While Diamond Sports in recent weeks has managed to secure crucial rights deals with the NBA and NHL as well as a new carriage agreement with Comcast, the owner of the Bally Sports RSNs isn’t expected to have a crack at exiting Chapter 11 until at least next month.
As part of an emergency session held Tuesday afternoon in the U.S. Bankruptcy Court for the Southern District of Texas, Diamond counsel Joe Graham asked that a twice-delayed confirmation hearing be rescheduled for early- to mid-November. Initially slated for June 18, the hearing represents what amounts to the final legal milestone in Diamond’s long journey out of bankruptcy.
As Graham noted, the terms of the renewals with the NBA and NHL require Diamond to emerge from bankruptcy “by April 1, 2025.” For all practical purposes, of course, that process must be concluded well before the end of this year if the two leagues are to enjoy any peace of mind during their respective 2024-25 seasons.
While the league renewals should go a long way toward bolstering Diamond’s go-forward plans—the company re-upped with 13 NBA and nine NHL clubs, although the Anaheim Ducks announced they would be leaving the RSN fold just a few days after the hockey component was finalized—a third partner’s status remains up in the air. Talks with Diamond’s legacy MLB franchises are ongoing, even though commissioner Rob Manfred has made it clear that he is eager to move on from the Bally Sports model.
Baseball has been particularly critical of Diamond’s efforts to extricate itself from debt ever since the company filed for bankruptcy back in March 2023, and in a recent filing, MLB attorneys suggested that the league remained skeptical about the cash-flow situation. But as Graham noted during today’s hearing, Diamond is all paid up for the 2024 season to date, having cut checks for “approximately 90% of all fees due to all MLB clubs.”
All told, Diamond has $78 million left to pay down before its final MLB bill comes due on Dec. 31. As of Oct. 1, that figure will have been cut down to approximately $36.5 million, while another round of payments will bring the total amount owed down to $20 million by the middle of next month.
In a Labor Day filing, Diamond revealed that it had made $60 million in payments to its MLB partners on Aug. 30. As noted in that document, Diamond seeks to reassure Manfred & Co. that they needn’t worry about being paid in full: “The debtors … have the ability and intention to make all remaining payments to the applicable MLB clubs for the remainder of the 2024 MLB season.” That said, in order to further assuage any doubts as to its liquidity, Diamond has made a number of assurances to MLB in the form of liens and a $20 million security deposit.
In response to Diamond’s opening salvo, MLB representative James Bromley suggested that the company is burning through its cash reserves at an unsustainable clip, as it has earmarked $215 million of the $495 million it collected in Sinclair settlement proceeds as a paydown to its first-lien lenders. Bromley also said that Amazon had pulled its $115 million cash infusion off the table, a development that puts another sizable dent in Diamond’s war chest. (Diamond has not explicitly acknowledged Amazon’s about face in its interactions with the court; that said, the company has another $450 million in financing on hand that it received from unsecured debt holders earlier this year.)
In keeping with MLB’s adversarial relationship with Diamond, Bromley concluded his presentation by suggesting that baseball isn’t a big believer in the company’s future prospects. “While it is great that NBA and NHL have taken care of their seasons … we have to keep in mind that what is being described to the court is a Band-Aid at this point.”
Before closing his remarks, Bromley reminded Judge Christopher Lopez that the Diamond case will have reached its 18th month on Sept. 16, before adding that the exclusivity period for debtors expires after 18 months. While that is indeed the letter of the law, the court may extend the bankruptcy timeframe by as many as 300 days.
For all that, discussions between the two combatants continue, and a Diamond attorney said the company “would very much like to see if there is a deal with baseball akin to the arrangements that we’ve been able to reach with the NHL and the NBA.”
As expected, Judge Lopez signed off on Diamond’s arrangements with the NBA and NHL, before going on to OK the company’s divorce from the Pelicans and Mavericks. He then agreed to preside over a status conference in the first week of October, one which should end with a firm date for a final confirmation hearing.
“Obviously, there’s still plenty of work to be done,” Judge Lopez said. “The debtors have certainly articulated a sound business reason for entering into this and I take great comfort that we’ve had an active committee working the entire time on this.” The judge also said that he took MLB’s concerns “very seriously” before approving Diamond’s proposed adequate-protection package.
However things shake out on the other side, the bankruptcy process, at long last, appears to be coming to an end. “It looks like we’re finally here, in terms of what’s really going to happen,” Judge Lopez said.
