Another winter of uncertainty? The latest on RSNs for MLB, NBA, NHL

Diamond Sports Group will reach a solemn milestone this week: 18 months in bankruptcy court, dating back to when Major League Baseball was gearing up for the 2023 season. Since then there have been twists, turns and frustrations, but, notably, no resolution.

Diamond, which operates under the name Bally Sports, owns the largest group of regional sports networks in the country, with 33 MLB, NBA and NHL teams in its portfolio even after a handful of cuts over this past year and a half. The uncertainty has hit baseball fans hardest, from their teams getting dropped in-season in 2023 to a major distributor pulling their games off the air in 2024. In between, MLB owners — operating within a sport where local media is more closely tied to payrolls than in the NBA and the NHL — used RSN volatility as an excuse for lower offseason spending.

Diamond descended into Chapter 11 largely because it took on $8 billion in debt when it purchased its RSNs five years ago. But its predicament epitomizes what has become an exceedingly volatile media landscape, and the company’s fate could have profound effects on how fans consume sports moving forward. Below is a look at the most pressing questions surrounding Diamond’s ever-evolving situation — and what it could mean for sports fans.

So where do Diamond’s broadcasts currently stand?

At the end of April, Diamond and Comcast, its third-largest distributor, failed to come to an agreement before the expiration of their deal, prompting Comcast to pull Bally Sports channels off the air. The NBA and NHL were done with their regular seasons by then and thus unaffected, given that playoff games air nationally. But many baseball fans — particularly those who follow the Atlanta Braves and Minnesota Twins, teams Diamond doesn’t have streaming rights for and reside in markets where Comcast is prevalent — were shut out.

But in a surprising turn of events, Diamond came to an agreement with Comcast on July 29, then subsequently locked in new linear cable and direct-to-consumer deals with the NBA and the NHL 25 days later. The new contracts came with lesser rights fees but an assurance that the 13 NBA teams and eight NHL teams would be broadcast and paid in full for the entirety of the 2023-24 seasons, regardless of whether Diamond emerges from bankruptcy.

In those deals, Diamond also dropped the NBA’s Dallas Mavericks and New Orleans Pelicans — both of whom have announced an over-the-air alternative, a growing trend for NBA and NHL teams. (The Anaheim Ducks, previously Diamond’s ninth NHL team, were on an expiring contract and announced in late August that it would go the same route.)

Diamond has continued negotiations with Amazon about joining forces on a direct-to-consumer venture where Bally Sports channels would be available on Prime Video at an additional cost, allowing local fans to watch their teams without a cable subscription, sources said. The New York Post reported recently that the two sides are in “late-stage talks” on a non-exclusive deal that could launch ahead of the upcoming NBA and NHL seasons.

Does that mean this saga is finally coming to an end?

We should have a clearer picture by the end of November. Maybe. One of the company’s attorneys, Joe Graham, said during a status conference last Tuesday that Diamond is aiming to file an updated reorganization plan before the end of September and expects to schedule a confirmation hearing in early to mid November. That “would put Diamond on the path to emerge [from bankruptcy] prior to Nov. 30,” Graham said, before they have to start paying MLB teams their rights fees for the 2025 season in January.

Federal bankruptcy judge Christopher Lopez formally approved Diamond’s NBA and NHL deals during a status conference last Tuesday, calling them “a step, certainly, in the right direction” in terms of putting Diamond on a path to emerge from bankruptcy. “It looks like we’re finally here,” Lopez said, “in terms of what’s really going to happen.” Details of Diamond’s NBA and NHL deals are not publicly known, with Lopez also ruling Tuesday that they would remain under seal. One thing we do know: They include a requirement that Diamond emerge from bankruptcy by April 1, 2025 — a date that has triggered more animus from MLB.

What is MLB upset about?

There has been a lot of animosity from MLB toward Diamond in this process, from its desire for more transparency to its skepticism over whether Diamond can remain a sustainable business. But nothing has angered MLB officials more than uncertainty over rights payments. And that April 1 deadline might be a tipping point.

MLB attorney James Bromley spoke on this subject for close to 15 minutes in court last Tuesday, calling Diamond’s plans to emerge by the end of November “aspirational” and the April 1 cut-off “concerning.” Said Bromley: “This is now the fourth season in a row that Major League Baseball is heading into the offseason with a complete lack of information and clarity with respect to what’s going to happen with respect to Diamond Sports and its ability or willingness to broadcast Major League Baseball games.”

Bromley also questioned Diamond’s sustainability once again, calling the recent developments “a Band-Aid” while describing this as “yet another handing of the baton.” In other words: It’s baseball’s turn, with NBA and NHL seasons set to start again, to go through another uncertain offseason, immediately after the two leagues experienced the same. Bromley added that if the process isn’t expedited, MLB could explore “more drastic relief,” though he did not specify what he meant.

Is this going to affect offseason spending — again?

Not to bum you out, but … probably. A handful of owners, at least, might once again cite it as a reason for not spending as much as their fans would like.

Teams guaranteed $3.05 billion to major league free agents last offseason, down from $3.92 billion the year before that and $3.3 billion the year before that, according to ESPN’s calculations.

The Texas Rangers — at that point in danger of falling out of an RSN deal that would pay them somewhere in the neighborhood of $100 million before settling on a lesser one-year contract with Diamond — went conservative in the wake of a championship. The San Diego Padres — the first team Diamond dropped last season, prompting MLB to take over broadcasts — brought their payroll down by about 35%. The Seattle Mariners — whose RSN, Root Sports, was placed on a more expensive tier by Comcast — basically kept payroll flat. And big-name free agents such as Blake Snell, Matt Chapman, Cody Bellinger and Jordan Montgomery — all Scott Boras clients at the time — signed unusually late.

