The story of the Bally Sports bankruptcy is getting more interesting by the day. Recently Bally Sports’ parent company Diamond Sports, agreed not to pay the Diamondbacks as it returned the team’s TV rights to the MLB. Now Diamond has sued its parent company, Sinclair arguing that decisions made by Sinclair have cost the network over $1.5 billion.
This was first reported back in July, but now the full copy of the lawsuit has been posted online. In short, Bally Sports’ parent company Diamond Sports Group, is arguing that decisions made by Sinclair to pay back its creditors have cost the company over $1.5 billion in money it needed.
“Diamond Sports Group is seeking to vindicate its rights and protect the value of the Diamond bankruptcy estate, including by recovering value from Sinclair Broadcast Group that was improperly transferred from Diamond prior to its filing for bankruptcy in March 2023.” Said a spokesperson for Diamond Sports Group in a statement sent to Cord Cutters News.
This may seem a bit strange, as Bally Sports was owned by Sinclair. Recently though, Sinclair spun off its sports group into the Diamond Sports Group to help protect itself.
At issue here is money that Diamond Sports Group wants back from both Sinclair and JP Morgan Chase. Earlier this year, Sinclair paid JP Morgan Chase $190.2 million to cover the majority of preferred equity units the bank bought for $1.025 billion in 2019. The money went towards Sinclair’s purchase of RSNs for 19 regional sports networks to create Bally Sports, which was caught in a downward spiral ending in the Diamond Sports Group bankruptcy filing earlier this year.
Earlier this year, Diamond Sports skipped a payment to the owners of sports teams just three business days after Sinclair paid JP Morgan Chase. This started a 30-day grace period that ended up forcing Bally Sports and Diamond Sports to enter Chapter 11 bankruptcy in March. With that repayment, JP Morgan Chase was made nearly whole as both Sinclair look to lose their equity in Bally Sports.
In the lawsuit, Diamond Sports says Sinclair is charging to much for management services and argues that Sinclair is profiting from the Bally naming rights deal with Bally Corp at the expense of the Diamond Sports group. When all of this money is put together, Bally Sports is arguing it costs them over $1.5 billion.
This all comes at a time when Bally Sports needs money as it struggles to make a go-forward plan for the court. Not only does Bally Sports need to create a plan to get out of bankruptcy, but Bally Sports needs to decide if it will pay NBA and NHL teams their full contracts or try to renegotiate unprofitable contracts. This is very similar to what we just went through with MLB teams, which resulted in two teams dropping their TV deals with Bally Sports. Adding pressure to the negotiations is the fact that both the NBA and NHL seasons are set to start in October. To help deal with all of this, Bally Sports is asking the Judge to appoint mediators to help with these talks.
“We believe mediation provides the best path to reach consensus on a reorganization plan with our creditors and achieve a sustainable go-forward business model and capital structure for Diamond Sports Group,” said a company spokesperson.
Bally Sports also has contracts coming up with major cable TV providers, including DIRECTV, Comcast, and Spectrum. If deals here are not reached, Bally Sports may be extremely hard to find on TV. DIRECTV has already made it clear that they want a discount on Bally Sports as it no longer has as many teams. Now it looks like even more teams may leave if deals with the NBA and NHL can not be reached.
Now it seems that Bally Sports not only wants to break free from the high costs of its contracts with MLB, NBA, and NHL teams but also from its contracts with Sinclair.
The Diamond Sports Group is a subsidiary of Sinclair Broadcast Group, but it operates independently and manages the Bally Sports RSNs. Currently, it manages TV rights for 40 professional teams, including 12 MLB teams, 16 NBA teams, and 12 NHL teams.
Getting back some of the $1.5 billion would be a huge help for Bally as it struggles to make deals with these teams and networks.