The troubled Bally Sports network filed Chapter 11 bankruptcy on March 14 in the U.S. Bankruptcy Court for the Southern District of Texas. This news was unsurprising after it first missed a $140 million payment on its $9-plus billion debt. The missed payment and filing made national news in the business and sports sections.
Owned by Diamond Sports Group (DSG), Bally has 21 regional networks that broadcast 42 teams from Major League Baseball, National Basketball Association and the National Hockey League. One of its markets is here in the Dallas-Fort Worth area, where it hosts Rangers, Mavericks and Stars games.
A business plan that was doomed to fail
DSG was founded in 2019 when Disney bought most of 21st Century Fox’s film and television assets. For the deal to go through, federal regulators required Disney to sell the regional sports network, which it did to the Sinclair Sports Group for more than $10.6 billion, but that included a crippling $8 billion in debt. Sinclair subsequently created the Diamond Sports Group, saddling it with this financial anchor.
Making matters worse, sports viewership everywhere is declining, with Dish Network already severing its arrangements with sports leagues or teams. The decline is further worsened by falling subscription numbers to cable networks that host the DSG networks. These factors contributed to loan default on a debt DSG cannot service.
What’s it means to sports here in Texas
Bally has already paid for the 2022-2023 basketball and hockey seasons, so Stars and Mavericks games will continue to be broadcasted. On the other hand, baseball season is just starting. Bally said it plans to continue operations as usual during the restructuring, but the Texas Rangers already announced that it considers bankruptcy filing a default that terminates its agreement. Bally countered that claim, asserting that it has made good on its annual $111 million to the club for broadcast rights. Bally has made payments to other MLB teams as well, but it informed the Arizona Diamondbacks that it would not broadcast the club’s games.
Major League Baseball has threatened to step in and broadcast games in local markets if Diamond and Bally cannot meet their financial obligations for the upcoming season.
Bankruptcies are always complicated
Business bankruptcies often involve a restructuring of debt. They can be quite strategic – DSG is trying to do something about the $8 billion debt — but the courts and creditors have to go along with the process.
Companies like DSG and their creditors need to work with law firms that handle business bankruptcies. These legal professionals can help clients negotiate a solution, whether collecting money owed or restructuring debts in a way that allows the client to move forward successfully.