Rob Manfred says MLB will handle team broadcasts if Bally Sports networks miss payments

Los Angeles Angels right fielder Jo Adell throw the ball back into the infield after making a catch against the Texas Rangers during the third inning of a baseball game, Friday, April 15, 2022, in Arlington, Texas. (AP Photo/Michael Ainsworth)
Bally Sports missing its payments could trigger financial chaos for MLB teams. (AP Photo/Michael Ainsworth)

With the owner of the broadcast rights of 14 MLB teams reportedly on the verge of bankruptcy, the league is gearing up for some new responsibilities.

MLB commissioner Rob Manfred told reporters Wednesday that if Diamond Sports Group, the company that runs the nationwide array of Bally Sports network, misses its payments to clubs, those clubs will indeed terminate their agreements, at which point the league would look to produce and distribute those games itself.

Diamond Sports announced Wednesday morning that it will miss a $140 million interest payment, triggering a 30-day grace period to figure out a way forward. It is widely speculated that such a road will lead to bankruptcy, putting MLB in a position where many of its teams could lose one of their biggest sources of revenue.

As Manfred explained MLB's backup plan, the league would try to get the games aired on local cable like usual while creating a new option for fans to stream local games, which has long been forbidden under the usual RSN structure:

"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. 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.

"We would also be seeking flexibility on the digital side, so that when you look at, 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."

When asked if he thinks MLB would be able to replace 100 percent of the revenue that teams were due to receive, Manfred responded simply "not in the short term."

Which teams are affected by Bally Sports' potential failure?

The following teams' local broadcast rights are owned by Bally Sports networks: 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.

It was reported by Sportico on Tuesday that the three AT&T SportsNet networks, which own the rights of the Colorado Rockies, Houston Astros and Pittsburgh Pirates, also failed to make the obligatory payments in recent weeks. Manfred did not directly address that Wednesday.

The issue is by no means an MLB-only matter, as Bally Sports networks also control the rights of 16 NBA teams, 12 NHL teams and four WNBA teams.

MLB's future if Diamond Sports fails

Diamond Sports' origins date to 2019, when parent company Sinclair Broadcasting Group purchased a group of Fox Sports regional networks from Disney as a condition of the latter's purchase of Fox. Its fall comes as the trend of cord-cutting intensifies, an issue that MLB has been anticipating for years.

Under the current structure, the vast majority of MLB teams are in agreements in which a regional cable channel pays them tens of millions of dollars annually for the right to air most of their games locally. MLB in turn doesn't allow its customers to stream games if they're in the market of that cable channel.

These channels are a major pillar of the cable industry, and the fact that most of them are on the verge of failure means MLB will have to change the way it does business, something Manfred acknowledged Wednesday:

"It's hard to escape the reality that change in media consumption has been particularly hard on the RSNs. 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. 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."

None of this is a surprise to MLB, which hired RSN veteran Billy Chambers as executive vice president of local media to tackle this exact problem. Whichever direction the league goes, the short term is likely to be painful for many teams' balance sheets.

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