Twins, Guardians And MLB File Emergency Motion To Force Owner Of Bally Sports RSNs To Pay Rights Fees

With Diamond Sports Group (DSG), who runs the Bally Sports branded regional sports networks, missing payments to two clubs in Major League Baseball, the league has filed an emergency motion with the courts to try and force DSG to pay their rights fees or release the rights to allow MLB to broadcast them.

Diamond Sports Group filed for voluntary Chapter 11 bankruptcy in mid-March but has continued to air games. Just prior to filing for bankruptcy they missed their payment to the Arizona Diamondbacks, barely missed a grace period deadline with the San Diego Padres on March 29, and now has missed paying their scheduled rights fee payments to Cleveland Guardians and Minnesota Twins, which spurred the league into legal action.

The filing was made by the Guardians, Twins, and MLB through the Commissioner’s Office.

A hearing has been scheduled at 2 p.m. CT on April 13, a week from the day of the filing.

Diamond Sports Group-owned Bally Sports North airs Twins games while Bally Sports Ohio & Great Lakes airs the Guardians.

The motion is partially redacted so as to not reveal the actual amounts the clubs are due in rights fees. According to The Athletic, a source close to Diamond said the Guardians’ annual fee is $55 million and the Twins is $42 million.

In the emergency motion, the league argues that even under bankruptcy proceedings Diamond is compelled to pay rights fees under the contracts reached and continue to “produce and broadcast all games in accordance with the Telecast Rights Agreements and pay all postpetition Telecast Rights Fees and Ancillary Fees as and when due (including those fees that have become due and payable).”

Should Diamond not do so the Twins, Guardians and MLB request in the motion that DSG “should promptly reject their agreements with the Clubs to enable the Clubs to contract with an alternative broadcast partner.” Major League Baseball has said they are ready to reclaim media rights, stream them and have been in talks with traditional television distributors such as DirecTV. The clubs and league claim that they would do so “to minimize the disruption of local broadcasts, and with promoting those alternatives to their fans.”

The motion argues that by Diamond not paying, yet continuing to air games, they are using “intellectual property provided by the” Guardians and Twins while “earning revenue from that use while selectively and deliberately” not paying them. The motion continues to argue that Diamond “are not only continuing to broadcast the games but are in all likelihood paying production costs to parties other than” the Guardians and Twins while receiving money from cable and satellite distributors in exchange. The league and club argue that streaming and promotional rights are also providing “direct benefits that [Diamond] have chosen to use without compensating the Clubs.”

To add additional pressure on DSG to make their payments, the Atlanta Braves, Arizona Diamondbacks, Detroit Tigers, Milwaukee Brewers, Tampa Bay Rays, and Texas Rangers have said they support the emergency motion and that “if any of these clubs do not receive any payments as and when they become due under their respective telecast rights agreements or any other agreements with [Diamond Sports Group] during these Chapter 11 Cases, these clubs may join in the relief requested.”

The Texas Rangers added that even though they support the motion they are not waiving “any rights regarding the termination of its respective telecast rights agreement or under its current standstill with [Diamond].” The Rangers are looking to exit their agreement with DSG.

In the emergency motion, the clubs and MLB claim that DSG have enough financing to pay all their “administrative expenses” which the motion claims to include the media rights fees contractually agreed to between the various clubs and Diamond.

As to when action on the emergency motion may take place, in an attachment, the club and league provide a proposed order that would seek to have Diamond pay the Guardians and Twins ”through April 3, 2023 within two business days of entry” of the court order. It goes on to say that should DSG look to exit their contracts with the Guardians and the Twins they would need to do so “by no later than April 30, 2023, with a hearing on the motion scheduled for no later than May 21, 2023.”