19 Bally RSN's going bankrupt, 14 MLB teams potentially affected

[caulfield12]

6 minutes ago, Tnetennba said:

First give us a discourse on how to interpret your rambling nonsensical posts.  I know what parody, sarcasm, and satire all are.  But do you know how to make a concise coherent point?

What exactly are you having difficulty comprehending?

It's a pretty straightforward issue for the Sox at least.

For the rest of baseball and numerous fanbase out there, it's pure chaos.

[caulfield12]

The buyer was Sinclair Broadcast Group, the second largest local TV station owner in the country, mainly known for controversies related to how those stations cover news. (Sinclair also owns cable’s Tennis Channel among other properties.) Sinclair transacted the $10.6 billion Fox Sports purchase with over $8 billion in debt. So disabuse yourself of the idea this financial crisis is about cord-cutting, a corporate parent that doesn’t “get” sports, or MLB’s archaic broadcast blackout maps. It’s about over-leverage, pure and simple. $8.2 billion of it, to be precise. (In case you were wondering, Sinclair sunk $1.5 billion of its cash into Diamond Sports Group (DSG), so it will not walk away from this whole.)

Wait, so you’re saying Bally’s isn’t in trouble?

No, never said that, but it’s not a basket case.

In 2021 and for the parts of 2022 for which financials are available, Diamond Sports had gross profits in excess of $400 million. Meaning it’s not a distressed business when stripped of all that debt. Additionally, it’s continuing to sign market-rate renewals with sports franchises all over the country. Sports Business Journal reported this week that DSG just signed a rights deal with the NHL’s Tampa Bay Lightning and the NBA’s LA Clippers, New Orleans Pelicans, and Indiana Pacers. Additionally, according to Ben Clemens of the respected baseball website Fangraphs, as recently as 2021 DSG signed the Milwaukee Brewers, Kansas City Royals, and Miami Marlins to multi-year rights deals all worth north of $40 million a year, which are “in-line” with rights fees signed by Fox and other RSNs a half-decade ago. If the sky is falling for the value of these rights, it’s not evident.

That said, the RSN business is “significantly challenged,” said one sports executive I spoke to who didn’t want to be named. RSNs are almost exclusively distributed on cable and satellite TV and cord-cutting is a trend that is only growing.

https://tcbmag.com/the-bally-sports-mess-explained/

[caulfield12]

Looks like the Twins are going to be much more isolated from damage on this than CLE, DET, KC.

See second half of previous article.

Very complicated situation playing out, though.

The assumption is that a decade down the road, when baseball’s distribution model is rewritten, that model will leave its franchises worth more, not less...

.....

 

Some are suggesting that MLB would like to use the Diamond collapse as a pretext to take greater control of local broadcast rights and mitigate those disparities (between small and large market clubs).

An unpackaged bankruptcy could allow all 14 MLB teams to abrogate deals with Diamond, though the Twins won’t need a court’s help, because their deal is currently up.

Unmentioned in all this is the fate of Diamond’s NBA/NHL broadcasts, with those seasons ongoing at the likely point of bankruptcy. There exists the possibility that those leagues could team up with MLB on a new broadcast platform or broadcast partner. Whatever happens, deals are now far more likely to be cut nationally because leagues realize they have a lot more leverage when negotiating for dozens of clubs instead of letting a local team negotiate for one. MLB recently hired ex-DSG executive Billy Chambers to a new role, specifically to manage local broadcast, telegraphing its intentions.

[caulfield12]

Regional network Entering the 2021 MLB season	Teams(s)
Bally Sports	Arizona, Atlanta, Cincinnati, Cleveland, Detroit, Kansas City, LA Angels, Miami, Milwaukee, Minnesota, St. Louis, San Diego, Tampa Bay, Texas (affected)
NBC Sports Regional Networks	Chicago White Sox, Oakland, Philadelphia, San Francisco ***
AT&T SportsNet (incl. Root Sports)	Colorado, Houston, Pittsburgh, Seattle (first three affected, Root Sports not) ***
Marquee Sports Network	Chicago Cubs (affected through exposure to Sinclair Broadcasting)
Mid-Atlantic Sports Network	Baltimore, Washington***
New England Sports Network	Boston***
Spectrum SportsNet LA	LA Dodgers***
SportsNet New York	New York Mets***
YES Network	New York Yankees (affected due to exposure to Sinclair Broadcasting)
Sportsnet	Toronto Blue Jays***

[Quin]

37 minutes ago, EloyJenkins said:

The trade deadline this year is going to be INSANE. The Reynolds of the worlds (stars with escalating arbitration values or near FA times) will be given away if these teams lose this revenue. Smart GMs with some savvy are salivating. 

