Collapse of Regional Sports Networks (Diamond Sports Group files bankruptcy, Warner-Discovery looking to leave business, Xfinity drops Bally)

[gstommylee]

Props to MLB for seemingly being ahead of the curve on this one and being ready to produce their own content at a moments notice.

just shows how desperate MLB is for ratings. That league doesn't have a great commissioner compared to NBA and NHL.

 

[TheLegend]

just shows how desperate MLB is for ratings. That league doesn't have a great commissioner compared to NBA and NHL.

It’s 21% of their revenues from RSNs so they aren’t simply going to blow it off.

 

[Masked]

What makes me curious is the potential of the elimination of blackouts, and the ripple effects, that effect Canadian teams and specifically Rogers/Bell. Because it's clear that the same sort of desire to see blackouts eliminated exists up here, but considering the fact that the oligarchy of telcos has a lot of fingers in the sports pie, how much longer can blackouts survive in Canada? I imagine that SN specifically, but also TSN, want people to continue to use their (frankly, terrible) services as the only option legally, especially if they are fans of their local teams.

This has nothing to do with "blackouts" aka regional restrictions that franchises use to protect their broadcast markets. The NHL could easily do away with regional restrictions if it wanted to but there's no desire to do so.

Assen na yo!

 

[These Are The Days]

The cap is gonna stay flat again because of this isn't it?

 

[Takuto Maruki]

This has nothing to do with "blackouts" aka regional restrictions that franchises use to protect their broadcast markets. The NHL could easily do away with regional restrictions if it wanted to but there's no desire to do so.

Okay...? That doesn't exactly answer my question, at all.

It's clear that the bankruptcy of Bally is going to lead to a very clear pushing of the issue with regards to sports leagues selling their content without blackouts, especially since this is affecting a large swath of teams across all four major leagues. What I am asking about is whether this will ultimately affect teams in Canada from doing the same considering it's not exactly a good look to continue with blackouts in Canada while the US is very rapidly approaching (whether they want to or not) a world where sports blackouts are a thing of the past.

 

[Masked]

Okay...? That doesn't exactly answer my question, at all.

It's clear that the bankruptcy of Bally is going to lead to a very clear pushing of the issue with regards to sports leagues selling their content without blackouts, especially since this is affecting a large swath of teams across all four major leagues. What I am asking about is whether this will ultimately affect teams in Canada from doing the same considering it's not exactly a good look to continue with blackouts in Canada while the US is very rapidly approaching (whether they want to or not) a world where sports blackouts are a thing of the past.

Why do you believe it is clear that the Bally RSN's bankruptcy will lead to easing of regional restrictions? IF the leagues wanted to remove regional restrictions they could easily do so. It's not the sports networks that have put the restrictions in place, it was the NHL franchise owners.

Whining about blackouts in Canada is stupid because games aren't blacked out. You can legally watch almost every NHL game everywhere in Canada if you'll pay for the appropriate services. The only issue is that some people don't want to pay the full price to watch every game in Canada.

assennayo

 

[Golden_Jet]

Okay...? That doesn't exactly answer my question, at all.

It's clear that the bankruptcy of Bally is going to lead to a very clear pushing of the issue with regards to sports leagues selling their content without blackouts, especially since this is affecting a large swath of teams across all four major leagues. What I am asking about is whether this will ultimately affect teams in Canada from doing the same considering it's not exactly a good look to continue with blackouts in Canada while the US is very rapidly approaching (whether they want to or not) a world where sports blackouts are a thing of the past.

Well if they make every game a National broadcast, then either the National broadcaster (Roger’s) has to pony up the hundreds of millions lost a year. Or TSN also gets National rights.

Why do you believe it is clear that the Bally RSN's bankruptcy will lead to easing of regional restrictions? IF the leagues wanted to remove regional restrictions they could easily do so. It's not the sports networks that have put the restrictions in place, it was the NHL franchise owners.

Whining about blackouts in Canada is stupid because games aren't blacked out. You can legally watch almost every NHL game everywhere in Canada if you'll pay for the appropriate services. The only issue is that some people don't want to pay the full price to watch every game in Canada.

assennayo

Correct.

