As the bankruptcy restructuring of Sinclair’s Diamond Sports Group has ground on over the past five months, the regional sports networks subsidiary has shown a reluctance to jettison teams on the cusp of successful seasons.
The latest example are the American League Central Division leaders, the Minnesota Twins, which according to the Minnesota Star Tribune, just received the remainder of their full-year $54.8 million local TV rights payment from Diamond to remain on Bally Sports North through the 2023 Major League Baseball season.
How much clarity this provides to the long-term future of Bally Sports, Diamond and Sinclair, and Major League Baseball, is debatable.
The Twins’ 12-year deal with Diamond expires at the conclusion of the 2023 regular MLB season. And according to the Star Trib, Bally Sports North has lost 37% of its subscribers since the agreement started because of pay TV cord-cutting.
Also notable: The Twins are not one of the five MLB teams which have offered up their streaming rights to Diamond's direct-to-consumer service, Bally Sports Plus. Diamond has leaned hard on the leverage provided by Chapter 11 to push the nine MLB who have ties to Bally Sports linear networks but not Bally Sports Plus to budge on their streaming rights. So far, none of these MLB teams have relented.
Most importantly, Diamond has told the Houston bankruptcy court overseeing its Chapter 11 process that it's losing money on the Twins. Diamond is using the leverage and flexibility provided by Chapter 11 law to get out from MLB, NBA and NHL contracts for which it is under water.
And some of Diamond’s decision-making process on which contracts to exit — and when to bolt them — seems to be dictated by shorter-term goals.
For example, Diamond is also losing money on Bally Sports Arizona. But the subsidiary is working to keep the channel’s two major tenants — both currently on winning streaks and drawing invigorated levels of local fan interest — from leaving.
Last week, Diamond commenced last-minute negotiations with the MLB's Arizona Diamondbacks after previously making motions in court to tear up the team’s contract. The Diamondbacks are currently leading the National League West.
This move came a month after Diamond convinced the Houston court to stop the NBA’s Phoenix Suns from leaving Bally Sports Arizona to show their games on local broadcast TV through Gray Television. The Suns, now a serious NBA Championship contender entering the 2023-24 season, just made one of the boldest moves of the league's ongoing player free-agent season by signing shooting guard Bradley Beal.
Meanwhile, over on Bally Sports Southwest, Diamond has paid most of what it owes to the MLB's Texas Rangers, who currently lead the American League West. The Rangers just a few short months back were among several MLB teams that had to petition the court to get Diamond to pay them.
Other Bally Sports MLB teams losing money for Diamond, and not on Bally Sports Plus — and importantly, not leading their respective divisions — have experienced different fates.
In March, for example, Diamond’s restructuring and the 2023 MLB season were just getting underway, and the San Diego Padres were being picked to win the National League West.
Diamond made its complete first payment to the Padres on time and without fanfare, while other MLB teams losing money for Bally Sports, including the Rangers, Diamondbacks, Twins and Cleveland Guardians were initially stiffed by the subsidiary.
By late May, however, the Padres were floundering. And still unwilling to join Bally Sports Plus, Diamond cut them loose from its 20-year, $1.2 billion local TV rights deal. The Padres became the first pro sports team to have its Bally Sports contract torn up early. The team set up its own channel with pay TV distribution partners including DirecTV, while streaming its games direct-to-consumer via MLB.tv.
It's unclear as to how close — or probably more appropriate, how far — this new arrangement comes to generating $60 million a season for the club.
Other teams could still find themselves exiting their Bally Sports contracts early.
Diamond still hasn’t offered any clarity on the Guardians. And the team’s Bally Sports Ohio roommate, the Cincinnati Reds, could also find themselves soon cast out of the Bally Sports ecosystem.
Diamond is trying to shed around $8 billion in debt, using Chapter 11 to trade equity for debt relief with its creditors, and to get out from under on money-losing deals with pro sports teams.
The debt was taken on back in 2019, when Sinclair Broadcast Group outbid MLB and paid $10.6 billion to acquire 19 Fox Sports Net regional sports channels.
Since that time, due mainly to cord-cutting, margins on these channels have declined from around 50% to under 15% on average today.
