A month into the bankruptcy restructuring of Sinclair's Diamond Sports Group regional sport network subsidiary, the lawyers are beginning to chirp from their respective dugouts.
“Major League Baseball and its clubs are not going anywhere," the pro baseball league's lawyers told the Texas judge overseeing Diamond's bankruptcy proceedings earlier this week. "Unfortunately, the same cannot be said for the debtors."
That "chin music" has some context, of course.
Diamond has TV rights contracts with 14 MLB teams across its 19 Bally Sports-branded RSNs, and it has skipped rights payments for three of those clubs with which it has money-losing deals: the Arizona Diamondbacks, Cleveland Guardians and Minnesota Twins.
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Sinclair and Diamond are arguing that they'll pay the clubs once the court can determine what the true "market value" of each team's deal should look like, and lower the respective fees accordingly.
Baseball is arguing that Diamond can't keep showing the affected teams' games on television, as it has through the first two weeks of the 2023 MLB season, without paying for the rights.
“What is extraordinary is that the debtor RSNs continue to broadcast Twins and Guardians games with zero payment,” league lawyers told Judge Christopher Lopez.
The league has asked the judge to make Diamond pays the teams their monies, and it will refund Diamond accordingly once the new fee structure is hammered out in restructuring.
Thus the zinger: MLB will still be here after that process unfurls. Will Bally Sports and Diamond?
For its part, Diamond has argued that it's still in the grace period for its missing payments to the Guardians and Twins. And besides that, it shouldn't have to pay a dime to the teams until the deals are restructured.
Notably, The Athletic -- which has ably kept up with the back-and-forth between the lawyers -- spoke to bankruptcy consultants who suggests that the two arguments are in a legal "gray area" ... and that it will be up to Judge Lopez to determine whether Diamond has to immediately cough up the fees to the affected teams.
Another interesting piece of information emerged from this week's hearings. Diamond actually stopped paying the Diamondbacks before it filed for Chapter 11 bankruptcy protection on March 14. Thus, the Arizona franchise falls under a different set of rules relative to the Guardians and Twins, and the Diamondbacks and their lawyers have been advocating for themselves amid a different legal process (although the team's positioning is said to be very similar to the MLB's rhetoric for the Guardians and Twins).
Sinclair and Diamond are trying to exchange around $8 billion in debt tied to Bally Sports channels for equity.
Those channels host the exclusive local TV rights for 52 teams across MLB, the NBA and NHL.
Fortunately for the NBA and NHL, individual team payments aren't due until later this year
