Last month the NBA Suns and the WNBA Mercury announced a deal with Gray Television that would put both teams’ games on broadcast TV and streaming for free online. Previously both teams had deals with the RSN Bally Sports. Now Bally Sports says this deal breaks their contract and violates bankruptcy law.
Now, the Judge overseeing the bankruptcy of Bally Sports parent company Diamond Sports has agreed that this deal broke the contract they had with Bally Sports according to a report from The Athletic.
According to the judge overseeing the Diamond Sports bankruptcy the Phoenix Suns’ deal with Gray Television to stream games for free “violated the rights of the incumbent regional sports channel under the bankruptcy code.”
The Suns had planned to stream games for free in the market and offer them on broadcast television in the market. For now, that deal is dead until the contract issues with Bally Sports can be resolved.
Here is what the judge said during the hearing:
“What I find is that the Suns are saying one thing outside of this court and another thing inside it,” Lopez said after a nearly five-hour hearing, with the first two hours consumed by ultimately fruitless settlement talks between the parties.
In court, the Suns and Gray argued their deal was conditional on reaching a resolution on the right of first refusal. But Lopez noted that such language was not included in the first communications the Suns sent to Diamond on April 19, and only after Diamond protested in a series of letters did the basketball team add a line to the April 28 press release announcing the media deal that the arrangement was conditioned on the incumbent regional sports channel’s approval.
“There’s no real response to (Diamond’s) April 25 or April 27 letters, instead the Suns go on an all-out media blitz about the new agreement lauding its benefits,” he said.
Diamond’s lawyer, Brian Hermann of Paul, Weiss, using the term “insidious,” argued essentially the Suns tried to slip one by Diamond with the April 19 notification of the media agreement because the correspondence did not include a concession that Bally Sports SW had a right of first refusal. It had five days from notification to execute its right of first refusal rights. It was a line of argument Judge Lopez agreed with.
“This is undisputed, the Suns sent Diamond Arizona a letter informing them about what we will call an offer from Gray and Kiswe,” Lopez said. “I would note and I state it on the record that the document attached … doesn’t say that the agreement is subject to any rights for Diamond, Arizona under the existing agreement. That language we know now was intentionally omitted.”
For now, Diamond Sports has successfully offered that they didn’t get an opportunity to match the deal offered by Gray Television. Over the summer the two sides will need to work this out but for now, the deal with Gray Television is on hold.