Conducting a news conference in Phoenix, Arizona Wednesday to mark the beginning of spring training, Major League Baseball Commissioner Rob Manfred was anxious to talk about league-wide momentum that saw ticket sales surge 10% in September, as well as how changes including the new balanced schedule might improve the overall fan experience. (Watch the full presser below.)
But the bulk of Manfred's 16-minute Q&A was spent responding to questions about what appears to be the imminent Chapter 11 filing by Sinclair Broadcasting's Diamond Sports Group, which owns the Bally Sports-branded regional sports networks that have broadcast rights deals with 14 MLB teams.
Manfred stressed that he hopes Diamond is able to pay MLB's clubs "as required under its contract." But if that doesn't happen?
"We've been really clear that if Diamond doesn't pay, under every single one of the broadcast agreements, that creates a termination right, and our clubs will proceed to terminate those contracts," the commissioner said.
"In the event that MLB stepped in, what we would do is we would produce the games, we would make use of our asset, the MLB Network, to do that. We would go directly to distributors -- meaning Comcast, Charter, the big distributors -- and make an agreement to have those games distributed on cable networks," Manfred added.
If it comes to that, and MLB ends up negotiating a carriage deal for its teams, the commissioner said he'd like to carve out streaming rights for the league to handle itself.
"We would also be seeking flexibility on the digital side, so that when you look at MLB.tv, you'd go in, you can buy your out-of-market package like you've always had, but you would have the option to buy up into in-market games, which I see as a huge improvement for fans," Manfred said.
This week, as expected, cash-strapped Diamond elected not to pay a $140 million mid-February all-interest payment to lenders covering around $9 billion in debt. It's expected that Diamond will file for bankruptcy after the 30-day grace period for that payment expires in March.
Sinclair paid over $10 billion back in 2019 to acquire 19 regional sports networks from Fox, as the entertainment conglomerate was divesting many of its assets to Disney.
Sinclair, which rebranded those channels as "Bally Sports" and set up a subsidiary, Diamond Sports Group, to manage them, has embarked on two stock buyback campaigns since that purchase. In fact, the money from those buybacks could have floated what Diamond owes the MLB teams for their broadcast rights, MLB biz watchers note.
But in addition to its creditors, there's now serious questioning as to whether Diamond can pay MLB's clubs what it owes them. And due to the seasonality of the deal structuring, the bulk of this year's payments are due between now and April 1, Manfred said.
The affected MLB teams under Bally Sports contract include: the Arizona Diamondbacks, Atlanta Braves, Cincinnati Reds, Cleveland Guardians, Detroit Tigers, Kansas City Royals, Los Angeles Angels, Miami Marlins, Milwaukee Brewers, Minnesota Twins, San Diego Padres, St. Louis Cardinals, Texas Rangers and Tampa Bay Rays.
Meanwhile, the Chicago Cubs and New York Yankees co-own RSNs with Diamond that aren't branded under the Bally Sports portfolio.
The Bally Sports channels also have broadcast contracts with 16 NBA franchises and 12 NHL teams, all of which don't wrap up their 2022-23 regular season schedules until April.
And to make matters worse for the pro sports ecosystem: AT&T SportsNet RSNs contracted with the Colorado Rockies, Houston Astros and Pittsburgh Pirates --- channels that are now owned and operated under the spun off Warner Bros. Discovery -- have in recent weeks handed over to the teams "lighter than expected envelopes," according to a report in Sportico earlier this week.
Manfred didn't address the AT&T SportsNet payment shortfall in his Wednesday discussion.
The commissioner did, however, address the larger longterm fate of regional sports networks ... which he believes will live on, but not at the scale we've all become used to.
"It's hard to escape the reality that change in media consumption has been particularly hard on the RSNs," Manfred said. "Obviously, we want all of our broadcast partners to be successful. We don't want them to have financial difficulties. We have been spending a lot of time and effort trying to work with Diamond to figure out exactly where they are.
"Obviously, our first choice would be that Diamond pay the clubs what they're contractually obligated to pay them," he also said. "But because I'm a contingency planner by nature, we are prepared no matter what happens, with respect to Diamond, to make sure games are available to fans in their local markets. We think it will be both linear in the traditional cable bundle and digitally on our own platforms, but that remains to be seen."
