The Minnesota Twins have been drawn deeper into Bally Sports’ complicated bankruptcy after Bally failed to make a payment due to the team on April 1. TCB reported in detail on the Diamond Sports (dba Bally Sports) financial situation last month. The overleveraged group of Regional Sports Networks (RSNs), which carry 14 MLB teams and a larger number of NHL and NBA teams, entered bankruptcy in mid-March.

The Athletic reported last night that MLB had petitioned the bankruptcy court to require Diamond to disgorge payments due April 1 to the Twins and Cleveland Guardians. Both payments are currently arrears in a two-week grace period. Should Diamond not pay, MLB is asking that Bally lose the rights to continue to broadcast Twins games. At such a point MLB, via its MLB Network subsidiary, would likely take over production coordination for the broadcasts using most of the existing staff.

Consensus in the industry is that Bally will be taken over by or sold on behalf of its debtholders and its salability is contingent on the preservation of its national network of teams. Absent the crushing leverage Bally carries, the network is believed to be cash flow positive. Bally has been making payments to some teams and was negotiating new broadcast deals with other teams during the pre-bankruptcy period.

Reports in Sports Business Journal indicated that Diamond skipped a payment to the Twins in part because the Twins are in the final year of a Bally’s deal and early negotiations have been unproductive. The missed payment might produce more productive negotiations.

The entire RSN universe is under stress. Only Comcast’s group of five RSNs, which do business in top-10 markets, seem stable. RSNs are under stress because fans are abandoning cable TV for streaming, exerting continual downward pressure on RSN revenues. Major League Baseball does not offer local streaming in most of its markets, including the Twins’. Diamond is known to be insisting on streaming rights in any new deals it negotiates with teams.

MLB has been reported to be working to create its own local broadcast/streaming platform to replace the teetering RSN universe, and teams like the Twins could be early adopters. Ultimately, the hope among teams like the Twins is that a nationalized platform could diminish some of the local broadcast revenue disparities which have turned MLB into a league of haves and have-nots.

4/13 Update: On April 12, Diamond asked the bankruptcy court to allow it to restructure its obligations to the Twins and Cleveland Guardians. Major League Baseball argued such an act was unnecessary and asked the court to compel Diamond to pay the two teams as it has paid other teams this year. The Twins are in the final year of their Bally contract and the move possibly indicates Diamond has lost hope of renewing the Twins and is content to let the relationship sour.