Judge Rules Diamond Sports Can Pay Half of What it Owes to Four MLB Teams in Blow to League’s Hopes
It appears that Major League Baseball will have to wait a little longer to reclaim the broadcast rights currently owned by Diamond Sports Group (DSG) and its subsidiary Bally Sports. That assessment comes on the heels of a ruling issued by bankruptcy court judge Christopher Lopez on Thursday night, as reported by Sportico.
The ruling states that DSG must pay 50% of the broadcast rights obligations it owes to the Arizona Diamondbacks, Cleveland Guardians, Texas Rangers, and Minnesota Twins. That’s a big blow to the hopes of MLB executives, who were hoping they could successfully argue that the missed payment allowed them to begin the process of officially reclaiming the rights to those clubs.
During a hearing on Wednesday, Judge Lopez encouraged the two sides to come up with a number on their own that MLB might find acceptable.
“There is a number that works, [and] you’ll know much better than I would what that number is,” the judge said. “If you come back to me, I’m just going to pick a number, and I hope you don’t leave it in my hands.”
But that appears to be what happened, as DSG lawyers said during a recess that they could not come to terms with the MLB commissioner or the four teams to whom the company owes money. Lopez then handed down his 50% ruling, which means that DSG will now be given a fair opportunity to make such payments before any talk of MLB reclaiming television rights can resume.
In all, this is not shaping up to be the quick jaunt through bankruptcy court that MLB was hoping for. Judge Lopez said during this week’s proceedings that “if someone wants their day in court, they will have it.” That certainly doesn’t sound like he’s inclined to agree with baseball’s assessment that the regional sports network (RSN) model is doomed no matter what happens, and there’s no point in prolonging the process any further.
The Cincinnati Reds are also awaiting repayment from Diamond, but the judge has not yet issued a ruling in that case. DSG is still in the midst of its grace period with the Reds, meaning that under the terms of its contract with the team, it has until May 1 to pay what it owes. If it does not do so, it appears that the most likely outcome is a ruling similar to what Lopez announced this week for the other four teams; a partial payment while Diamond continues to restructure its $8 billion debt.
But the Reds’ case is unique because the team owns a stake in Bally Sports Ohio, which broadcasts the team’s games. The particulars of the team’s contract, which was signed when the channel was still owned by FOX Sports, are not completely known, but there is a possibility that they could help MLB get the rights to the Reds back sooner than for any other franchise. Potentially, the league could take over broadcasting duties for Reds games as early as May 6.
The league has been thwarted, for now, and must exercise patience while it awaits the reduced payments that DSG is now obligated to make. For fans, this means that games will continue to be broadcast on Bally Sports RSNs for the foreseeable future. There are still plenty of ways that the Diamond-MLB drama could play out, but it appears that the judge in the case is willing to give Diamond a reasonable chance at restructuring its debt before terminating any contracts between the sides.