Major League Baseball and Diamond Sports spent more than 20 hours in a Houston court over two days last week over the price of four teams’ media rights. Bankruptcy DSG, the owner of 18 regional sports channels under Chapter 11, has stopped paying its teams, arguing that it is entitled to fair market value, MLB said.
Judge Chris Lopez finally said that the court is not the forum to determine the market prices, and the fact that MLB has testified that it has proposed to estimate the contracts, in any case they must be in the fair market. DSG has ordered full payments to the Minnesota Twins, Cleveland Cavaliers, Arizona Diamondbacks and Texas Rangers.
But all those hours weren’t a complete waste. While confidential information such as royalties were not revealed — the monitors viewed by witnesses and attorneys were visible only to them and Judge Lopez — some interesting details did slip out. Here are some of them:
• It is well established that Diamond wants direct-to-consumer (or DTC) rights to all MLB teams it broadcasts on cable. DTC rights refer to the streaming of in-market games directly to fans (as opposed to streams via a certified cable connection). Diamond currently owns all NHL and NBA teams and five of its 13 MLB teams. According to Commissioner Rob Manfred’s testimony, Diamond and parent Sinclair are seeking not only DTC rights, but many other rights of lesser concern. These include allowing the broadcast to be linked to a second gambling-themed show. the right to sell merchandise on the screen; Or even if MLB decides to sell the ninth inning of games.
“Oh, by the way,” Manfred said of his conversations with Sinclair, “the opportunity to let you decide how gambling fits into our distribution, which is a fundamental business decision…. . “You will not have those rights. So we had an unpleasant relationship.”
Sinclair CEO Chris Ripley told investors on a 2021 earnings call about plans to integrate gambling with RSNs.
My story on today’s marathon Diamond Sports/MLB bankruptcy hearing. Bottom line: The two sides really don’t like each other. https://t.co/SItbDNvga8
— Daniel Kaplan (@KaplanSportsBiz) June 1, 2023
• Twins president Dave St. Peter confirmed during his testimony that the club’s contract with DSG will expire after this season. He said the contract would pay the Twins roughly $60 million this year, but DSG offered $54 million to renew it last year, which the team rejected.
“So that was a $54 million reduction in the first year. And then it has a one-percent ramp. Therefore, if we go to the fifth year of 2028, it will be up to 56 million dollars. DSG’s exclusive bargaining period ends on April 30. The Twins haven’t begun negotiations with other parties, but St. Peter said he expects that to begin soon, and “we’ve heard from a number of interested parties who are interested.” They love hanging out with the twins.
• Diamond’s attorney said during cross-examination that the Milwaukee Brewers’ deal with Bali Sports is $33 million annually and will not increase. Media offers almost always have built-in accelerators, so this is unusual. Also, the Brewers are one of five Diamond MLB teams to sell DTC rights.
• Manfred described the Atlanta Braves’ payment as “very low,” though the team did not say what he would be paid. Braves public records don’t disclose the rights payment for his contract, which runs through 2027, but the Atlanta Journal-Constitution reports it is $100 million this year.
• Braves owner Liberty Media was a partner with MLB in the 2019 bid for the 19 RSNs Sinclair bought from Fox, Manfred said. MLB’s bid was at least $900 million less than Sinclair’s winning bid of $10.6 billion.
“The reason we were the bidders was because we knew that Major League Baseball was the best place to manage in a time of change,” Manfred said. I think. You know, we had some capacity, but it was three and a half, okay. We had a major media player, Liberty Media was a partner… we thought we’d put ourselves in a much better position to have options to distribute the games. When the bidding process was going on, and we already had distribution deals going to distributors. .
• Rangers COO Neil Leibman said revenue from the Rangers’ telecast accounts for “25 to 30 percent of our total revenue.” Club’s lawyer As long as 2023 meets projections, Bally Sports Southwest, the RSN that hosts the Rangers, will make nine figures from the Rangers from 2020-23. Meanwhile, the other teams suffered eight-figure defeats in similar circumstances. The Rangers are owed about $26.5 million in rights fees this month.
• Bally Sports San Diego’s ownership breakdown was 60 percent owned by the Diamonds and 40 percent by the Padres. The Diamonds got 80 percent of the profits and the Padres took 20 percent. Diamond holds four of the five board seats, while the Padres have one.
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• Manfred spoke positively about the sport’s viewership. “Our domestic ratings have been declining relative to subscriber numbers. If you factor in the decline in subscriber numbers, they’re up quite a bit.
An MLB-side lawyer asked, “So even though enrollment is down, is viewership still higher or higher?” he asked.
“That’s right,” replied Manfred.
• Later the Commissioner’s phrase was challenged by Diamond’s lawyer. The ratings, the lawyer pointed out, actually dropped.
“If you actually look at the numbers, the drop in rating numbers is less than the drop in subscribers,” Manfred said. Properly identified as ‘Lay’.
The lawyer disagreed.
(Top photo: Chris Coduto / Getty Images)
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