That’s a precursor to what might happen again this offseason. Whether it’s a valid reason depends on whom you speak with. Local media represents about 20% of team revenues in the aggregate, and not being able to count on that will naturally impact spending for some clubs. But many are quick to push back on that notion, noting that there are other avenues where teams can make up for losses, including: the distribution of luxury tax payments, with MLB’s portion expected to reach up to $150 million this year; a growth in central revenue largely from national TV deals that are still in their early stages; and revenue from uniform patches that did not exist until last year.

As an added layer of protection, MLB and the MLB Players Association agreed in July on what amounts to a reallocation of the money generated from luxury tax overages this offseason, giving teams that experienced losses in local-media revenue up to $15 million. Will that make a difference in owners’ actions? That remains to be seen. If not, it’ll be another offseason defined by the clubs that, at least for now, have secure media deals and those who don’t, further widening the gap between big- and small-market teams.

Is there any chance for a deal similar to the one Diamond cut with the NBA and the NHL?

That’s Diamond’s hope. The company said in court that it continues to have active dialogue with MLB about a new deal. But the circumstances are different. The NBA and the NHL engaged with Diamond after their respective seasons because those leagues were able to take all their streaming rights back at that point, prompting a reason to renegotiate.

In those deals, the 13 NBA teams in Diamond’s portfolio saw a decrease of 30% to 40% with the new rights deal, according to Sportico, while the eight NHL teams got a 20% reduction in the aggregate. MLB, with long-term aspirations of placing all its rights under a national model, has continually stated that it does not want to devalue its rights. A deal of that nature doesn’t seem to be on the table for them. MLB also hasn’t shown interest in giving Diamond streaming rights to more teams than the five it already has — the Miami Marlins, Tampa Bay Rays, Detroit Tigers, MIlwaukee Brewers and Kansas City Royals, smaller-market teams whose RSN deals were propped up because of those rights.

One potential piece of leverage at Diamond’s disposal: The bankrupt operator dropped the Mavericks and Pelicans because it did not deem them financially beneficial. If MLB is unwilling to reopen negotiations and consider lesser rights fees in exchange for RSN certainty, Diamond could theoretically threaten to drop MLB teams, like it did with the Padres and Arizona Diamondbacks last year.

Diamond currently has RSN rights for 12 teams, but three of them — the Rangers, Twins and Cleveland Guardians — are on one-year deals that will expire at the end of this month. The other nine: St. Louis Cardinals, Cincinnati Reds, Los Angeles Angels, Atlanta Braves, Rays, Brewers, Tigers, Marlins and Royals.

What is the likelihood Diamond actually emerges from bankruptcy?

This case is taking place in the Southern District of Texas (in Houston), which has emerged as the venue of choice for large, complex corporate bankruptcies. Companies file here, essentially, because it has built a reputation for being more debtor-friendly, giving them a better chance of emerging. Several bankruptcy experts who have spoken to ESPN in recent weeks expect Diamond to succeed despite pushback from MLB.

“Success in Chapter 11 doesn’t require perfection,” Zev Shechtman, a bankruptcy attorney at the law firm Saul Ewing LLP, said. “If that was the standard, almost no one would ever emerge out of Chapter 11. But the standards for turning this into a Chapter 7 liquidation or appointing a trustee through a contested, adversarial process requires some kind of mismanagement or inability to properly handle the complexities of Chapter 11. And just because you have opposition, just because you have challenges, doesn’t mean you don’t deserve to emerge as a reorganized debtor.”

“MLB can vote against the plan; if other people vote in favor of the plan, it’s very possible for the plan to be approved. And that’s not because of the judge holding any bias or favoritism towards the debtor. That’s because they satisfied the requirements of Chapter 11.”

MLB’s representatives have stated that they would prefer Diamond emerge as a sustainable business, allowing teams to be paid through the length of their respective RSN contracts. But they’re skeptical that could happen. Bromley noted in court last week that Amazon has opted out of its initial plan to invest $115 million into the company, part of a restructuring support agreement in January that a Diamond representative called “transformational” at the time. Bromley also referenced a $215 million payment that Diamond must pay its first-lien lenders by Nov. 18. And though that money will come out of a Sinclair settlement that paid the company $495 million, it’s less cash on hand nonetheless.

Privately, league officials have stated throughout the year that Diamond has consistently fallen short of the projections it has laid out to them and have noted that the deal with Comcast is unfavorable because it places their channels on the distributor’s highest, most expensive tier, which means fewer subscribers (and less money). These concerns are the reason MLB has pushed for details on Diamond’s deal with Comcast, as well as its agreements with the NBA and the NHL, to no avail.

Diamond counters that it is in a favorable financial situation, touting the importance of cutting deals with its top distributors and negotiating lesser rights fees with the NBA and the NHL. Soon the company is also expected to announce a new naming-rights deal, with FanDuel previously reported to be a new partner. A potential deal with Amazon to place its channels on Prime Video, meanwhile, should greatly enhance the company’s reach.

In its rebuttal to Bromley’s presentation last Tuesday, Andrew Goldman, another lawyer for Diamond, stated that the schedule presented to the judge represents “real dates,” not aspirational ones, adding that the company is incentivized to emerge from bankruptcy by the end of November because that’s when its debtor-in-possession loan matures.

“We are not looking to elongate this,” Golden said. “We, too, have been at this quite a long time, and as quickly as we can emerge, we would like to emerge.”

ESPN’s Tim Bontemps and Kristen Shilton contributed to this report.