The sports broadcasting rights bubble was eventually going to burst. We first saw the signs when Time Warner paid upwards of $200,000,000 a year for the rights to broadcast Los Angeles Dodgers games and then in short order half of LA couldn’t watch the games because Time Warner wanted too much money from some of the “cable” companies in the area and they refused to pay up to carry them. IT wasn’t much longer until the same thing began to play out nationwide with Dish Network, and then streaming platforms like Hulu, YouTube TV, and others. There may be a major issue now for the Cincinnati Reds and other professional teams as it appears Bally Sports is heading towards bankruptcy.
Bloomberg reported on Wednesday that Bally Sports is likely heading towards bankruptcy and that there could be a few options on the table for what that entails. One option would be that as a part of the bankruptcy that teams could gain equity in Bally Sports if they are not paid for their broadcast rights. Another option could be that the rights agreement could be terminated, which would then give the teams the ability to shop their games around to a different company for broadcast.
Major League Baseball is in a bit of a different situation than the NBA or the NHL. You may be aware the Bally Sports has launched their own standalone product where you can get access to the channel without having any other subscription for $20 a month. That includes NBA and NHL broadcast rights, but it does not include MLB rights. Major League Baseball and Sinclair, who owns Bally Sports networks have been in a battle over those rights. Bally Sports believed they would be able to include those rights in their standalone product, but MLB has those rights and has not been willing to give them up.
At one point in recent memory there was a scenario being explored where the NBA, NHL, and MLB would buy out Bally Sports but that deal seemed to go nowhere rather quickly. Now there’s far more uncertainty in what could happen.
There’s a chance that Bally Sports could still exist in the way that they do now, just run by a different company. Ideally that’s probably what’s best for the short term for the Cincinnati Reds and the other professional sports franchises who have television contracts with them. But that’s only if the new Bally Sports pay the contractually agreed to rates for the broadcasts (or very close to it).
If the teams don’t get those needs met, though, it could leave teams in a strange place where there may not be an immediate answer for where you turn your television to in order to watch games. What would likely happen in that scenario is that Major League Baseball would quickly implement the no blackout streaming option through MLB.tv for your local games (but likely at a higher cost than the current rate of MLB.tv). That would at least make the games available in the home market for fans, but also allow teams to recoup *some* of the expected broadcast fees that they would no longer be getting from Bally Sports. Rob Manfred has spoken about how they want to be able to implement this kind of plan in the future, and now it may be something that they get to work on in an accelerated timeline.
Many teams, though, wouldn’t just be taking a hit on the broadcast rights fees. When most of these television broadcast deals were made, teams opted for ownership stakes in what was the Fox Sports regional networks alongside of these large money deals. Cincinnati was one of those teams. How much stake they got is unknown. Some teams, like the St. Louis Cardinals, got a 30% stake in their local Fox Sports network when they signed their deal that also paid them $67M a season for 15 years. Amazingly, the Cincinnati Reds television deal is the only one in America where we don’t really have solid numbers on.