Take this list and cross reference it with the Bally RSN teams for a list of players Hahn will target.

[ewokpelts]

Three possible outcomes:

1. espn/Disney buys back the RSNs below what they sold for. And we see them migrate to espn local networks. 
 

2. FOX rebuys the RSN network below what they sold to Disney. And go back To fox sports insert name here. 
 

3. MLB buys the RSNs and rebrands. 

[southsider2k5]

 

[bmags]

Yeah I feel like league will fail upwards here.

[Tnetennba]

1 hour ago, bmags said:

Yeah I feel like league will fail upwards here.

MLB will gain control of all of those RSNs, yet still not end blackouts...

[he gone.]

On 2/16/2023 at 10:33 AM, caulfield12 said:

Cleveland and the Twins will now likely struggle to make midseason moves due to the diminished financial flexibility,, and perhaps to even pay commitments to the likes of Correa/Buxton or Jose Ramirez from the Guardians’ side.

It's not like franchises were blindsided here ... moves like this just don't happen out of the blue and there were whispers around Bally's for some time. I see very little in the way of changes on the financial end. 

Also, as you evidenced by Apple and Peacock getting involved for rights sports still is a draw. As Manfred says, in the short term, maybe it's a blip, but all these franchises will be fine. 

[Texsox]

23 hours ago, bmags said:

Yeah I feel like league will fail upwards here.

So do I. Ironically we may be back to 1980s era pay per view models. JR was way ahead of the curve. 

[CentralChamps21]

For quite a while now, MLB/NBA/NHL revenue modes have included getting RSNs distributed to people who didn't want them by getting them bundled in cable/satellite packages. With so many options via streaming, more and more people who don't want them are finding ways to get the channels they do want without having to pay for the RSNs.

We may end up with having the RSNs offered individually, but I don't think they can get the price they'd need to keep their same revenue level.

[Tnetennba]

On 2/18/2023 at 8:12 AM, Texsox said:

So do I. Ironically we may be back to 1980s era pay per view models. JR was way ahead of the curve. 

The idea was ahead of its time.  But forcing people into a pay model in a time many houses weren’t even wired for cable wasn’t.  It was short-sited and stupid, like much of JR’s tenure. 

[ewokpelts]

On 2/19/2023 at 8:47 AM, Tnetennba said:

The idea was ahead of its time.  But forcing people into a pay model in a time many houses weren’t even wired for cable wasn’t.  It was short-sited and stupid, like much of JR’s tenure. 

if he held out a few more years, and not sold to cablevision, the sox would be in a different place financially. NESN was a diaster fo rteh red sox until it went to basic cable. and Fenway Sports Group owns four teams in four sports, and its financed by NESN fees.

[caulfield12]

https://www.yahoo.com/sports/forget-the-new-rules--the-biggest-story-in-baseball-right-now-is-the-collapse-of-the-regional-sports-networks-032239854.html

As of right now, 20 total teams involved, with Cubs/Marquee and Yanlees/YES peripherally involved due to various ownership stakes.

This article mostly about the blackout rules and centralized MLB revenues that are divided more equitably to preserve competitive balance vs. $200+ million differentials prevalent today across the sport.

RSN's currently comprising roughly 20-24% of individual team revenues...further negating importance of day-to-day attendance over 81 home games.

Edited March 3, 2023 by caulfield12

[Tnetennba]

 

[Kyyle23]

So when do these clubs cease business operations 

[Eminor3rd]

MLBAM has been positioning themselves for this for years. There's a good chance that the mlb.tv infrastructure becomes one of the shrewdest investments of the past several decades. IF, that is, they can survive the painful interim period without losing too much of the fanbase for good.

I will add one piece of information that I haven't seen discussed, because I've had some recent conversations with people directly involved -- not every RSN is in the same position, in terms of revenue. Some are markets are operating in the black, and the one where I currently am is telling its business partners that it has a clear path to continuing operations in the near term even if Diamond ultimately dissolves, possibly to the point of making the transition back to an independent entity. I have no way to confirm how true that is, but I can tell that it is very much the official company line. If that IS the case, this could turn into a much longer and more painful transition period than MLB is hoping, and select fans may be pretty screwed for while, as the fractured remnants of the old system continue to persist.

[ScootsMcGoots]

1 hour ago, Kyyle23 said:

So when do these clubs cease business operations 

What would the chance then be of the Sox winning the world series? I mean, this has all got to be part of JR's rebuilding plan right? Just eliminate half the competition?

