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While Major League Baseball’s owners stole the headlines this week when <a href="https://www.washingtonpost.com/sports/2023/11/16/oakland-as-relocation-las-vegas-mlb-owners/" target=_blank>they voted to approve the Oakland Athletics’ move to Las Vegas</a>, the cogs behind another potentially transformative development for the sport churned away in a Houston courtroom.

Judge Christopher Lopez of the United States Bankruptcy Court in the Southern District of Texas approved a deal between Diamond Sports and the NBA teams whose games it is under contract to broadcast on its Bally Sports networks. The deal indicates that the broadcasts would continue until the end of the 2024 season and then terminate.

In the process of petitioning the judge to approve that pact, a lawyer for bankrupt Diamond Sports suggested the company hopes to come to a similar agreement with the 12 MLB teams whose games it is still contractually obligated to broadcast. But lawyers for both Diamond Sports’s parent company, Sinclair, and MLB raised concerns with the NBA deal, centered around its effect on the company’s ability to pay for its baseball obligations, even through next season.

Lopez, the judge, said he planned to schedule a hearing to assess those objections, and lawyers for MLB indicated Wednesday that they would be discussing proposals that would solidify Diamond Sports’s plans for its remaining MLB markets next year. As with the NBA, and an expected deal with the NHL, any agreement reached would likely be geared toward ending Diamond Sports’s broadcasting obligations after 2024.

“This is a very, very complicated situation,” MLB Commissioner Rob Manfred said Thursday. “Our primary goal at this point is certainty.”

MLB has not had certainty when it comes to Diamond Sports’s plans since the Sinclair subsidiary <a href="https://www.washingtonpost.com/sports/2023/03/15/diamond-sports-bankruptcy/" target="_blank">declared bankruptcy in March</a>, though some people familiar with the process would argue that the league did not have the certainty it should have about Diamond Sports’s solvency when it took on debt to <a href="https://www.washingtonpost.com/sports/2019/05/06/bet-live-sports-sinclair-ceo-chris-ripley-talks-acquiring-regional-sports-networks/" target="_blank">buy broadcast rights in 2019</a>.

When Diamond missed its contractually obligated payment to the San Diego Padres last year, MLB was prepared to take over broadcasts and did so, marketing a streaming package to viewers in that market. MLB also had to take over broadcasts of Arizona Diamondbacks games in July when Diamond Sports rejected its rights agreement. Despite mere hours of notice before the San Diego takeover, MLB seemingly handled the production of both teams’ games without an issue. But Manfred said he is unwilling to go through another season of reacting rather than preparing.

“It kind of came off without a hitch in the sense that San Diego was terminated, Arizona was rejected, we were able to step in and broadcast those games, fans were not disadvantaged in any way. In fact, our reach was better because we had a digital product available,” Manfred said.

“To undertake another summer where we have 12 teams at risk given that the financial situation of the Diamond RSNs has further deteriorated is not an appealing prospect. It’s one thing to pick up one or two. Picking up 12 with no notice is a herculean feat. We need to know so our fans are not disrupted.”

The certainty Manfred wants is both logistical and financial. For much of the last three decades, behemoth cable rights contracts sparked exponential growth in player salaries and team revenue, providing steady, predictable streams of revenue that were sturdier than ticket sales or merchandise.

Even as his office was prepared to take over production and marketing of their broadcasts, Manfred was clear that the end of the Padres and Diamondbacks agreements with Diamond Sports would cost both franchises money, and that the league could not backstop the full difference between what they would have made under the original deal and what they would make from new agreements beyond 2023.

The remaining 12 teams to which Diamond Sports has rights enter this winter in similar situations, unable to predict how long their broadcast partner will be able to make its payments to them. A lawyer for Diamond Sports said Wednesday that the company’s intention “is to broadcast almost all of [our] Major League Baseball teams next year,” but added that “there are a few, a very few, for which we do not have agreements in place.”

“And that, frankly, at this point, are too expensive for us to broadcast without concessions,” he added. “I am told that those discussions are taking place, there have been reach-outs to both of the teams involved.”

The World Series Champion Texas Rangers and Cleveland Guardians, two Diamond Sports teams, have been open about the glaring financial uncertainty created by the fragile state of their rights agreements.

“There’s no deal with MLB, there’s no deal with the Rangers,” a lawyer for the Rangers said in court Wednesday as he raised concerns about how the NBA deal might affect Diamond’s ability to pay for its agreement with the team. “We don’t know what [Diamond’s] intention is with respect to the Rangers.”

Earlier this week, Guardians President of Baseball Operations, Chris Antonetti, indicated <a href="https://www.cleveland.com/guardians/2023/11/chris-antonetti-cal-quantrills-arbitration-projection-didnt-fit-guardians-2024-payroll.html" target=_blank>to Cleveland.com</a> that the team would not be able to offer a contract to effective homegrown starter Cal Quantrill because the more than $6 million he was projected to make in arbitration seemed unlikely to fit in a crunched payroll. On Friday, the Guardians traded Quantrill to the Colorado Rockies for a minor league catcher.

“We don’t yet have clarity on that other than there’s financial uncertainty, so that makes things a bit harder to plan,” Antonetti <a href="https://www.cleveland.com/guardians/2023/11/chris-antonetti-cal-quantrills-arbitration-projection-didnt-fit-guardians-2024-payroll.html" target=_blank>told Cleveland.com this week</a>. “It’s difficult to plan in a normal year at this point in the offseason as we’re still trying to wrap our arms around what our revenue might be. The Bally’s component adds more uncertainty and that certainly makes it harder.”

The other teams still under contract with Diamond — the Atlanta Braves, Miami Marlins, St. Louis Cardinals, Milwaukee Brewers, Kansas City Royals, Los Angeles Angels, Cincinnati Reds, Minnesota Twins and Tampa Bay Rays — are in a similar boat. Even if Diamond and MLB work out a deal to broadcast their games through the 2024 season, it is unclear what kind of value the league will get for their broadcast rights on a fresh open market that reflects a dip in cable subscriptions because of streaming.

Still, there is a silver lining to the process to which Manfred has long been willing to point publicly, even as he acknowledges his teams will likely lose revenue to Diamond’s bankruptcy.

Most of the league’s current cable rights deals, including the one with Diamond, preclude MLB from selling streaming packages to fans in local markets, resulting in blackouts for local fans who do not have access to the right cable providers. In the D.C. area, for example, fans without a cable subscription that gives them access to the Mid-Atlantic Sports Network cannot watch Nationals games even if they purchase the <a href="http://mlb.tv/" target=_blank>MLB.TV</a> package because the preexisting deals with cable providers include regional exclusivity.

But if those deals are terminated or not renewed, the league can produce its own broadcasts, then market them to as many cable companies as it wants. Perhaps more importantly, MLB might be able to market the streaming rights on its own, selling local subscription packages like it did last year for the Padres and Diamondbacks. If Diamond’s contracts all dissolve by the end of next year, MLB could suddenly find itself with streaming rights for 14 of its 30 teams, perhaps tapping into another form of broadcast revenue. Manfred has acknowledged a larger streaming presence would not necessarily make up all the cable money immediately, but that it would make access to baseball’s product much easier and more direct. Under the current system, the league funnels the money made from those local streaming subscribers back to the Padres and Diamondbacks, respectively.

Yale University, B.A. History and International Studies, Stanford University, Master's in Communication

Chelsea Janes is the national baseball writer in sports. She was The Washington Post's beat writer for the Washington Nationals from 2014 to 2018 and was a sports intern for The Post in 2013. She also previously covered the 2020 presidential campaign. 

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