If the formerly named Bally Sports Regional Networks is unable to reach a deal to emerge in the next months from its nearly 18-month-long stay in Chapter 11 bankruptcy, the NBA and NHL would receive as little as 65 percent each of what they are owed on TV contracts for the ‘24-’25 seasons, according to a court filing today by the regional sports network company’s parent, Diamond Sports.
The 12 NBA teams that Diamond covers are owed $253 million collectively for the upcoming season, according to the document, known as a disclosure statement in Chapter 11 parlance and which lays out the debtor’s financial conditions in the final period of the bankruptcy process. Diamond estimated if it has to wind down operations, it could pay the NBA between $163.7 million and $187.9 million. And those are figures based on re-negotiated contracts with the NBA that had lowered rights fees for this season.
For the NHL, Diamond owes the nine teams that it covers $135 million for the upcoming season, and if the Chapter 11 re-emergence plan collapses, the hockey league can expect between $87.3 million and $100.2 million, according to the disclosure statement.
“The estimated claim balance includes all unpaid telecast rights payments for the 24–25 NHL Season due on or after November 30, 2024,” reads the disclosure statement. “The estimated claim balance also includes an estimated amount of performance bonuses that may be payable by the Debtors to the applicable NHL Parties for the 24–25 NHL Season… Holders of NHL Claims are estimated to receive a 65% recovery in the lower recovery estimate and a 74% recovery in the higher recovery estimate. “
Of course, Diamond’s plan is to emerge from Chapter 11 as a new entity, divorced of its Sinclair Broadcasting ownership and slimmed down. A critical hearing, known as a confirmation, is scheduled November 14 when Diamond’s plan will be subject to objections and review by the court.
MLB has been a particular thorn in Diamond’s side, but the RSN company disclosed recently it only plans to keep one team, the Atlanta Braves . And the remaining $20 million owed MLB will be paid in full, according to the disclosure statement.
In 2024, Diamond is scheduled to pay $1.4 billion in rights fees to the teams it broadcasts, according to an attachment to the disclosure statement. Underlining the significant reduction in the number of teams it is paying, Diamond would owe $675 million in rights fees next year, and $637 million in each of the following two years, according to the disclosure statement exhibit.
Diamond projects it will be $70 million cash flow negative this year, but $39 million positive in 2025, up to $90 million in 2026 and in 2027 $143 million cash flow positive, according to the disclosure statement documents.
Diamond confirmed in the disclosure statement that Amazon had backed away from its agreement to provide $115 million in exit financing , noting the company had the right to do so if Diamond did not emerge from Chapter 11 last summer. Amazon, which is in talks with Diamond to provide a streaming platform for the RSNs, waived a $4 million break up fee, according to the disclosure statement.
Diamond also disclosed it is close to a new naming rights partner–believed to be FanDuel–to replace Bally Sports. The new company will receive a single digit percent of equity, with warrants that could double the ownership stake, according to the disclosure statement.
Diamond’s investment bank, Moelis, valued the prospective new media company if it successfully exits Chapter 11 at between $600 million and $1 billion, according to the disclosure statement documents. By contrast, Sinclair valued Diamond at $10.6 billion when acquiring the company in 2019. Diamond had many more teams it covered then, and cord cutting still had not ravaged the traditional cable business as it has done so since.
The majority of Diamond’s debt holders are on board with the reorganization plan. Diamond lists one risk in the disclosure statement, warning, “The Debtors’ ability to reorganize as a going concern will depend on the Debtors’ ability to raise additional exit financing commitments… Although the Debtors are in discussions with multiple potential financing sources, there can be no assurances that the Debtors will be able to secure commitments.”
Diamond will notify the bankruptcy court by December 16 whether its plan of reorganization for the Bally Sports RSNs will move forward, or if a wind down process must commence.
Diamond first filed for Chapter 11 in March 2023. Late in the year it agreed to wind down after the ‘24 MLB season, but in early 2024 changed course and inked a series of renewed distribution deals.
The post NBA, NHL stand to lose tens of millions if Bally Sports does not emerge from bankruptcy appeared first on Awful Announcing .
Local News
Comments / 0