Bally Sports files for Chapter 11

Impact might not be felt immediately 

The nation’s biggest regional sports network chain just filed for Chapter 11 bankruptcy, but of all the talk and bluster about its implosion, they actually might come out fine. Well, maybe.

Bally Sports parent Diamond Sports Group entered those waters last Tuesday with the Southern District of Texas bankruptcy court as the company – a subsidiary of Sinclair Broadcasting, is carrying eight billion in debt after its leveraged buyout from Disney in 2019. This comes as cord-cutting has hit cable-related properties hard, and their high subscriber-per-price keeps them off most MVPDs, virtual and non-virtual alike (let’s get this out of the way upfront – Marquee Sports Network – who is owned by Sinclair and the Chicago Cubs, are NOT affected.) Use of the Bally name is licensed from the casino corporation of the same name, who is building a casino near downtown Chicago and whose CEO Soo Kim is engaged in a nasty battle with the FCC as his Standard General is trying to buy the Tegna station group.

There are nineteen Bally Sports Nets nationwide, carrying fourteen MLB teams, sixteen NBA teams, twelve NHL teams, and four WNBA teams. With the exception of Chicago, Bally is present in every Midwestern television market including Detroit, St. Louis, and Cleveland, among others. 

So what does this mean for the teams and fans? 

Despite all the talk of MLB “taking back rights”, legally under Chapter 11 bankruptcy they won’t be able to do so unless they get permission from a judge, and he/she isn’t likely to grant that order. “Once you file bankruptcy, no one can take any action to collect a debt against you unless you go get court permission,” former Las Vegas bankruptcy judge and Northwestern University bankruptcy law professor Bruce Markell told The Score (a site not related the Chicago radio station of the same name) last week in an article about Bally’s bankrutcy. “The goal of Chapter 11 is for there to be a plan of reorganization, which is a document detailing who gets what, and who does what.” 

That’s exactly what this is – a reorganization.

Team broadcasts on Bally are expected to continue without interruption. Under the reorganization plan however, Diamond plans to drop four MLB teams – Cincinnati Reds, Cleveland Guardians, San Diego Padres, and the Arizona (Phoenix) Diamondbacks, as Bally recently skipped a payment owed the team. It’s not known how these four teams would continue airing games, but one scenario being floated is selling rights to another company such as Scripps, who is eager to get into the the sports business (Scripps owns over-the-air stations in each market those four teams play in.) 

The plan is to make Diamond a completely independent company from Sinclair with the majority of equity being owned by the company’s secondary and unsecured creditors. This is what happened to former WGBO-TV owner Grant Broadcasting, who filed for Chapter 11 in late 1986 at a time when TV owner bankruptcies were quite common in the industry. In 1988, Grant went into receivership and converted into the creditor-owned Combined Broadcasting, who sold WGBO and two other stations it owned to Univision and Paramount, respectively in 1994.

Several media companies who filed for Chapter 11 came out fine – among them in recent years include iHeartMedia and Cumulus Media, who used Chapter 11 to get out of several unprofitable sports contracts, including the Chicago Bulls and White Sox.

On the other hand, Chapter 11 did lead to the end of others, such as the former syndication companies Qintex and LBS Communications.

With the Chapter 11 filing, Diamond now intends to plow ahead toward the future, including acquiring the rest of the MLB streaming rights it didn’t own, which could set up yet another battle with the league (it owns streaming rights to all the NBA and NHL teams it has rights to); and fighting a plan by the Texas Rangers to get out of its long-term Bally deal, which could kick off yet another long court battle. 

Another thing to look for is the future of AT&T Sportsnets, who plan to shut down March 31 as parent Warner Bros. is looking to sell its sports teams rights back to its owners. So far, the Houston Rockets and Astros are looking have shown interest while the Seattle Mariners and Colorado Rockies are planning to continue airing games without them.