As he asked the judge to approve the pact, a lawyer for bankrupt Diamond Sports suggested the company hoped to reach a similar agreement with the 12 MLB teams whose games it is still contractually obligated to broadcast. But lawyers for Diamond Sports parent company Sinclair and MLB have expressed concerns about the NBA deal, centering on its effect on the company’s ability to pay its baseball obligations, even until next season.
Lopez, the judge, said he planned to schedule a hearing to weigh those objections, and MLB’s lawyers indicated Wednesday that they would discuss proposals that would solidify Diamond Sports’ plans for its remaining MLB markets. ‘next year. As with the NBA and an expected deal with the NHL, any deal reached would likely seek to end Diamond Sports’ broadcast obligations after 2024.
“It’s a very, very complicated situation,” MLB Commissioner Rob Manfred said Thursday. “Our main goal at this point is certainty.”
MLB unsure of Diamond Sports plans from Sinclair subsidiary declared bankruptcy in Marchalthough some people familiar with the process would say the league did not have the certainty it should have had about Diamond Sports’ solvency when it took on debt with buy broadcast rights in 2019.
When Diamond missed his contract payment to the San Diego Padres last year, MLB was ready to resume broadcasts and did so, marketing a streaming package to viewers in that market. MLB also had to resume broadcasting Arizona Diamondbacks games in July when Diamond Sports rejected its rights deal. Despite a few hours’ notice before San Diego’s takeover, MLB apparently handled production of both teams’ games without issue. But Manfred said he wasn’t willing to go through another season of reacting rather than preparing.
“It went off without a hitch in the sense that San Diego was knocked out, Arizona was voted out, we were able to come in and broadcast those games, the fans were not disadvantaged in any way. In fact, our reach was better because we had a digital product available,” Manfred said.
“Going into another summer where we have 12 teams at risk as the Diamond RSN’s financial situation has further deteriorated is not an attractive prospect. It’s one thing to have one or two. Collecting 12 without notice is a Herculean feat. We need to know this so that our fans are not disturbed.
The certainty Manfred seeks is both logistical and financial. For much of the past three decades, giant cable rights contracts sparked exponential growth in player salaries and team revenues, providing steady, predictable revenue streams that were more robust than ticket or television sales. goods.
Even though his office was willing to take over the production and marketing of their broadcasts, Manfred was clear that ending the Padres and Diamondbacks’ agreements with Diamond Sports would cost both franchises money and that the league would not could not cover the entire difference between what they had purchased. what they would have made under the original deal and what they would gain from new deals beyond 2023.
The remaining 12 teams that Diamond Sports has rights to enter this winter in similar situations, unable to predict how long their broadcast partner will be able to make their payments. A lawyer for Diamond Sports said Wednesday that the company’s intention “is to broadcast almost all of (our) Major League Baseball teams next year,” but added that “there are a few , very few, for which we do not have agreements in force.” place.”
“And that, frankly, at this point, costs too much for us to broadcast without concessions,” he added. “I am told that these discussions are taking place, contacts have been made with both teams involved.”
The World Series champions Texas Rangers and Cleveland Guardians, two Diamond Sports teams, have spoken openly about the glaring financial uncertainty created by the fragility of their rights deals.
“There is no agreement with MLB, there is no agreement with the Rangers,” a Rangers lawyer said in court Wednesday, as he expressed concerns about how the NBA deal could affect Diamond’s ability to pay for his deal with the team. “We don’t know what (Diamond’s) intention is with Rangers.”
Earlier this week, Guardians president of baseball operations Chris Antonetti said on Cleveland.com that the team would not be able to offer a contract to efficient local starter Cal Quantrill, because the more than $6 million he was expected to earn in arbitration seemed unlikely to fit into a tight payroll. The Guardians traded Quantrill to the Colorado Rockies on Friday for a minor league catcher.
“We don’t have clarity on that yet, other than the financial uncertainty, which makes things a little harder to plan,” Antonetti said. told Cleveland.com this week. “It’s difficult to plan for a normal year at this point in the offseason because we’re still trying to figure out what our revenue could be. The Bally component adds more uncertainty and that certainly makes things more difficult.
The other teams still under contract with Diamond – the Atlanta Braves, Miami Marlins, St. Louis Cardinals, Milwaukee Brewers, Kansas City Royals, Los Angeles Angels, Cincinnati Reds, Minnesota Twins and the Tampa Bay Rays – are in a similar boat. Even if Diamond and MLB strike a deal to broadcast their games through the 2024 season, it’s unclear what sort of value the league will get for its broadcast rights in a new open market that reflects a decline in cable subscriptions due to streaming.
There is, however, a positive side to the process, which Manfred has long been willing to emphasize publicly, even as he acknowledges that his teams will likely lose revenue because of Diamond’s bankruptcy.
Most of the league’s current cable rights deals, including the one with Diamond, prevent MLB from selling streaming packages to fans in local markets, leading to blackouts for local fans who don’t do not have access to good cable providers. In the DC area, for example, fans without a cable subscription giving them access to the Mid-Atlantic Sports Network cannot watch Nationals games even if they purchase the MLB.TV package because pre-existing agreements with cable companies include regional exclusivity.
But if those deals are terminated or not renewed, the league can produce its own shows and then market them to as many cable providers as it wants. Perhaps more importantly, MLB might be able to market streaming rights itself, selling local subscription packages as it did last year for the Padres and Diamondbacks. If Diamond’s contracts are all dissolved by the end of next year, MLB could suddenly find itself with streaming rights for 14 of its 30 teams, perhaps tapping into another form of broadcast revenue. Manfred acknowledged that a larger streaming presence wouldn’t necessarily offset all the cable money immediately, but it would make access to baseball product much easier and more direct. Under the current system, the league redirects money earned from these local streaming subscribers to the Padres and Diamondbacks, respectively.