Alden GonzalesESPN Author8:20 p.m. ET4 minutes read
Manfred: MLB is prepared if Diamond Sports Group cannot pay the teams
MLB Commissioner Rob Manfred says Diamond Sports Group’s impending bankruptcy will not affect fans’ ability to see their teams.
PHOENIX, Ariz. – The pending bankruptcy of Diamond Sports Group, the company that owns Bally’s 19 regional sports networks, will not affect fans’ ability to watch their favorite teams play, Major League Baseball commissioner Rob Manfred said Wednesday and adding that the sport would take up streaming at worst.
Diamond Sports Group, a Sinclair subsidiary, announced Wednesday that it would skip February’s $140 million interest payment, entering the 30-day grace period that will likely result in a bankruptcy filing, an expected but monumental development across the professional sports landscape. MLB, which has 14 teams generating significant revenue from regional sports deals with Diamond Sports Group, could be severely impacted.
Manfred, who spoke at the start of spring training, hopes teams will continue to receive their rights fees throughout the process.
“Of course we want all of our broadcast partners to be successful,” said Manfred. “We don’t want them to have financial difficulties and we’ve put a lot of time and effort into working with them and finding out where they are. Obviously our first choice would be for Diamond to pay clubs what they are contractually obligated to pay them, but as I seem to be a contingency planner by nature, no matter what happens in relation to Diamond, we stand ready to make sure the Games are available to fans in their local markets.
“We think it will be both linear in traditional cable bundles and digital on our own platforms, but that remains to be seen. As I said, our first hope is that Diamond finds a way to pay the clubs and broadcast the games as they are contractually obligated to do so.”
Sinclair, through Diamond Sports Group, bought Fox’s regional sports networks for $10.6 billion in 2019. But the company initially borrowed more than $8 billion for the purchase and is nowhere near able to generate expected revenue at the rate at which customers across America have been cutting the wire by the wire.
For the third quarter of 2022, Diamond Sports Group reported a net loss (after accounting for interest payments) of $1.2 billion. The company pays approximately $2 billion in rights fees annually and made approximately $415 million in debt payments in the first nine months of 2022.
Diamond wrote in a press release on Wednesday that it “intends to use the 30-day grace period to continue its ongoing discussions with creditors and other key stakeholders regarding potential strategic alternatives and deleveraging transactions to best position Diamond Sports Group for the future .” A financial restructuring, which would reportedly be completed in May or June, would wipe out the company’s existing equity and convert most of its debt into shares in a new company, leaving creditors to take responsibility.
The dissolution of the Diamond Sports Groups could open up an opportunity for MLB to take control of all of its rights and potentially end blackouts once and for all, which has long been a key concern for the league. But the direct-to-consumer route wouldn’t allow MLB to match the money it currently generates through the cable model.
“Not in the short term,” said Manfred.
However, it could be a short-term solution while the dust settles on Diamond Sports Group’s restructuring. If the company fails to make payments to teams, those teams would have the option to terminate their contracts, Manfred said.
“In the event that MLB stepped in, we would produce the games. We would use our capital, the MLB network, to do this. We would go straight to the distributors — that is, Comcast, Charter, the big distributors — and arrange for these games to be distributed over cable networks. My expectation is that as part of the negotiations there would be a price negotiation. And that probably leads back to what the economics would be like, but we would look for flexibility on the digital side as well.”
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