Diamond Sports Group files for bankruptcy following $8.67bn debt

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Diamond Sports Group, the operator of the Bally’s Sports brand running 19 regional sports networks across the US, has filed for bankruptcy protection following missed payments on its debt. 

As reported by Yahoo, Diamond missed a $140m payment on its debt, which stood at $8.67bn according to its most recent financial statement, causing the company to file for Chapter 11 protection. 

Diamond Sports will continue operating despite filing

The company, a subsidiary of Sinclair Broadcast Group, holds the rights for 42 pro sports teams across baseball, basketball, and hockey, the broadcasting of which will not be interrupted during the process of bankruptcy, as it expects to continue operations in the meantime. 

“DSG will continue broadcasting games and connecting fans across the country with the sports and teams they love,” Diamond Sports CEO David Preschlack stated. 

“We look forward to working constructively with our team and league partners and all DSG stakeholders throughout this process and beyond.”

Yahoo reported that Diamond owes nearly $1bn in rights payments due this quarter, mostly owed to MLB teams. Whilst negotiations are underway to reach a deal on these payments, MLB noted that it “expected” the situation to play out how it has and has put in place contingencies to ensure broadcasting can continue. 

The league has a local media department on standby and would broadcast games via MLB Network or MLB.TV. The organization recently penned a deal with FanDuel which includes the streaming of the free game of the day within the FanDuel app. 

“Diamond Sports Group’s bankruptcy declaration today is an unfortunate development that we have been expecting. Despite Diamond’s economic situation, there is every expectation that they will continue televising all games they are committed to during the bankruptcy process,” MLB published in a statement. “Over the long term, we will reimagine our distribution model to address the changing media climate and ultimately reach an even larger number of fans.”

The impact of the bankruptcy on Bally’s

As alluded to, this news has not come out of the blue and reports of Diamond’s bankruptcy have been swirling over the last few weeks. 

Bally’s was forced to come out and distance itself from Diamond’s debt during its Q4 financial report given the speculation at the time.

Bobby Lavan, Bally’s CFO, told investors that it looked forward to promoting its brand with Diamond and that it was looking forward to working with the management of the company. 

He also explained that Bally’s is not impacted by Diamond’s debt, noting: “In 2020, Bally’s acquired naming rights over Diamond’s regional sports networks. Sinclair Broadcast Group separately agreed to promote Bally’s brand over Sinclair networks. 

“However, the Bally’s brand and naming rights are owned by Bally’s alone. Bally’s has no liability related to Diamond’s debt and Diamond holds no equity or other ownership rights in Bally’s.”

Moving forward, Diamond will continue to negotiate to reach a restructuring agreement with its creditors, in a move that would likely see it separate from the Sinclair Broadcast Group.