The Kansas City Royals and Detroit Tigers shocked casual baseball fans and thrilled their ardent supporters with surprising road upsets in their respective Wild Card Series. The Tigers will now be moving on to face a Cleveland Guardians team that won that potent Central Division, the first time these original American League teams will face each other in the post-season. And if you’re a fan of the other Central Division champions, the Milwaukee Brewers…well, as an acknowledged Mets fan, it’s probably best that I refrain from attempting to say anything this morning.
All four of these teams provided a summer’s worth of excitement and, yes, more than decent local market ratings, particularly in a fractionalized and still-evolving measurement paradigm. Yet all four of these teams may soon be without a destination to watch next year’s games.
As FORBES’ Maury Brown wrote yesterday:
Diamond Sports Group, which owns the Bally Sports branded regional sports networks, is mired in bankruptcy. For Major League Baseball, changes announced in court by DSG on Wednesday could alter where ten of 11 clubs are broadcast. As part of a hearing in a U.S. Bankruptcy Court in Houston, Diamond announced plans to retain only the Atlanta Braves.
For the remaining clubs hanging in the balance, their fate is tied to several factors.
The contracts of Texas Rangers, Cleveland Guardians, Minnesota Twins, and Milwaukee Brewers have expired and are part of the bankruptcy proceedings. With Diamond’s intent of releasing them, the court is likely to approve and with it, make the clubs free agents. The Texas Rangers have reportedly said they will independently seek their own distribution deals and direct-t-consumer offering outside of MLB.
The Tampa Bay Rays and Detroit Tigers would see their contracts voided, something that has happened prior with the San Diego Padres and Arizona Diamondbacks under Diamond.
For the Cincinnati Reds, Kansas City Royals, Los Angeles Angels, Miami Marlins, and St. Louis Cardinals, matters are complicated by the fact that they each own partial equity ownership in their regional sports networks. While the clubs are not part of the bankruptcy proceedings, in these cases Diamond would look to renegotiate new terms, or as contracts expire, the clubs would be released.
These networks’ entire raison d’etre lies in their ability to provide live coverage of local teams’ games, and including spring training major league baseball provides seven months and more than 100 opportunities for competitive, significant audiences–yes, even teams that haven’t had the level of success that the playoff competitors have had of late. And according to the ASSOCIATED PRESS’ Joe Reedy, Diamond/Bally’s isn’t quite ready to commit hara-kiri–though the rhetoric attached reveals more than a smidge of hedging:
Attorneys for Diamond said during the hearing that the company has delivered proposals to the 11 teams that are out of contract, rejected deals or are joint ventures. “Today marks an important step forward for Diamond with the filing of a baseline plan to enable us to emerge from bankruptcy as a viable, go-forward business before year-end,” Diamond Sports said in a statement. “We firmly believe that through our linear and digital offerings we have created the best economic and fan-friendly engine for all of our team partners.” Diamond attorney Andrew Goldman said during the 30-minute hearing that talks remain ongoing with all teams.
And as Goldman was quoted in Brown’s piece:
“For many of these clubs, we’ve got proposals out, we have provided significant diligence and projections, and our management team has had live discussions with every one of those clubs,” said Andrew Goldman, a lawyer for Diamond as part of the hearing. “But at the end of the day, the amended plan now puts the decision in the clubs’ hands.”
Sad to say, that’s as encouraging an endorsement of democracy as anyone who claims putting abortion rights in the hands of individual states is a positive.
For the most part, this”hit” list represents markets of modest size and limited upside. Yes, options exist, and Major League Baseball has already demonstrated a model where teams can eliminate the middle man and produce the games with similar–sometimes better–quality with no material difference in coverage or audience delivery. As Reedy reminds, (o)ver the past two seasons, Major League Baseball has had to take over the broadcasts of the San Diego Padres, Arizona Diamondbacks and Colorado Rockies after agreements could not be reached.
But even in a market like Los Angeles, as the LOS ANGELES TIMES’ Bill Shaikin reported yesterday, there are parochial complications:
In 2011, what was then called Fox Sports had lost the Lakers to Time Warner Cable, and the Dodgers’ television rights were about to hit the market. Angels owner Arte Moreno brilliantly leveraged that situation, opting out of a Fox Sports contract worth $500 million and signing a new one worth $3 billion.
The Angels were owed $112 million in rights fees from Bally in 2023, according to Moreno. The team generated an estimated $407 million in total revenue that year, according to Sportico.
The uncertainty over what might happen to about 28% of the team’s revenue could dampen the amount Moreno might approve in player spending over the coming winter.
Considering the track record Moreno has had with which players he spent that revenue on (see Anthony Rendon), that uncertainty may be seen as a plus by Halo Honk supporters. But on the other hand, they compete for attenton and eyeballs with a Dodger team that has an $8.35B deal with a non-Bally’s RSN (SportsNet LA) that runs through the end of the next decade.
That reality, coupled with similarly beneficial ones that exist with such other larger markets teams as the Yankees, Mets, Cubs and Red Sox and yes, even the pathetic White Sox (who are part of the just-launched Chicago Sports Network that is replacing NBC Sports’ RSN) , all but assures tiers of haves and have-nots, and compromises MLB’s desire to aggregate the rights of the Bally’s teams into a mega-offering that they believe would be something a streamer like Amazon, Apple or ESPN+ might desire. As anyone associated with Venu can attest, the value proposition of an aggregator that doesn’t offer the full gamut of options, and therefore something for just about anyone, is, at best, compromised.
What’s most troubling about all of this is that this situation is the result of mostly self-inflicted wounds. Diamond’s partner Sinclair overvalued the one time FOX Sports Networks at a time when Disney needed to unload them to meet the requirements to allow their acquisition of 20th Century FOX to go forward. Taking on a casino with its own financial issues as a partner and rebranding them accordingly brought on its own set of issues. Continuing a theroretically COVID-precaution production model where participating teams shared feeds and crews and forcing announcers to report remotely well past any truly pandemic-related protocols in the interest of saving a few bucks brought on further consternation.
Not that all hope should be lost. The broadcasts WILL wind up somewhere, and potentially to a much wider audience. Several NHL and NBA teams that have been similarly impacted have started their own hybrid streaming/over-the-air options with partners like Scripps, Gray and Nexstar. Ironically, even FOX has re-entered this world, offering a package of 65 Anaheim Ducks games offered via the emerging streamer Victory+ on its rebranded FOX 11 PLUS, which us Luddites used to call Channel 13, and which was the last over-the-air partner for Angels games.
And even Diamond is on its way toward resolving at least one of its missteps, as Reedy concluded:
Goldman also said during the hearing that Diamond is “on a path to getting a new naming rights partner, which is a big development for the company as well as a commercial agreement with one or more streaming partners with respect to the digital rights that the company will possess.”
One hopes they will have deep enough pockets to help them remain competitive again. Sure hope they’ll be watching this week as a reminder of what success can look like.
Until next time…