A leaner Diamond Sports Group emerges from bankruptcy

On November 14, U.S. Bankruptcy Court Judge Christopher Lopez at a courthouse in Houston approved the restructuring plan of financially troubled Diamond Sports Group (DSG), the nation’s largest regional sports network (RSN). Under the new plan, DSG will have agreements to televise and stream six MLB teams for the 2025 season, many at a reduced cost. The RSN also signed agreements with thirteen NBA teams and eight NHL clubs. The 27 clubs are a sharp drop from the 42 clubs they had agreements with in 2019, when DSG was founded.

With a debt of almost $9 billion, DSG has been in bankruptcy protection since March 2023 and is working on a fiscally feasible solution. In recent years, the RSN company has suffered financially as their customers canceled their cable subscriptions, mainly due to rising costs and other video options. RSNs have been particularly affected by cord cutting because they charge some of the highest transportation costs in the cable industry. Since DSG entered bankruptcy protection 20 months ago, its debt load has fallen to about $200 million.

Sportico According to reports, DSG has lost 25 million subscribers since 2019. Smaller subscriber numbers also result in lower ratings, which impacts advertising revenue and sponsorship opportunities. The current estimated value of DSG’s RSN holdings is estimated at between $600 million and $1 billion. The cost of acquiring the RSNs in 2019 was estimated at $10.6 billion.

Heading into the bankruptcy court hearing, DSG made some notable announcements:

• In October, before the bankruptcy hearing, the DSG announced the new name of their RSNs. The Bally Sports name that was in effect since March 2021 is now FanDuel Sports Network. As part of the agreement, FanDuel TV programs will air on the RSNs, including studio shows Op & Adams And Feed it back. The bankruptcy court approved the agreement.

• In early November, DSG reached a multi-year agreement with Amazon Prime Video, allowing the 16 RSNs to stream games on Amazon Prime Video. Under the agreement, Prime Video subscribers will have access to in-market games as an add-on subscription. The subscription costs will still come. The financial agreement was not made public. DSG CEO David Preschlack said the Amazon deal “creates a tremendous opportunity for us to expand our reach and better connect with viewers.” This announcement came days before the bankruptcy hearing. Several other local teams have made in-market streaming available.

• Starting December 5, Diamond will introduce a single-game streaming option for NBA and NHL games. The costs are €6.99 per game. It is unknown whether the a la carte option will be available to MLB teams. Both Prime Video and FanDuel Sports Network offer a single-game subscription. A monthly fee and an annual fee remain available. This announcement was also made just days prior to the bankruptcy hearing.

Looking at revenues, DSG forecasts that television revenue from carriage will total $776 million in 2027, down 47% from $1.48 billion this year. From 2024 to 2027, advertising and sponsorship revenues are expected to decline from $368 million this year to $302 million (-18%).

During the court hearing, DSG also predicted that over the next three years, 26% of their current cable TV base will cancel their subscriptions, which amounts to 16.7 million in 2027 (from 22.6 million). During that time, the RSN expects the number of streaming users to increase by 2.3 million. In total, a net loss of 3.6 million subscribers is expected.

The 27 clubs that DSG currently has an agreement with are:

13NBA: Atlanta Hawks, Charlotte Hornets, Cleveland Cavaliers, Detroit Pistons, Indiana Pacers, Los Angeles Clippers, Memphis Grizzlies, Miami Heat, Milwaukee Bucks, Minnesota Timberwolves, Oklahoma City Thunder, Orlando Magic and San Antonio Spurs.

8 NHL: Carolina Hurricanes, Columbus Blue Jackets, Detroit Red Wings, Los Angeles Kings, Minnesota Wild, Nashville Predators, St. Louis Blues and Tampa Bay Lightning.

6MLB: Atlanta Braves, Detroit Tigers, Los Angeles Angels, Miami Marlins, St. Louis Cardinals and Tampa Bay Rays. (A month ago, DSG only had agreements with the Atlanta Braves.)

As part of the restructuring, compensation was renegotiated for most clubs. DSG expects an annual reduction in compensation from $1.5 billion this year to $982 million in 2027, a decline of 35%. For example, earlier this month the St. Louis Cardinals renegotiated a new three-year deal with DSG that included a reported rights fee reduction of more than 20%. The Cardinals RSN deal is valued at a reported $75 million through 2025. In contrast, the previous 15-year agreement was to run through 2032 and was valued at more than $1 billion. The games will air on FanDuel Sports Network Midwest and include streaming for the first time.

Looking at MLB teams that abandoned DSGs after the 2024 season include; the Cincinnati Reds, Cleveland Guardians, Milwaukee Brewers and Minnesota Twins. All four will have MLB produce and distribute their games locally. In 2024, MLB produced and distributed games of the Arizona Diamondbacks, Colorado Rockies and San Diego Padres.

MLB Commissioner Rob Manfred wanted to launch a multi-team direct-to-consumer bundle, similar to today’s MLB.TV, but without blackouts in the local market. The court’s DSG ruling has temporarily suspended that plan.

Additionally, the Texas Rangers have also dropped DSG, with the potential to launch their own RSN before 2025. Both the NHL’s Dallas Stars and the NBA’s Dallas Mavericks have also dropped DSG and are using different distribution models. Dallas Stars games stream without subscription fees on the ad-supported VICTORY+. Dallas Mavericks games are available on a local broadcast station.

Of the thirty MLB clubs, only the Kansas City Royals have yet to sign a distribution agreement for the 2025 season. There are reports that the club is in discussions with DSG.

Additionally, the NHL’s Anaheim Ducks announced in August that they had dropped DSG with in-market games available on local television. Similarly, the NBA’s New Orleans Pelicans announced in August that they would be dropping DSG with games broadcast on a local TV station.

During the bankruptcy hearing, Judge Christopher Lopez said, “This case was not a layup.” The judge praised DSG for finding a feasible way back, calling the company’s situation “a model” for how reorganizations can take place. Judge Lopez noted, “Reorganization is a good thing. It saves jobs. It helps people get through tough times,” adding, “It is important when you have had a stressful day and you want to root for your team and go home and enjoy the game with your family.”