[caulfield12]

The biggest problem is that consumers continue to migrate away from traditional cable TV to streaming services, with the number of pay TV households in the United States dropping from 100 million in 2014 to roughly 65 million today.

Fun fact: It’s estimated that there will officially be more non-pay TV households (68.2 million) in the United States than pay-TV households (63.4 million) by the end of 2023.

Number Of Pay TV Households In The United States

2014: 100.5 million

2015: 99.6 million

2016: 97.7 million

2017: 94.3 million

2018: 90.3 million

2019: 84 million

2020: 78.2 million

2021: 72.9 million

2022: 68.5 million

2023: 65.1 million

Add in the fact that RSNs are the most expensive part of the cable bundle, and the decline of cable TV households has only further accelerated their problems.

For example, Xfinity dropped MSG Networks — home to the Knicks, Rangers, Devils, Islanders, and Red Bulls games — in 2021 after it found that 95% of its customers didn’t watch more than 10 of the 240 games on the network.

And this creates a vicious cycle. Cable operators that choose to keep these RSNs have to continuously increase the bundle's price to make the economics work, which only makes more people cut the cord in the long run. And given that RSNs typically earn about 90% of their revenue from carriage fees, networks dropping their channel from the cable bundle can be disastrous for the company’s bottom line.

 

 

Remember, the NBA and NHL playoffs are about to start, and these leagues have already received payment from Sinclair for this season.

And when you look at the long-term impact, it gets even more interesting. Major League Soccer was criticized a fair amount for signing a long-term, exclusive deal with Apple TV. For example, why would a league that is trying to grow and acquire new customers close its distribution model and go 100% exclusive to streaming?

Well, maybe that wasn’t so bad after all — because while MLS limited its growth and discoverability by removing itself from cable TV, at least its cash flow will be stable over the next decade, and fans know exactly where to watch games (without blackouts).

So when/if the RSN model fails, don’t be surprised when these leagues go back to airing games on free local TV stations and allow everyone else to pay a monthly subscription fee to stream anything they want.

 

https://huddleup.substack.com/p/the-multi-billion-dollar-problem

Edited March 3, 2023 by caulfield12

[Kyyle23]

We have reached terminal velocity folks

[ewokpelts]

On 2/17/2023 at 9:04 AM, southsider2k5 said:

 

that's a lie from manfred. they could have fixed it years ago. they enjoyed making money off the extra innings and mlb.tv packages, as well as making the national packages worth more due to blackout restrictions.

[caulfield12]

2. Illinois

"For the Illinoisans leaving the state, the choice came down to moving for a new job (31%), family (30%), retirement (24%) and a new lifestyle (22%).

This marked almost a decade of straight losses for Illinois, with residents looking for more affordable living. Interestingly, nearly 52% of those who left the state in 2022 earned more than $150,000 a year.

Considering Illinois “offers” one of the highest combined local and state tax rates — and the second-highest property taxes — in the country, it’s unsurprising high earners are eager to set up shop elsewhere."

 

https://www.yahoo.com/finance/news/off-beaten-track-searching-better-140000055.html

Edited March 7, 2023 by caulfield12

[ewokpelts]

15 minutes ago, caulfield12 said:

2. Illinois

"For the Illinoisans leaving the state, the choice came down to moving for a new job (31%), family (30%), retirement (24%) and a new lifestyle (22%).

This marked almost a decade of straight losses for Illinois, with residents looking for more affordable living. Interestingly, nearly 52% of those who left the state in 2022 earned more than $150,000 a year.

Considering Illinois “offers” one of the highest combined local and state tax rates — and the second-highest property taxes — in the country, it’s unsurprising high earners are eager to set up shop elsewhere."

 

https://www.yahoo.com/finance/news/off-beaten-track-searching-better-140000055.html

and this has WHAT to do with sinclair?

[caulfield12]

14 minutes ago, ewokpelts said:

and this has WHAT to do with sinclair?

Illinois is bleeding population as well cable subscribers.

If they don't make the playoffs in the next two years and there's no new stadium and/or Chicagoland relocation...it's going take coin flip luck they get an ownership group that can ever challenge the Cubs like the Angels got in Moreno and Mets got in Cohen in those markets with multiple teams.

It will look a lot more like the A's situation...minus the almost complete desperation/exasperation.

IMO Milwaukee, Minnesota, Cleveland, St. Louis and the Cubs all have better ownership groups...certainly front office teams.

Edited March 7, 2023 by caulfield12