Diamond Sports Has Paid 94% of Fees Owed to MLB Teams, but Two Key Payments Are Due in Coming Days
The downright icy relationship between Major League Baseball commissioner Rob Manfred and the company that airs 13 of his teams’ games may have thawed by a degree or two this week. Manfred has been engaged in a knock-down, drag-out fight with Diamond Sports Group (DSG) in bankruptcy court, trying by hook and by crook to reclaim the broadcast rights of those teams and pull them off Bally Sports regional sports networks (RSNs).
Manfred spoke to the Baseball Writers Association of America on Tuesday, amidst MLB’s All-Star game festivities. When the question of DSG was raised, Manfred admitted the league had gotten the vast majority of what it was owed by Diamond, though he stopped short of paying the company any kind of compliment.
“Of the rights fees that have come due, I think we’ve collected 94% of those rights fees so far. And that’s really important,” the commissioner said. “We have backstopped clubs to make sure that there isn’t some unforeseen alteration in their revenue, and all that’s designed to put clubs in a position to not have disruption when it comes to the most important side of their business, that is putting a good team on the field.”
DSG would not have made this kind of financial outlay to keep its broadcast rights if it didn’t have to. Diamond had requested the judge in its bankruptcy court case rule that its contracts with MLB teams are worth less today than they were when they were signed, and allow the company to pay a smaller amount for rights fees. But Judge Christopher Lopez rejected that argument in early June, telling DSG it had to pay the full amount to each club whose rights it owns.
It’s been a seemingly never-ending process throughout the spring and summer, figuring out which teams were due payment by DSG next, and awaiting the deadline to see if that club’s games would be pulled from their Bally Sports RSN or not. So far it’s only happened once; MLB took over broadcasts of San Diego Padres games at the end of May, as Diamond lost so much money from its Padres deal that it was willing to surrender the contract.
But the process isn’t over yet. The Cincinnati Reds are due payment on July 15, and the Arizona Diamondbacks will be in court for a hearing on July 17 to determine that team’s future. DSG had originally intended to give up its Arizona deal, and even scheduled a hearing with Judge Lopez to reject the team's contract. But at the last minute, the company and the team decided to postpone the hearing to keep working on an altered deal that will keep games on Bally Sports Arizona, and send local streaming rights to Bally Sports+.
The two sides are still working on that agreement, so the hearing with Judge Lopez was postponed until July 17. If negotiations fall through, or if Commissioner Manfred follows through on his threats to block the new agreement, DSG could still decide to surrender its Diamondbacks rights at the hearing.
Manfred still has designs on fundamentally shifting the way his league offers its fans games. His dream is to launch an in-market streaming service with all 30 MLB clubs available, but there are numerous obstacles standing in his path. One of the biggest is the fact that the league’s local and national broadcasting rights are scattered far and wide, but an evolving TV industry is forcing new and innovative thinking on the subject.
“Well before the Diamond bankruptcy, we were kind of on the topic of that part of the media landscape changing,” Manfred said. “Our goal from the beginning has been to make a transition from the current situation into a new model that did two things, number one, increase the availability of our games to fans, and number two, to minimize any financial disruption for clubs.”
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