Well, folks, it looks like Diamond Sports Group (Bally Sports) is playing a game of “discount my payments” with no guarantee they’ll be able to actually make good on the contracts.
Diamond Sports Group, which is owned by Sinclair Broadcasting and holds the broadcast rights to 14 Major League Baseball (MLB) teams, including the Detroit Tigers, is expected to file for Chapter 11 bankruptcy due to its inability to service its $140 million interest payment on an $8.6 billion debt. The filing could affect the 2023 season, as MLB teams could take back the rights and broadcast through their streaming services or acquired networks.
What does that mean for us Detroit Tigers fans, you may ask? Well, it means the future of our baseball broadcasts is up in the air, but fear not – MLB commissioner Rob Manfred has assured us that the games will be broadcast one way or another.
In fact, MLB teams could take back the rights to their broadcasts and show games through their own streaming services or networks they’ve acquired. It seems like everyone wants a piece of the pie these days, as even Disney and ESPN+ are using streaming technology originally pioneered and sold by MLB.
Why it matters: Baseball teams at risk of losing guaranteed revenue
Local broadcast revenue, which makes up 21% of MLB’s almost $10.9 billion revenues each season, is guaranteed to teams and makes up a significant portion of their revenue. Regional Sports Networks (RSNs), which make 90% of their revenue from customer subscriptions, have seen a drop in subscribers from over 100 million homes to under 67 million homes due to consumers switching to other outlets, such as streaming channels or just cutting the cord completely.
Key points:
- Diamond Sports Group, owned by Sinclair Broadcasting, is expected to file for Chapter 11 bankruptcy.
- The company holds the local broadcast rights to 14 Major League Baseball clubs, 12 National Hockey League clubs, and 16 NBA teams.
- MLB teams could take back the rights and broadcast through their own streaming services or acquired networks.
- MLB has refused to include digital rights in contracts with RSNs, but the Detroit Tigers are an exception.
The Big Picture: The changing landscape of broadcast media
The bankruptcy filing of Diamond Sports Group and Sinclair Broadcasting’s ownership highlights the shifting landscape of broadcast media, with more consumers turning to streaming services and cutting the cord on traditional cable TV. The loss of guaranteed local broadcast revenue could affect the financial stability of MLB teams, and the league could take back the rights and broadcast through its own services. The rise of streaming services has also affected the revenue streams of RSNs, which rely heavily on customer subscriptions.
Bally Bankruptcy by the numbers
Understanding the importance of MLB broadcast rights and the revenue streams they generate is critical to understanding the financial stability of individual teams and the league as a whole. The loss of guaranteed local broadcast revenue due to the bankruptcy of Diamond Sports Group could significantly affect the revenue streams of teams. The rise of streaming services has also affected the revenue streams of RSNs, which are largely dependent on customer subscriptions.
- Local broadcast revenue makes up about 21% of MLB’s almost $10.9 billion revenues each season.
- RSNs make about 90% of their money from customer subscriptions.
- Less than half of all US homes now have a cable TV subscription.
- Each MLB team receives an estimated $110 million in sharing of local revenues that, includes local TV, ticket sales, and other stadium-related local revenues.
What they are saying
Quotes:
- “I think you should assume that if Diamond doesn’t broadcast, we’ll be in a position to step in. Our goal would be to make games available not only within the traditional cable bundle but on the digital side, as well.” – MLB commissioner Rob Manfred
- “What we do is largely dependent on how Diamond and the creditors play their cards, what they decide to do,” Manfred said. “Our No. 1 goal in terms of preparations is that if for some reason Diamond isn’t broadcasting, that we want to be in a position to make sure our fans are going to get their games.”
The Bottom Line – Tough times for Diamond Sports Group, Uncertainty for Tigers Fans
Let’s be real, folks. Traditional cable TV is dying faster than the Tigers’ playoff hopes in recent years. Streaming services are taking over, and even the mighty Diamond Sports Group is feeling the heat. Who knew that cutting the cord could have such a major impact on the financial stability of broadcast media companies?
While it’s still unclear what will happen with our beloved Tigers and the other MLB teams, one thing is for sure: they will need to adapt and evolve to the changing times. They might even need to take back their broadcast rights and find new ways to get their games out to the fans. Sure, that could be a great thing for us fans, but it might also mean our team loses out on guaranteed local broadcast revenue.
The bottom line is that the future of baseball broadcast rights is up in the air, and we don’t know what will happen next. But hey, change can be a good thing, right? Maybe this is an opportunity for the Tigers and other teams to innovate and find new ways to engage with their fans and generate revenue. One thing’s for sure, as Tigers fans, we’re used to a bit of uncertainty, so we’ll weather this storm just like we always do.
Going Deeper:
Diamond Sports prepares for possible bankruptcy (cnbc.com)
Diamond Sports Group missed payment triggers bankruptcy countdown (axios.com)
Rob Manfred — MLB ready if Diamond Sports Group can’t pay teams (espn.com)