 

[varsaku]

Is it possible for Diamond Sports Group to break the TV contract with teams in this and renegotiate a new one at a lower amount? Most teams don't have much of other options and would accept the lower amount if offered that.

 

[LadyStanley]

Is it possible for Diamond Sports Group to break the TV contract with teams in this and renegotiate a new one at a lower amount? Most teams don't have much of other options and would accept the lower amount if offered that.

Depends on bankruptcy court judge too.

Unilaterally, no.

 

[mouser]

Is it possible for Diamond Sports Group to break the TV contract with teams in this and renegotiate a new one at a lower amount? Most teams don't have much of other options and would accept the lower amount if offered that.

Sinclair/Diamond Sports cannot do so themselves (unless there's a clause in the contract allowing them to). The bankruptcy court does have the power to void contracts, which can be requested by any of the involved parties.

 

[LadyStanley]

Friedman on bankruptcy...teams may continue to be paid, but not full amount

 

[MMC]

 

[KevFu]

What makes me curious is the potential of the elimination of blackouts, and the ripple effects, that effect Canadian teams and specifically Rogers/Bell. Because it's clear that the same sort of desire to see blackouts eliminated exists up here, but considering the fact that the oligarchy of telcos has a lot of fingers in the sports pie, how much longer can blackouts survive in Canada? I imagine that SN specifically, but also TSN, want people to continue to use their (frankly, terrible) services as the only option legally, especially if they are fans of their local teams.

This has nothing to do with "blackouts" aka regional restrictions that franchises use to protect their broadcast markets. The NHL could easily do away with regional restrictions if it wanted to but there's no desire to do so.

Assen na yo!

Each team was given the exclusive local broadcast rights to sell, back when "Broadcast" meant "TV" and no one knew there'd be a secondary means for distributing broadcasts, which was global and portable.

Those rights have all been sold to RSNs on long-term contracts. If the leagues voted to eliminate local blackouts today, nothing would change tomorrow.

It would take DECADES for each league to consolidate all their local streaming rights into one package under league control. All their decisions today would do is say "Next TV deal, don't give away streaming, and grant those rights back to the league so we can include them in ESPN+ or NHLtv, or MLBtv."

 

[chaz4hockey]

Is it possible for Diamond Sports Group to break the TV contract with teams in this and renegotiate a new one at a lower amount? Most teams don't have much of other options and would accept the lower amount if offered that.

ATT Sportsnet just shorted 3 MLB teams this month....don't know why but looks like it's affecting the industry.

 

[GKJ]

They’re going to have to lift blackouts.

 

[Golden_Jet]

They’re going to have to lift blackouts.

That would really hurt HRR and the cap.

 

[varsaku]

That would really hurt HRR and the cap.

NHL and other leagues created this bubble that is about to burst. They made themselves so reliant on TV money that now it is too big to fail.

 

[KevFu]

ATT Sportsnet just shorted 3 MLB teams this month....don't know why but looks like it's affecting the industry.

The "Why" is the because cable subscriptions are down from 72% of American households 8 years ago, to 52% of American households.

Young people are streaming instead of channel surfing. It's really easy to build your own cartel of friends who trade passwords. (Amazon is the only company immune because anyone logged in can just order any product on your credit card).

My friend group has almost everything covered and we didn't plan it at all. It actually makes me mad we didn't plan it.

 

[Byrddog]

The cap is gonna stay flat again because of this isn't it?

Flat cap could be the best case . What we are witnessing is the death of cable and satellite. Attached to that is the revenue the NHL is given for its product. The problems the NHL does not have the deep pockets to produce there own broadcasts, the in fact have relied on TV revenue to fund the teams. If Bally does file bankruptcy the impact will probably spread to the rest of the broadcasting. Using MLB’ 21% of revenue as a guide this could be catastrophic for the NHL not only losing a revenue stream that pays the league they would have to pony up a huge chunk of money to put the games on TV it would be easy to expect a 20% impact on revenue. What would that mean cap wise spitballing between 8 and 12 million reduction in cap and another 5 to 10% increase in ticket prices.

