Major League Baseball filed a motion last week to the Texas bankruptcy court overseeing the restructuring of Diamond Sports Group, the Sinclair subsidiary that manages the Bally Sports regional sports network channels, demanding that the Cleveland Guardians and Minnesota Twins be paid for their TV rights or released from their Bally Sports contracts.
Meanwhile, baseball's Arizona Diamondbacks, who haven't received their Bally Sports rights payment either, filed a separate but similar motion on their own behalf.
Diamond has RSN rights deals with 14 MLB clubs, and it skipped making its TV rights payments for the just-started season to the three aforementioned teams, each of which it's losing significant amounts of money on.
So far, games for all three MLB teams have remained on Bally Sports channels.
“The Debtor RSNs made this decision even though they continue to use the Clubs’ valuable intellectual property every day. By continuing to broadcast Guardians and Twins games, they generate post-petition revenue, yet boldly refuse to pay the Clubs," reads the MLB motion, which was obtained by The Athletic.
Sinclair and Diamond are trying to trade equity in the 19 Bally Sports channels in exchange for around $8 billion of debt relief. As the operation restructures, it seems to be forsaking money-losing deals with individual teams.
MLB commissioner Rob Manfred said earlier this spring that the league would step in and stream games for teams that have seen their rights payments stop.
This pledge of support does not, however, seem to offer a near-term solution as to how the teams will recoup the lost revenue of their suddenly cancelled linear TV rights contracts.
According to numerous published reports, the Guardians are paid $55 million annually by Diamond, while the Twins -- which serve a smaller pay TV base -- recoup $42 million. Notably, the Twins deal with Diamond is set to expire after the 2023 season.
The Guardians generated total revenue of $267 million in 2022, according to Cleveland Plain Dealer, so the club's RSN contract accounts for 20% of its total revenue.
According to Statista, the Twins generated $268 million in revenue in 2021, rendering its Bally Sports deal at around 16% of total revenue.
Diamond did make its payment to the San Diego Padres, a club prominently listed on the RSN's money-loser list ... but which is contending for the National League West crown and could see its TV audience improve as a result.
Unclear to Next TV is the status of the Cincinnati Reds, yet another team on that list. Both the Reds and Guardians are carried by Bally Sports Ohio.
"With the 2023 season underway, the Clubs are navigating a complicated and fragile situation without certainty in their ability to consistently provide games for the millions of fans who follow professional baseball through daily televised broadcasts," MLB's lawyers wrote in their motion to the bankruptcy court.
