There is trouble brewing in the regionals sports network world. Diamond Sports, which operates the 19 Bally Sports channels, missed a $140 million interest payment earlier this month and is expected to file for Chapter 11 bankruptcy soon, according to Sportico. Bally broadcasts 14 MLB teams plus several NBA and NHL clubs.
These are the 14 MLB teams broadcast by Bally Sports: Angels, Braves, Brewers, Cardinals, Diamondbacks, Guardians, Marlins, Padres, Rangers, Rays, Reds, Royals, Tigers, and Twins. Diamond also holds a minority stake in several other RSNs, including the Yankees' YES Network.
In the wake of the Diamond news, and in the wake of Mets owner Steve Cohen amassing the largest payroll in baseball history, MLB has created an "economic reform committee," reports The Athletic. The committee includes at least three owners -- John Henry (Red Sox), Chris Ilitch (Tigers), Dick Monfort (Rockies) -- among others.
Here's what commissioner Rob Manfred said about the new committee (via The Athletic):
"It came out of a recognition of a couple of issues — one new, one old — that were particularly acute for us," commissioner Rob Manfred said. "The new one's the local media situation. I think that people see it as an opportunity to rethink the revenue side of the house a little bit, which has been hard in our sport. People entrenched in their local (media dynamics)."
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"When you start thinking about the opportunities in terms of a more national (broadcasting) product, it did lead into a conversation about our disparity issues on the revenue side," Manfred said. "We have businesses that are literally not similar in terms of the overall revenue that they're generating. And to the extent that you could find a new distribution model that actually helped on that disparity side, that would be the daily double. So people are having conversations that haven't been had in baseball, and it's really been owners talking to owners, which is a good thing."
MLB has formed economic committees in the past and, generally speaking, the outcome is typically the same. The committee determines owners who spend big must be reined in and owners who don't invest as much in their clubs do not have to be encouraged to spend further. It's not unreasonable to think the committee is the first step toward MLB again pushing for a salary cap when the collective bargaining agreement expires after the 2026 season.
"I'm not gonna say for now, but I would need to understand the underlying rules behind it," Cohen told The Athletic on Monday when asked whether he would support a salary cap. "The answer is, I'll make that decision when we get there. But I totally sympathize with the issues in baseball."
It should be noted news of the new economic committee comes only days after Manfred confirmed the Padres, a team that plays in one of baseball's smallest media markets, are generating so much revenue now that they are likely to pay into the revenue sharing system this year rather than receive revenue sharing money.
Manfred confirms that Padres will likely switch from a payee to a payer (payor?) in revenue sharing, which @sdutKevinAcee wrote about this week. They are such a fascinating test case.
— Chelsea Janes (@chelsea_janes) February 15, 2023
Seems to me the solution to revenue disparity is right there. Invest in the team and energize the fan base, and fans and sponsors will invest in you. As our Matt Snyder recently explained, the Padres show "small market" is just a state of mind. Every MLB owner is fabulously wealthy and every MLB team generates a lot of revenue, but some owners are more willing to invest that revenue in the team than others.
Manfred said MLB is positioned to take over broadcasts should Diamond fail to make the required payments. Even then, the Bally situation is poised to have a major impact on the sport's economic landscape. MLB will figure it out and come out on the other side in an even better position, the league always does, though there might be some pain in the short-term. Pain the league will try to use to create a more favorable economic structure for the owners.
