Twins/MLB Prevail in Legal Claim Against Bally Sports
The Minnesota Twins and Major League Baseball (MLB) have won their motion for judgement in a federal bankruptcy court in Houston, obligating Diamond Sports Group (dba Bally Sports North) to pay the Twins the full contractually obligated sum for rights to its 2023 broadcasts. Judge Christopher Lopez ruled late Thursday that Diamond had not proved the payments were unreasonable and that Diamond had no right to unilaterally reduce them, noting that Major League Baseball had twice recently attempted to buy its teams’ broadcast rights back from Diamond, yet the broadcaster declined.
The Twins are owed $60 million for the season’s rights. Diamond was attempting to use its bankruptcy as a pretext to lower payments to several teams, including the Twins, claiming they were well above market value, and that its revenues had declined by nearly a third since the mid-2010s. Diamond/Bally’s is the largest broadcast rights holder in MLB, with rights to 13 teams. Some MLB teams have contracts with Diamond/Bally that extend for another decade or more.
The Twins’ contract with Diamond runs only through season’s end, yet Diamond does have the prerogative, due to its bankruptcy, to reject its contract with the team, which it has done in several other markets where it holds broadcast rights that it deems highly unprofitable. Should Diamond do so, Major League Baseball will take over production and distribution of the games. (Twins’ broadcasters are employees of the team, not Diamond.) Diamond also has the rights to Timberwolves and Wild broadcasts in contracts which go beyond 2023 and are not currently the subject of litigation.
Diamond, previously known as Fox Sports North, is in bankruptcy due to its overleveraged purchase of the regional sports network (RSN) group from Fox, but a secondary component is the cord-cutting phenomenon which has cost it revenue from cable companies. Diamond had been pressuring MLB to give it team streaming rights to mitigate its losses, but the league has resisted.
In April, MLB first asked the bankruptcy court to require Diamond to fully pay the Twins and two other teams for broadcasting rights. Two months earlier, Diamond had missed a $140 million debt payment.
At season’s end, if not sooner, the Twins will be one of a number of MLB teams without a broadcast partner—the Diamond refugees and those of AT&T SportsNet, which walked away from its broadcast rights in spring—creating an opportunity for a new model to replace the sinking RSN universe. MLB currently offers only out-of-market streaming through its MLB.TV service.
MLB teams are bracing for a lengthy period of broadcast revenue declines after the salad days of cable exclusivity and hefty RSN payments. The Twins—whose RSN contract was believed to be modest relative to market size due to chronically low cable penetration in the metro area and a thinly populated fan base beyond—may see less dramatic revenue reversals than most teams.
For now, the Twins await Diamond’s decision. If it intends to reject the four months of games and roughly $30 million in payments left due to the Twins, it will probably do so quickly, with the season now a third complete.