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, and JP Morgan Chase.
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 for the Bally naming rights deal with Bally Corp at the expense of the Diamond Sports group.
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.
Now we will have to wait and see how the judge rules when it comes to its contracts with its own parent company.