Bally Sports Owner Nearing Bankruptcy; Local Deals With Sports Leagues Could Be Impacted

The owner of the Bally Sports network is heading towards bankruptcy, with major implications for local sports networks.

Diamond Sports Group is currently negotiating with creditors and sports leagues as its financial situation deteriorates.

According to Bloomberg, the largest owner of local sports networks is heading towards a massive "$8.6 billion debt restructuring," and betting on a "new direct-to-consumer streaming service."

Diamond Sports bought the regional networks just a few years ago in 2019, only to see cable subscriptions plummet afterwards.

Despite carrying local games for Major League Baseball, the NBA and NHL, their financial struggles have reached a breaking point.

How this shakes out will have a significant impact on regional sports broadcasts, given the size of Diamond/Bally.

Bloomberg quoted one telecom analyst who said it could entirely "rewrite" this segment.

“You’re looking at a potential rewrite of the entire regional sports business on the other side of this restructuring,” Davis Hebert said.

One potential outcome could be that creditors, and potentially even the leagues, could become partial owners.

Major League Baseball Commissioner Rob Manfred answers questions during an MLB owner's meeting at the Waldorf Astoria on February 10, 2022, in Orlando, Florida. Manfred addressed the ongoing lockout of players, which owners put in place after the league's collective bargaining agreement ended on December 1, 2021. (Photo by Julio Aguilar/Getty Images)

What Happens to Local Live Sports Rights?

Discussion of local broadcasts has intensified recently, especially around MLB.

READ: MLB MAY SOON TRY TO ELIMINATE LOCAL AREA BLACKOUTS

Bloomberg reported that multiple executives warned that rights payments could be severely impacted by Diamond's collapse.

The explosion of salaries and other expenditures for sports teams have largely been based on television revenue.

If that declines to some extent, the runaway spending seen throughout MLB and other leagues could be affected.

There aren't a lot of details on what a "direct-to-consumer" offering might entail. But given the rapid proliferation of streaming services, it's hard to know how popular that might be.

Peacock, Paramount Plus, Apple TV+, YouTube, Facebook, ESPN+ and Amazon have all offered, or currently offer, sports programming.

If Diamond tries to add to that list, it could risk being lost in the shuffle.

Regardless, it's going to be an interesting few months in the television rights world as Bally Sports tries to salvage its business.