 

[These Are The Days]

Stu Sternberg is gonna have to sell the Rays at this point because he won't have any TV money coming in

Flat cap could be the best case . What we are witnessing is the death of cable and satellite. Attached to that is the revenue the NHL is given for its product. The problems the NHL does not have the deep pockets to produce there own broadcasts, the in fact have relied on TV revenue to fund the teams. If Bally does file bankruptcy the impact will probably spread to the rest of the broadcasting. Using MLB’ 21% of revenue as a guide this could be catastrophic for the NHL not only losing a revenue stream that pays the league they would have to pony up a huge chunk of money to put the games on TV it would be easy to expect a 20% impact on revenue. What would that mean cap wise spitballing between 8 and 12 million reduction in cap and another 5 to 10% increase in ticket prices.

The cap going down catastrophically and ticket prices going up is peak Bally. It was a crap broadcast and now it just defaults and completely f***s everything up for everyone.

f*** Bally again

 

[chaz4hockey]

The "Why" is the because cable subscriptions are down from 72% of American households 8 years ago, to 52% of American households.

Young people are streaming instead of channel surfing. It's really easy to build your own cartel of friends who trade passwords. (Amazon is the only company immune because anyone logged in can just order any product on your credit card).

My friend group has almost everything covered and we didn't plan it at all. It actually makes me mad we didn't plan it.

Yes I clearly understand the industry dilemma.

However, ATT does not have the severe debt challenges that Sinclair has.

Thus, my comment.

 

[Byrddog]

Stu Sternberg is gonna have to sell the Rays at this point because he won't have any TV money coming in

The cap going down catastrophically and ticket prices going up is peak Bally. It was a crap broadcast and now it just defaults and completely f***s everything up for everyone.

f*** Bally again

Unfortunately it’s the game that’s played. On Oct 18 Bettman released that the Cap would go up a minimum of 4 mil. Tuesday of this week he released another statement that the cap would only go up 1 million IF everything went well through the end of the season. Now the TV revenue seems to be in worse trouble and in the next 30 days if Bally does indeed file bankruptcy it may turn the league on its head. If the cap is forced down 2 or 3 mil more it could result in a lockout and restructuring of the CBA. Players are already rejecting increased escrow so there is really not another option. A restructuring of every contract as a whole would be the most painless. If it goes to the point of canceling all the contracts and a free for all to re sign players that would be a unprecedented soap opera. The cap has leveled out the teams ability to just spend to win championships. Creating windows of opportunity , the issue is GM’s pressured to overspend on high end players. When teams have 5 players absorbing more than 50% of the cap prevents talent hording it also creates players underpaid to fill out roster, it has a negitive impact to the fans watching. When the Cap was put in place 20 years ago the projected Cap for 2020 was supposed to be 121 million. They sure have missed those projections. It’s one thing to miss a short term one year or even a pandemic but the league has underperformed for a very long time. Some blame blame greedy owners while others see the owners as having deep pockets not caring to lose money. There is not one owner or ownership group that can make a go without showing profit. And if you have never managed millions of dollars you could not start to understand the pressure to perform. Imagine the pressure now. Watch the financials on Forbes they show profitable teams bs money losers. On average 14 teams turn a profit in any given year. This is not sustainable less than half the teams solvent. Not much teams can do with fixed costs so they have two choices reduce labor (salaries) or raise revenue. They are failing at both.

Stu Sternberg is gonna have to sell the Rays at this point because he won't have any TV money coming in

The cap going down catastrophically and ticket prices going up is peak Bally. It was a crap broadcast and now it just defaults and completely f***s everything up for everyone.

f*** Bally again

 

[jkrdevil]

Each team was given the exclusive local broadcast rights to sell, back when "Broadcast" meant "TV" and no one knew there'd be a secondary means for distributing broadcasts, which was global and portable.

Those rights have all been sold to RSNs on long-term contracts. If the leagues voted to eliminate local blackouts today, nothing would change tomorrow.

It would take DECADES for each league to consolidate all their local streaming rights into one package under league control. All their decisions today would do is say "Next TV deal, don't give away streaming, and grant those rights back to the league so we can include them in ESPN+ or NHLtv, or MLBtv."

It also could be a huge fight internal fight for the league to try an unilaterally get teams to sell back their local rights. Remember when the Rangers tried to sue the league over the league taking over team websites? Imagine that times 1000. Blackouts exist because the leagues don’t have have those rights.

