Diamond Sports, currently in Chapter 11 bankruptcy, terminates contracts with Tigers and Tampa Bay Rays, with others likely to follow
The attorney for Diamond Sports Group, which owns Bally Sports and holds the local television broadcast rights to a dozen major league baseball teams, told the bankruptcy court on Wednesday that the company has terminated the contracts for the Detroit Tigers and the Tampa Bay Rays , and is expected to terminate the contracts for seven other teams over the coming off season. Contracts for three teams expired at the end of the 2024 season.
Speaking at a virtual hearing in front of Judge Christopher Lopez, Diamond counsel Andrew Goldman revealed that the owner of the Bally Sports-branded regional sports networks (RSNs) expects to cut ties with what amounts to eight MLB clubs, should it successfully emerge from bankruptcy.
“The debtors are assuming a single telecast agreement, that of the Atlanta Braves,” Goldman said, in a nod to an amended re-organization plan that had landed on the docket shortly before Wednesday’s hearing got underway. “All of Major League Baseball’s other agreements will be rejected under the plan.”
MLB lawyer Jim Bromley was quoted as saying the league was “sandbagged” by the development.
“We have no information about what is being done,” Bromley said. “We’ve had no opportunity to review and now we’re in front of the court and being asked to make our comments.”
Diamond Sports Group had contracts with the Cleveland Guardians , Minnesota Twins Milwaukee Brewers , and Texas Rangers , on one-year deals with Diamond that expired after the 2024 season. Eight other teams that are, or were, under contract for the 2025 season include the Atlanta Braves , Cincinnati Reds , Detroit Tigers , Kansas City Royals , Los Angeles Angels , Miami Marlins , St. Louis Cardinals and Tampa Bay Rays . Diamond said that they would assume (retain) the contract with the Atlanta Braves . The other five teams (other than the Tigers and Rays) are technically not part of the bankruptcy, as their contracts are termed “joint ventures”.
Diamond filed for Chapter 11 (business reorganization) bankruptcy in federal court in Houston, Texas, prior to the 2023 season, citing cord cutting and debt resulting from the company’s $10.6 billion acquisition of the regional sports networks from Disney.
Amazon withdrew a $115M offer to Diamond Sports Group that would have provided much needed cash, delaying Diamond’s bankruptcy exit plan. MLB has consistently expressed skepticism about the company’s ability to emerge from bankruptcy.
Essentially, Diamond is telling the teams that they want to negotiate a better deal and pay the clubs far less money than what their current contracts require. The five clubs that operate joint ventures with Diamond- meaning that the clubs take an ownership or partnership interest in the regional sports network, are still under threat of having their contracts terminated if they don’t agree to Diamond’s terms which they have rejected thus far. If Diamond cancels their contracts, the teams regain their broadcast rights.
The bankruptcy court is expected to hold a hearing in mid November, with an earlier date for clubs to object. Diamond sports has stated they are in talks with each of the clubs, but are no longer working with the commissioner’s office.
The San Diego Padres and Arizona Diamondbacks were dropped by Diamond last winter, and made arrangements with MLB to stream their games through MLB tv. Diamond renegotiated contracts with NHL and NBA teams for the 2024-25 season that give them a substantial cut in the fees paid to the teams.
The Detroit Tigers recently signed a new contract with Bally Sports, which is owned by Diamond, that includes the digital streaming rights. That is something that Diamond had sought from other clubs, but MLB balked, as it intended to retain the streaming rights and sell them on other platforms. The Tigers were paid $50 million per year under the old contract, which ended in 2021, and the new contract, which runs through 2025, was thought to be worth possibly even more, but no details have been released.
The Tigers have a few options to broadcast games in 2025 and forward.
- They can renegotiate the terms of their deal with Diamond/Bally, at a reduced annual rate.
- They can start up their own regional broadcast network.
- They can partner with MLB to package their games on MLB.tv, as part of a direct-to-consumer streaming package to be available in 2025 .
- They can find an alternative vendor to purchase the broadcast rights.
It is worth noting that Jason Benetti, like Dan Dickerson, is under contract directly by the Detroit Tigers, so he would not be left out should the team move on to another broadcast partner.
One casualty of the reorganization, which would be celebrated by baseball fans, could be an end to local blackouts, which are terms that are often included in the local TV contracts as they grant exclusive broadcast rights to the RSN, prohibiting other outlets, such as MLB.tv, from showing the games, even if they are not available to all consumers.
The temporary loss of local television revenue from the contracts is sending shock waves through major league baseball- not only for the teams whose contracts are being dropped, but all 30 clubs, because local TV revenue is a significant source of the funds that are used for revenue sharing, with 48 percent of all local revenues going into the kitty which is then shared among all MLB teams.
No doubt, some clubs will use the uncertainty surrounding the revenue stream as a reason for cutting back on payroll over the coming off season.
According to Evan Drellich of the Athletic ,
- Local TV revenues represent 12 to 32 percent of a given team’s total revenue, with the majority of teams sitting around an average of 21 percent.
- Stadium-related revenue, such as ticket sales and concessions, accounts for 39 percent of revenues on average.
- Central revenue — national broadcasting deals and sponsorship — amounting to 26 percent.
- The remaining 14 percent of MLB team revenues comes from “advertising, promotion and other,” per the players’ union (MLBPA).
This is before league revenue sharing divvies up the local revenue pool. The central fund revenue is distributed unevenly in order to “level the playing field” among teams in varied sized markets. The Tigers, for example, have long been a recipient of revenue sharing funds.
MLB commissioner Rob Manfred is known to desire MLB control over more (or all) local television broadcast rights. It’s not surprising that Diamond wouldn’t see MLB as a partner in helping teams to keep their current RSN’s. Nor is it surprising that the league and many teams would want to get out from under Diamond’s ongoing mismanagement and financial troubles. This will be a bigger story nationally this offseason as teams come up with new plans to broadcast games, or decide to renegotiate terms with the regional networks.