Wednesday, June 12, 2024
Parent company of Bally Sports reduces team payments.

Parent company of Bally Sports reduces team payments.

Diamond Sports Plans to Cut Fees for Three MLB Teams

Diamond Sports, the parent company of Bally Sports Regional Networks, has announced plans to reduce fees paid to three MLB teams. The Arizona Diamondbacks, Cleveland Guardians, and Minnesota Twins have all seen their payments from Diamond Sports cut off, despite their games continuing to be broadcast on the channel. The move sparked furious reactions from both the teams and the MLB, with both filing emergency motions that ask the bankruptcy court to intervene.

Diamondbacks File for End of Contract or Full Payment

The Diamondbacks are attempting to recoup the $30.8 million owed to them from Diamond Sports. Because the company ceased payments to the team before filing for Chapter 11 bankruptcy, it creates a different legal situation than the other 13 teams covered. Diamond Sports argues that bankruptcy law permits the company to restructure the contracts to reflect current market value, citing that the contracts were originally signed before cord-cutting became such a prevalent trend.

MLB Argues Diamond Sports Should Pay Agreed Upon Rate

The MLB lambasted Diamond Sports in a recent court filing, stating that the company cannot choose to not pay the agreed upon contractual rate. The league also claimed that the payments are essential to team operations, and the teams are losing revenue each day. Diamond Sports counters, stating that the grace periods for payment have not expired, and the clubs’ argument for needing cash flow is “conclusory.” The court must now decide whether Diamond Sports can reduce the payments legally.

Bankruptcy Attorney Predicts Diamond Sports Will Achieve Its Goals

Bankruptcy attorney Schuyler Carroll, of Loeb & Loeb, states that both parties have an argument, and it is up to the bankruptcy judge to make a decision. However, he predicts that Diamond Sports may get what it wants, with courts being concerned about risk.

Court Could Order Teams to Pay Back Money After Restructuring

Carroll suggests the judge may agree with the MLB and order Diamond Sports to pay the teams what they are owed with the understanding that the teams would have to reimburse Diamond Sports if the contracts are restructured later. Diamond Sports had proposed putting the money into escrow, but the MLB suggested getting paid everything now with the possibility of givebacks.

The situation is ongoing, with a court date set for April 19, although Diamond Sports is pushing for a date in May.

Source

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