What Happens Now that Bally Sports’ Parent Company Missed a Payment to the Twins?

[Cody Christie]

The Twins' television situation is becoming cloudier by the day. Now, Diamond Sports has missed a payment to the Twins and MLB has stepped in to force action.

Image courtesy of Jeffrey Becker-USA TODAY Sports

On Wednesday, Daniel Kaplan of The Athletic reported that MLB filed an emergency motion in the bankruptcy proceedings for Diamond Sports, the parent company of Bally Sports North. Recently, Diamond Sports missed a payment to the Minnesota Twins and Cleveland Guardians, so MLB is demanding payment to these two organizations by April 13.

How Did the Situation Reach This Point?
Last month, Diamond Sports filed for Chapter 11 bankruptcy protection. At the time, they said the regional sports channels would continue to operate. The issue continues to be the number of customers that continue to cord-cut and search for streaming options. With fewer viewers, there is a decrease in revenue from ad sales and cable contracts. Some teams are losing money for their regional network, which doesn't help Diamond stay profitable. 

The New York Post reported that Diamond planned to reject the contracts of four teams that cost more to operate than they bring in with cable contracts and ads. At the time, the Cincinnati Reds, Cleveland Guardians, San Diego Padres, and Arizona Diamondbacks were the teams most likely to have their contracts rejected due to bankruptcy proceedings. The Padres lose the most money at $20 million annually. Diamond missed a payment to the Diamondbacks before filing for bankruptcy, and now the Twins and Guardians join the list. 

What Changed?
Bally Sports North has continued to televise Twins games even though Diamond Sports missed a payment. In the motion, MLB's lawyers wrote that Bally Sports decided to miss a required payment "even though they continue to use the Clubs' valuable intellectual property every day. By continuing to broadcast Guardians and Twins games, they generate postpetition revenue, yet boldly refuse to pay the Clubs."

According to reports, the Guardians' annual fee is $55 million, while the Twins is $42 million. The Twins weren't included on the initial list from the New York Times, but the team's television market is complicated compared to others across baseball. Historically, the Twin Cities has fewer people utilizing cable services, resulting in smaller television deals for the Twins. Minnesota's current television contract expires after the 2023 season, so Diamond might be willing to lose the Twins sooner rather than later. 

What Happens Next?
MLB has given Diamond one week to make up its missed payments to the Twins and Guardians, but that seems unlikely. Throughout this process, MLB has insisted that it is prepared to take over the broadcasts if needed. MLB has hired former regional sports network executives to help transition to broadcasting games, and now they will face a unique situation.

"With the 2023 season underway, the Clubs are navigating a complicated and fragile situation without certainty in their ability to consistently provide games for the millions of fans who follow professional baseball through daily televised broadcasts," MLB's lawyers wrote in their motion to the courts.  

The New York Post reported that MLB planned to stream games for free while attempting to negotiate with other cable companies for lower contracts. At the time of the report, there was no finalized plan for how black-out restrictions would work for these games. MLB plans to offer a streaming service for around $15 per month if a deal is reached with a different cable company. Eventually, an overarching streaming service is something that baseball will need to consider to help with marketing its game. 

How are you currently watching Twins games? Would you pay $15 monthly for MLB's streaming service? Leave a COMMENT and start the discussion.

 

View full article

[Trov]

I am not a bankruptcy lawyer, and sure MLB lawyers know what they are doing, but my limited knowledge is once someone claims bankruptcy, you cannot seek payments from them.  Now, the timing of the bankruptcy may play a major roll in this, as they did not seek to back out of the contract for the Diamond Backs because they are a creditor because the non-payment was before the bankruptcy.  However, I might imagine the bankruptcy court might rule now the Twins are a creditor and dismiss MLB's motion.  If so, they bankruptcy court will let it all play out.  I think it would be helpful for some article to, here or elsewhere where they consult with a bankruptcy attorney to express an opinion as to how this will play out. 

[danielp19653]

I sure hope the Twins end up on MLB.tv for local streaming I would gladly pay the $15 a month to kill the $50 a month Xfinity charges for the base cable package to get the Twins 

[Whitey333]

Me, like thousands of other Twins fans have been unable to watch the Twins on home TV.  Ever since we dropped cable we switched to three streaming services and of course they all dropped it.  We haven't been able to watch the Twins for a couple of years unless we go to a bar or restaurant or in person for at least the past two years.  So not much has changed for me.  I follow the Twins on radio.  But I sure miss not being able to watch them. 

