Bally Sports North must pay the Twins the full $54.8 million the sides agreed to a dozen years ago, a Federal bankruptcy judge ruled Thursday in Houston. But whether the Twins actually recoup that money, or whether Bally finishes out the season as the Twins’ primary broadcasting outlet, remains greatly in doubt.
After two days of testimony from witnesses that included MLB Commissioner Rob Manfred and Twins President Dave St. Peter, Judge Christopher Lopez ruled in favor of the Twins, Guardians, Diamondbacks and Rangers in their suit against Diamond Sports Group, parent company of 19 Bally-branded regional sports networks.
The suit sought to compel Diamond Sports, which earlier this year filed for bankruptcy protection for several of their networks and missed quarterly payments to those four teams, to pay in full the rights fees agreed to in each team’s contract. For the Twins, St. Peter testified Thursday, that’s $54.8 million this year, the final season of a 12-year contract and a far higher dollar figure than was publicly known.
“MLB appreciates the ruling from the Federal Bankruptcy Court in Houston requiring Diamond to pay the full contractual rate to Clubs,” the league said in a statement after Lopez announced his late-afternoon verdict. “As always, we hope Diamond will continue to broadcast games and meet its contractual obligations.”
But under bankruptcy law, Diamond Sports now has the right to ask the court to terminate the contracts, since the networks say that, with the possible exception of the Guardians’ deal with Bally Great Lakes, they lose money by televising those teams’ games. Termination would return the broadcasting rights to the teams, and Manfred has committed MLB to producing and distributing broadcasts of affected games if that happens.
In fact, MLB has already begun doing so in the case of the Padres, whose contract with Bally’s San Diego was terminated on Tuesday. “As with the Padres, MLB will stand ready to make games available to fans if Diamond fails to meet its obligations,” the league’s statement said.
The court has yet to set a date for Diamond Sports to retain or reject its contract with the Twins, though in addition to unpaid fees due in April, Bally Sports North has another payment due on July 1. The Twins’ contract, unlike that of the Guardians, Diamondbacks or Rangers, expires at season’s end, which would seem to make it highly unlikely that Bally Sports North would have any motivation to sustain another four months of losses.
But Diamond Sports is in the middle of negotiations with carriers like Comcast, Cox Communications and DirecTV over carrying their networks, talks that become more difficult if the Bally networks lose a significant number of the 41 MLB, NBA and NHL teams that they currently have contracts with.
Manfred also testified Wednesday that MLB is prepared to cover any lost TV revenue to teams affected by Diamond Sports’ bankruptcy up to 80% of contracted fees. In the Twins’ case, that means MLB will insure that the team receives at least $43.7 million, enough to prevent the team from seeking large payroll reductions.
Also notable in the bankruptcy ruling is that the court refused to award Diamond Sports the direct-to-consumer streaming rights for the affected teams to their Bally networks, which DSG had sought. MLB hopes to consolidate the rights to many teams’ streaming rights in an easy-to-access package for consumers in the near future.
During the trial, Diamond Sports’ attorneys and CEO David Preschlack characterized the rights fees owed to the four teams involved as well above “fair market value,” and asked Judge Lopez to reduce those fees by at least 20%. But St. Peter testified that Diamond, in an effort to negotiate a new five-year contract earlier this year, offered to pay $54 million for 2024, with a 1% increase each following season, basically undercutting their claim that the current fee is unfair.
BSN also pays the Twins $2 million a year, St. Peter revealed, for the rights to stream its telecasts, but only to its cable or satellite subscribers.