Diamondbacks. MLB has filed its own motion in the bankruptcy court to take back the broadcast rights due to the missed payments. But the judge has set a May 31 hearing to first rule on the Diamond request for lower team payments.
Sports Business Journal reported yesterday that Diamond alerted the Cincinnati Reds that it would not make its April 17 payment on time. (The Reds games are on Bally Sports Ohio.) The publication says Diamond now has a 15-day grace period to make the payment without penalty.
But this is where it gets interesting. Unlike the missed payments to the Twins, Rangers, Guardians and Diamondbacks, which are tied up in the May 31 bankruptcy hearing, SBJ says MLB executives believe it can seize the Reds broadcast rights as early as the first week of May if Diamond misses the grace period payment. The Reds missed payment is different because the team owns part of Bally Sports Ohio along with Diamond, which might keep it out of the bankruptcy process.
SBJ writes that the Los Angeles Angels, St. Louis Cardinals, Miami Marlins, San Diego Padres and Kansas City Royals also have equity stakes in the Bally Sports channels that air their games. For now, that’s not an issue because Diamond has not missed payments to those teams.
But in early May, if Diamond doesn’t make the Reds payment, it’s possible that MLB could file an emergency motion to take back the rights and begin broadcasting Cincinnati’s games itself, using a freelance camera and production crew.
Diamond undoubtedly is aware of this possibility so the company will need to decide whether it wants to keep the Reds or not. We should know that answer in 15 days.
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— Phillip Swann