For weeks now, we have heard about how Sinclair Broadcast Group’s sports division Diamond Sports Group, would declare bankruptcy. Now last week, Sinclair missed a $140 million interest payment, according to the AP, a move that is expected to lead to bankruptcy after a 30-day grace period.
During this time, Sinclair is reportedly trying to negotiate with creditors to work out a deal to avoid bankruptcy.
In total, Diamond has nearly $1 billion in sports rights payments due in the 1st quarter of 2023. Most of this is from the Bally Sports RSNs. It is being reported that bally does not have the cash on hand to cover all of its rights payments through 2023.
So what would happen if Bally Sports’ parent company Diamond Sports, did declare bankruptcy and had to go into Chapter 11? Let’s take a look.
Will Bally Sports Shutdown?
A chapter 11 bankruptcy does not mean Bally Sports will shut down. It seems that Bally Sports are hoping to renegotiate its contracts with the MLB, NBA, and NHL. However, this could give leagues an option to try and get out of their contracts with Bally Sports.
Could MLB, NBA, & NHL stream in-market games if Bally Sports declares bankruptcy?
MLB, NBA, and NHL have all announced that they have plans in place to stream games in the market if Bally Sports is unable to complete its contract with them.
The critical part here is unable to air games as all three leagues have said they hope Bally Sports will continue to complete their contract. The reason for the NBA, NHL, and MLB are all hoping that Bally Sports will keep airing games is the fat paychecks they get from Bally Sports.
The NBA, MLB, and NHL will have operatives to walk away from their contracts with Bally Sports, though, if it declares bankruptcy. A lot would have to go into that, and Bally SPorts will likely have to try to get out of payments to the major leagues before they would decide to go streaming only or resell to other networks.
How will MLB, NBA, & NHL games be streamed if it comes to that?
All three leagues have reportedly come up with plans to stream in-market games if Bally Sports is unable to complete their contract. It is reported that MLB games would move to MLB.TV and NBA games would go to NBA League Pass.
NHL games would likely, according to reports, end up on ESPN+ since the NHL shut down its streaming service to partner with ESPN.
So what will this mean for sports as a whole?
For now, we will have to wait and see what happens, as Diamond Sports is likely to drag out any possible bankruptcy as long as possible. What is clear is what was once seen as a safe investment with RSNs is no longer the easy cash it once was.
Increasingly major sports leagues have been looking for ways to go direct to consumers. The main holdback was the fact checks from RSNs, FOX, CBS, ESPN, and more. Now though, this bankruptcy could speed up plans to bring sports directly to sports fans at some point in the future.