 

[DJL44]

I am going to guess the Twins get a payment at 11:59pm on April 13.

[Cozinator]

I would gladly pay $15 a month to watch the Twins. I just hope they include home games. I think being able to watch your favorite club play all of their games would make you want to attend a game in person even more. Any rumors about whether the home schedule will be blacked out? 

[lake_guy]

Caught this live on KFAN the other day, Gleeman does a nice job of highlighting just how complicated this all really is.  Go to the 10:30 mark - https://www.iheart.com/podcast/139-the-dan-barreiro-show-26981004/episode/bally-bubble-burst-astros-preview--112349708/

In summary - for years clubs were getting those large multi million dollar payments because the cable companies where charging every customer for the RSN regardless if you watched it or not.  That cable customer base is a much larger number than the Twins fanbase which translates into having to charge a high price to the Twins fans willing to pay for the streaming service to get to that 40 million mark for the Twins.  How many fans are going to pay for that streaming service?  And of the portion of Twins fans how many are going to go to the trouble of fussing with streaming services?

Gotta say I love league revenue sharing as part of the answer Bonnes talks about.  

[adorduan]

If I'm still blacked out here in Iowa, what's the point?

 

 

[TCDoc]

I recommend getting a simple vpn like Nord, and just buying mlb.tv to watch all games even in network.  Works great.

[Major League Ready]

In 2020 they averaged over 140,000 viewers per game.  It's a fraction of that now because of distribution but I don't see why they can't return to those levels.   If that's the average viewership, the number of people potentially willing to stream the product is something significantly above 140,000 viewers.   The audience is out there.  They need to find a good way to service that audience.  Also, removing the blackout would effectively cut the price per game in half which would obviously make for a more attractive product.

The new rules, especially pacer of play could bolster viewership as well.

[Althebum82]

I was at best a sporadic viewer back when I had cable, but it seemed like it was a challenge to find the time to watch more than a couple innings (a short attention span probably fed into that as well).  The cost of cable just was not worth the benefit of having it in our household after kids all moved out.  It is true, a quicker game is an enticement, but I am now conditioned to simply just live without it and catch highlights afterwards or listen to the radio if I happen to be driving.  Clearly, I am part of the problem!

[DJL44]

1 hour ago, heresthething said:

charge a high price to the Twins fans willing to pay for the streaming service to get to that 40 million mark for the Twins

Except it isn't just subscriber money, it's also some of the best advertising rates in television.

[KirbyHawk75]

So if it moves to mlbtv will I not get that either because yputubetv dropped it?

[Brock Beauchamp]

Really nice article @Cody Christie. Covered all the bases. 

[ashbury]

39 minutes ago, Brock Beauchamp said:

Really nice article @Cody Christie. Covered ... all the bases. 

Yes, he truly ... knocked it out of the park?

[Brock Beauchamp]

28 minutes ago, ashbury said:

Yes, he truly ... knocked it out of the park?

[twinsguy03]

19 hours ago, KirbyHawk75 said:

So if it moves to mlbtv will I not get that either because yputubetv dropped it?

If it moves to MLB.TV you will be able to watch the games. I have had both MLB.TV and Youtubetv for a few years. The only difference is you will have to watch the games on the mlb app or through their website instead of through Youtubetv like in previous years.

[Richmond Dude]

On 4/7/2023 at 9:15 AM, Trov said:

I am not a bankruptcy lawyer, and sure MLB lawyers know what they are doing, but my limited knowledge is once someone claims bankruptcy, you cannot seek payments from them.  Now, the timing of the bankruptcy may play a major roll in this, as they did not seek to back out of the contract for the Diamond Backs because they are a creditor because the non-payment was before the bankruptcy.  However, I might imagine the bankruptcy court might rule now the Twins are a creditor and dismiss MLB's motion.  If so, they bankruptcy court will let it all play out.  I think it would be helpful for some article to, here or elsewhere where they consult with a bankruptcy attorney to express an opinion as to how this will play out. 

The bankruptcy is irrelevant to this particular issue.  MLB isn't claiming that the Twins are owed something, they are claiming that Bally is stealing from them.  The analogy is that someone agrees to buy your house and on the appointed day, doesn't pay you.  They arrive and say they filed for bankruptcy last week, so you can't ask them for the money but you still have to let them have the house.  Don't give them the house, nothing requires you to continue to do business with them at that point.