Amazon Could Become YES Network’s Largest Owner Thanks to Diamond Sports’ Investment

Amazon’s decision to invest in Diamond Sports Group (DSG) seemed like exactly what the regional sports broadcaster needed when the accord between the two entities was first announced last week. But a new report from Sportico reveals that Amazon has built a contingency plan into its investment proposal that would see it gain a big equity stake in YES Network if Diamond folds in the coming years.

• Diamond Sports Group owns 20% of YES Network currently, and Amazon owns a further 15%.
• If Diamond cannot pay back the money Amazon is planning to invest, Amazon will have the option to acquire Diamond’s portion of YES Network.
• Amazon could then sell that portion, or use its newfound equity to make changes in the network’s operation, potentially putting more Yankees games on Prime Video.

How Could Amazon Acquire Diamond’s Portion of YES Network

YES Network is the regional sports network (RSN) that offers New York Yankees, Brooklyn Nets, and New York Liberty games to customers in the New York area. Diamond Sports Group — which controls 18 Bally Sports RSNs fully — owns 20% of the network, but that may not be a permanent state of affairs.

Sportico reports that as part of the deal that would see Amazon invest in Diamond, the latter company would have to offer its YES Network stake as consolation if it cannot pay back the money Amazon plans to pay into it. Amazon can convert its investment into a 15% ownership stake in Diamond, and if it does, it can compel Diamond to fork over its 20% of YES Network if DSG falters again in the next two years.

There are lots of moving pieces in this arrangement, and the whole house of cards could come crashing down if one of Diamond’s current debtors objects to the restructuring plan in bankruptcy court. Major League Baseball has already made clear that it would have serious objections to continuing its relationship with Diamond past 2024 regardless of Amazon’s involvement, so it’s no sure thing that the deal will even end up being approved.

What Could Amazon Do With YES Network if It Acquires Diamond’s Stake?

If Amazon were to get Diamond’s equity in YES Network, it would own 35% of the channel. That would make it the largest single shareholder of any investor in YES Network, including the Yankees, who own 26% of the channel as shares are currently split.

Amazon could decide to sell that ownership stake, which would be worth hundreds of millions or even billions of dollars. Doing so could help refill Amazon’s coffers which could then be emptied again if any of the other sports rights deals that the tech giant is reportedly interested in pursuing come to fruition, including its desire to acquire a slate of NBA games.

Alternatively, Amazon could decide to increase the inventory of Yankees games that stream on Prime Video every year. Currently, YES Network and Prime Video team up to stream around 20 games per season on the latter service for in-market New York fans. Deepening its ties with one of MLB’s premier franchises isn’t a bad idea for Amazon, which has promised to be “aggressive” in going after more live sports. YES Network launched a direct-to-consumer streaming service for in-market fans of its own ahead of MLB’s 2023 Opening Day, and earlier this month announced a joint venture with fellow New York sports broadcasting company MSG.

YES Network itself would have to agree to allow Amazon’s proposal — including the path to expanded ownership — to go through bankruptcy proceedings, but if Amazon can get all interested parties to give their consent to Diamond’s debt restructuring plan, it might find itself as the largest shareholder in YES Network in two years’ time.

*An earlier version of this article stated that Amazon could become a “Majority Owner,” which was inaccurate due to not meeting the threshold of 50% ownership or more. The title of this article was changed to reflect that.