In the process of petitioning the judge to approve that pact, a lawyer for bankrupt Diamond Sports suggested the company hopes to come to a similar agreement with the 12 MLB teams whose games it is still contractually obligated to broadcast. But lawyers for both Diamond Sports’s parent company, Sinclair, and MLB raised concerns with the NBA deal, centered around its effect on the company’s ability to pay for its baseball obligations, even through next season.
Lopez, the judge, said he planned to schedule a hearing to assess those objections, and lawyers for MLB indicated Wednesday that they would be discussing proposals that would solidify Diamond Sports’s plans for its remaining MLB markets next year. As with the NBA, and an expected deal with the NHL, any agreement reached would likely be geared toward ending Diamond Sports’s broadcasting obligations after 2024.
“This is a very, very complicated situation,” MLB Commissioner Rob Manfred said Thursday. “Our primary goal at this point is certainty.”
MLB has not had certainty when it comes to Diamond Sports’s plans since Sinclair subsidiary declared bankruptcy in March, though some people familiar with the process would argue that the league did not have the certainty it should have about Diamond Sports’s solvency when it took on debt to buy broadcast rights in 2019.
When Diamond missed its contractually obligated payment to the San Diego Padres last year, MLB was prepared to take over broadcasts and did so, marketing a streaming package to viewers in that market. MLB also had to take over broadcasts of Arizona Diamondbacks games in July when Diamond Sports rejected its rights agreement. Despite mere hours of notice before the San Diego takeover, MLB seemingly handled the production of both teams’ games without an issue. But Manfred said he is unwilling to go through another season of reacting rather than preparing.
“It kind of came off without a hitch in the sense that San Diego was terminated, Arizona was rejected, we were able to step in and broadcast those games, fans were not disadvantaged in any way. In fact, our reach was better because we had a digital product available,” Manfred said.
“To undertake another summer where we have 12 teams at risk given that the financial situation of the Diamond RSNs has further deteriorated is not an appealing prospect. It’s one thing to pick up one or two. Picking up 12 with no notice is a herculean feat. We need to know so our fans are not disrupted.”
The certainty Manfred wants is both logistical and financial. For much of the last three decades, behemoth cable rights contracts sparked exponential growth in player salaries and team revenue, providing steady, predictable streams of revenue that were sturdier than ticket sales or merchandise.
Even as his office was prepared to take over production and marketing of their broadcasts, Manfred was clear that the end of the Padres and Diamondbacks agreements with Diamond Sports would cost both franchises money, and that the league could not backstop the full difference between what they would have made under the original deal and what they would make from new agreements beyond 2023.
The remaining 12 teams to which Diamond Sports has rights enter this winter in similar situations, unable to predict how long their broadcast partner will be able to make its payments to them. 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, a very few, for which we do not have agreements in place.”
“And that, frankly, at this point, are too expensive for us to broadcast without concessions,” he added. “I am told that those discussions are taking place, there have been reach-outs to both of the teams involved.”
The World Series Champion Texas Rangers and Cleveland Guardians, two Diamond Sports teams, have been open about the glaring financial uncertainty created by the fragile state of their rights agreements.
“There’s no deal with MLB, there’s no deal with the Rangers,” a lawyer for…
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