Major League Baseball and a bankrupt regional broadcaster are on a collision course over media rights payments that could determine the course of future income streams for teams across the league, The Post has learned.
Diamond Sports — which operates about half of the regional sports networks, or RSNs, across the US under the Bally’s name and which declared bankruptcy in March — wants to cut the fees to some of the 13 MLB teams whose local broadcasting rights it owns as cable’s decline accelerates.
Among those are the NL West-leading Arizona Diamondbacks, one of the biggest surprises in baseball with four players on the National League roster for Tuesday’s All-Star game in Seattle.
Diamond is close to negotiating a 20% discount for a five-year deal with the Diamondbacks that would also give the broadcaster valuable streaming rights it doesn’t presently own, sources told The Post.
“They’ve cut a deal that’s much more attractive to Diamond,” a source with direct knowledge of the situation said.
MLB Commissioner Rob Manfred, however, is threatening to block Diamond’s plans if the Diamondbacks deal is presented in its current form at a bankruptcy court hearing slated for July 17, sources said.
Manfred, who has the power to approve all media deals, has been saying for months that MLB will take over local broadcasts if Diamond rejects contracts and that other owners would help compensate teams for the lost revenue.
Indeed, the plan doesn’t sit well with owners of big-market teams like Yankees, Mets, Cubs, Dodgers and Red Sox – which all have their own regional broadcast deals. While the team owners back paying other clubs 80% of their lost Diamond media rights fees, they only support it for this season, sources said.
“I’m not paying past one year,” an MLB owner told The Post.
Diamond, which had signed a 20-year, $1.5 billion deal in 2015 with Arizona, is now offering 80% of what the Diamondbacks are making in their contract for next year and then the percentage drops by more in the next several years, according to sources.
That puts Manfred in a bind over blocking the Diamondbacks deal since the team may be in worse financial peril next year without Diamond’s reduced offer, sources said.
“I don’t believe Rob will reject the Arizona deal. I think it’s a complete bluff,” the MLB owner said.
MLB declined to comment.
A Diamond spokesman said, “We are having discussions with the Diamondbacks but have not yet reached a deal.”
As long as Diamond remains in bankruptcy, which will likely extend into next year, it can reject media rights contracts.
Diamond’s senior debt is trading at less than 80 cents on the dollar and there is speculation the company will be forced to liquidate in the next year or so if Manfred does not go along with the restructuring plan, sources said.
Diamond’s best hopes to emerge from bankruptcy are getting more streaming rights for its national service, these sources noted.
The company makes money on perhaps half of the 13 MLB media rights deals it has, including the Braves and Marlins, and is willing to pay fees to those clubs going forward without changes, sources said.
But if it goes under, MLB can take over the media rights or try to sell them in a package to tech giants entering the live sports streaming wars like Amazon Prime and Apple+. Both currently have broadcast deals.
MLB has had ambitions of launching its own national streaming service that will broadcast the games of all 30 teams. The owners offered to buy Diamond this spring in bankruptcy court for around $350 million including the roughly $175 million Diamond had on its balance sheet.
So far, the deal has not been accepted, two sources close to the situation said.
The MLB owner said the commissioner has been given a short leash in the Diamondbacks negotiations.
“Nobody has faith in Manfred creating an MLB network”, the MLB owner said.
There are more Diamond negotiations with other clubs on deck.
Diamond paid the Minnesota Twins and Texas Rangers current fees for this season, though sources said those are contracts that will need to be reworked next season.
Also, Diamond has only paid the Cleveland Guardians through July and it has a payment due July 15 on the NL Central-leading Cincinnati Reds.
Earlier this year, Diamond rejected the remainder of its expensive San Diego Padres contract. MLB picked up broadcasting their home games.
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