A federal bankruptcy judge has ordered Diamond Sports to pay the full value of its media contracts to the Cleveland Guardians, Arizona Diamondbacks, Minnesota Twins and Texas Rangers.
Judge Christopher Lopez made the ruling on Thursday in Houston. Diamond Sports, which owns 19 networks under the Bally Sports banner, has been in Chapter 11 bankruptcy proceedings in the Southern District of Texas since it filed in March. Diamond said in a financial filing last fall it had debt of $8.67 billion.
In April, the judge ruled Diamond to pay half of what the teams were owed in rights fees.
“I think the contract rate is the right answer here,” said Lopez in issuing his decision after two marathon days of testimony.
Major League Baseball said in a statement Thursday night: “MLB appreciates the ruling from the Federal Bankruptcy Court in Houston requiring Diamond to pay the full contractual rate to Clubs. As always, we hope Diamond will continue to broadcast games and meet its contractual obligations to Clubs. As with the Padres, MLB will stand ready to make games available to fans if Diamond fails to meet its obligations.”
The decision is another chapter in what has been a contentious week in the strained relationship between MLB and Diamond Sports.
On Tuesday, the last San Diego Padres game was aired on Bally Sports San Diego after Diamond Sports missed a rights payment fee and let the grace period expire.
MLB took over production of Padres' telecasts, beginning with Wednesday's game at the Miami Marlins.
Whether MLB takes over other teams and Diamond Sports lets other payments lapse after the grace period will have to be answered over the next four months. If Diamond rejects the terms of the agreement, the rights would revert back to MLB and the teams.
Lopez stressed during his closing remarks that he wants both sides to continue to talk, despite how contentious the process has been.
Lopez also said he realized he is not answering the biggest question fans have — will their team's games end without interruption?
“I’m not really answering questions that real fans have, the folks who come home after work, the family dealing with increased costs that just wants to know they can come home and watch their team for the rest of the season, and where they’re going to watch their team play," Lopez said. “Those issues aren’t being decided and it’s not my decision to make. I’m careful not to overstep my boundaries.”
Commissioner Rob Manfred testified on Wednesday that in the case of the Padres and other teams that would have their rights deals end that MLB will pay teams up to 80% of what they would have received. Manfred said MLB came to that percentage because it would prevent teams from encountering financial distress and allow them to make player payroll.
Manfred also said MLB made a $9.1 billion bid for the regional sports networks when they were up for sale four years ago. Diamond Sports Group and Sinclair Broadcast Group bought the regional sports networks from The Walt Disney Co. for nearly $10 billion in 2019. Disney was required by the Department of Justice to sell the networks for its acquisition of 21st Century Fox’s film and television assets to be approved.
Diamond has the rights to 41 professional teams — 13 baseball, 16 NBA and 12 NHL.
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