Diamond Sports is about to breach another one of its rights contracts

Last month, Major League Baseball took over broadcasting San Diego Padres games after Diamond Sports, owner of the Bally regional sports network group that included Bally Sports San Diego, failed to make a rights payment to the Padres.

Looks like we’re about to have another team joining that group soon, per Daniel Frankel of Next TV:

According to recent bankruptcy court filings, Diamond has until Thursday to either pay the Texas Rangers for 2023 local TV rights or cut the team loose from its Bally Sports contract.

Diamond has payments to three other MLB teams due on July 1

This time, there doesn’t appear to be any grace period.

Last week, Diamond’s lawyers asked the Houston court overseeing its restructuring to clarify what happens to money it has already paid MLB clubs should it decide to tear up their contracts. Since payments are made for games that are in the future, Diamond doesn’t want end up paying for rights it doesn’t use.

Undoubtedly, MLB will wind up taking over Rangers TV rights from Bally Sports Southwest (which likely ceases to exist at that point) and will stream them. In San Diego, MLB also made deals with local cable providers to air games that way, and it seems likely they’d try to do the same in the Dallas-Ft. Worth market.

Essentially, Diamond was trying to get out from rights payments they had contracted for. Earlier this month, federal judge Chris Lopez rejected Diamond’s argument, which had this result:

Diamond had been waiting for the court to restructure deals on four MLB teams that were under court jurisdiction — the Arizona Diamondbacks, Cleveland Guardians, Minnesota Twins and Texas Rangers — before rendering them complete payments for the ongoing 2023 season.

On June 2, after acrimonious testimony between Diamond and MLB Commissioner Rob Manfred, Lopez sided with an MLB motion, and ordered Diamond to get up to date in full with those four teams, per existing contracts.

Speculation since then is that Diamond will soon tear up its contracts with all or some of those teams. And the subsidiary’s motion seems to confirm that it’s thinking about doing just that.

So the other three teams mentioned above are the Diamondbacks, Guardians and Twins, and those three RSNs could wind up going away July 1, with the league again taking over broadcasting the games. Fans won’t lose out on any games they want to watch.

The losers in all this are the teams, which don’t get the rights fees they contracted for. For the Padres, this article notes that fans in San Diego could pay $19.99 a month or $74.99 for the rest of the season (beginning a couple of weeks ago). Figure similar costs for fans in Texas, Minnesota, Arizona and Cleveland, or perhaps a bit less now that more of the season has gone by.

This isn’t a bad deal for fans — but the teams aren’t likely to get anywhere near the money from streaming subscriptions that they were pocketing from rights fees. This is something that’s playing out in other streaming realms as streaming services such as Disney+, Paramount+ and others are losing billions of dollars.

And there’s the eventual problem for teams. If they’re taking in less money from TV, they’re going to have less money to spend on baseball players. You might not see this show up right away, but as I have noted before, this is likely to be a major topic of discussion in the next baseball labor talks.

Lastly, for now, this does not affect the Cubs or Marquee Sports Network. Over time, though, as much or all of baseball broadcasting goes to streaming, it might.

As always, we await developments.