Of course the leagues (like MLB may be prepared to do) may have to step in for some teams that are left without options. This whole thing is a mess.

 

[KevFu]

It also could be a huge fight internal fight for the league to try an unilaterally get teams to sell back their local rights. Remember when the Rangers tried to sue the league over the league taking over team websites? Imagine that times 1000. Blackouts exist because the leagues don’t have have those rights.

Of course the leagues (like MLB may be prepared to do) may have to step in for some teams that are left without options. This whole thing is a mess.

Right, the big issue in finding a solution to this miss is that SOMEONE has to be left holding the bag...

Advertisers is what made the RSNs profitable when everyone had cable. The carriage fees made back most the money they paid in rights fees to the teams; and the ads during games made it profitable.

But with subscribers leaving, cable companies couldn't raise prices to pay higher carriage fees to the RSNs (or even more people would cut cable). That meant RSN's lost both revenue from carriage fees AND less ad revenue because the broadcasts had fewer viewers.


If the leagues go to self-distribution and divide into cable and streaming (I'm going to use MLB since they're the ones saying they're prepared for this).

- Producing the games and selling them to cable companies in the current TV areas would likely go fine. It's more cost but the leagues can recover revenue that way, and separate the streaming into a different platform.

BUT
- Each league would be offering a streaming product in each market that features ONE local pro sports team.
- The RSNs are offering in-market streaming NOW, and DSG is still going bankrupt.

If DSG can't stay afloat selling Phoenix Suns, Arizona Diamondbacks and Arizona Coyotes YEAR ROUND on one service, how is MLB selling just the DBacks in the summer and making more money?


One possible advantage is that MLB could have a far easier time getting distribution on cable and streaming services as a bundle. They could sell an "MLB Local" channel to not only cable, but all the "streaming TV" providers. THAT is probably where they could find success.

MLB's plan should be to avoid exclusivity and cut deals with literally every cable and or streaming service; because the Streaming Service wars are going to be very messy, and being available on ALL OF THEM is the best way to keep the sport popular, alive and growing.

 

[rsteen]

It's a Chapter 11 bankruptcy so Bally is not going to disappear overnight. The rights are a major part of Diamond's assets so they would want to retain the more profitable ones. We could see some deals rejected by the bankruptcy court and some retained but with a reduced payment (so if your team had a $20M contract with Bally they end up with $10M say).
The average NHL RSN deal is apparently 25M, so 625M from USA RSNs. Bettman projected revenue at 6B this season, so ~10% rather than MLB's 21%. So revenues will still be over the 4.4M that triggers the 1M increase per year until the covid escrow is paid off.
There's also the factor that Bettman was talking about transitioning to the lag formula as early as 2023-24. That's the 4M increase in cap that was floated about in the fall. So an 86Mish cap based off 2021-22's 5.2B or so revenue. From what I can see in the MOU, the Bally hit wouldn't be taken into account until 2024-25 or 2025-26 depending on whether the revenue hit starts this season or next. If revenues for last season, this season and next season go 5.2B, 5.9B, then back down to 5.2B, I assume they would decide on the minimum increase so the cap doesn't go 86M, 90M, 86M or something. Or renegotiate the MOU if the MOU provisions would still end up in a significant drop in the cap.

Maximum year-over-year increase in the Upper
Limit will be the lesser of 5% and the trailing two-
year average HRR growth percentage (measured
using Final HRR from the League Year four years
prior, Final HRR from the League Year three years
prior, and Preliminary HRR from two years prior
and after taking into account any FX impact
adjustments)

o Except for the 2026-27 League Year, minimum
year-over-year increase in the Upper Limit is the
lesser of 2.5% and the trailing two-year average
HRR growth percentage. (measured using Final
HRR from the League Year four years prior, Final
HRR from the League Year three years prior, and
Preliminary HRR from two years prior and after
taking into account any FX impact adjustments)

o For any immediately upcoming League Year for
which the NHL and NHLPA anticipate a Shortfall
(as defined in Section 50.11(a)(i)) based on
Preliminary or projected HRR, the parties may
(but are not required to) increase the Upper Limit
for that upcoming League Year by up to an
additional 5% (over and above the increases
dictated by the provisions above) so long as both
the NHL and NHLPA agree to do so by the June
15th prior to that start of that League Year