PADRES GAMES WILL BE ON TV
Diamond Sports Group is expected to file for bankruptcy
One way or another, every Padres games will be televised this season.
Whether that is on Bally Sports San Diego or a replacement channel operated by Major League Baseball is the question — as is how much money the Padres will receive via their broadcast agreement.
Diamond Sports Group, which operates Bally Sports San Diego and 13 other regional sports networks that broadcast MLB teams’ games, took a step toward a long-expected bankruptcy filing on Wednesday.
Diamond said in a statement it expects “business will continue as usual, and it will keep broadcasting quality live sports productions while it addresses its balance sheet.” A Padres source and another person familiar with Diamond’s plans said the expectation is that the quality of broadcasts will be not affected.
Bankruptcy could mean the approximately $50 million the Padres are due from its agreement with Bally Sports San Diego will be diminished or even completely wiped out in 2023.
“What Diamond has been saying to us is that they intend to pay the clubs,” MLB Commissioner Rob Manfred said Wednesday.
He added that it is “an unfolding” situation.
“We have been really clear that if Diamond doesn’t pay, under every single one of the broadcast agreements that creates a termination right and our clubs will proceed to terminate those contracts,” Manfred said.
In that event, Manfred said MLB would produce the broadcasts, negotiate fees with cable providers and direct the resulting revenue toward teams. However, he said, that revenue would likely be less than the amount called for in current
agreements.
The league taking over would make some cord-cutters happy, as Manfred said deals with cable providers likely would include a provision that games are available on MLB.TV without the current blackout restrictions.
Diamond announced it missed an interest payment to bondholders that was due Wednesday, triggering a 30day grace period during which the company is expected to negotiate with lenders in advance of filing for bankruptcy protection.
Diamond operates 19 RSNs that hold the broadcast rights for 42 teams in the NHL, NBA and MLB. The agreements with MLB teams account for approximately $1 billion in revenue.
Is it sustainable?
The Padres have become an outlier and a leaguewide curiosity — a small-market team that spends money. Their investment in players has drawn the private ire of some team owners ever since Peter Seidler assumed the chairman’s role and the team began handing out big contracts in 2021. And last month, Rockies owner Dick Monfort took the rare step of publicly questioning the wisdom of the Padres’ spending.
On Wednesday, Manfred weighed in. He first confirmed a Union-Tribune report that the Padres will be a payor into the revenue-sharing system next year, based on their team-record revenue generation.
“I think there’s real positives in the Padres’ story,” Manfred said.
Speaking at a Cactus League media event, Manfred went on to intimate he has at least some level of skepticism about the longterm viability of their spending.
“The trick for all smallermarket teams has always been sustainability,” Manfred said. “Hats off to Peter Seidler. He’s made a massive financial commitment — personally — to making this all happen. The question becomes: How long can you continue to do that, and what happens when you have to go through a rebuild? But they have done a really, really good job of capitalizing on their talent to drive their revenue.”
The Padres’ projected payroll of more than $243 million ranks third in the major leagues, the highest the team has ever ranked. They trail only the two New York teams. No other “smallmarket” team is ranked in the top 14.
The last time a team not among the league’s top 10 media markets had a payroll ranked in the top five was the Detroit Tigers in 2016.
The 2008 Tigers were the last such team to be ranked in the top three.
The last team to win a World Series without having one of the league’s 10 highest payrolls was the 2017 Houston Astros.
Padres CEO Erik Greupner acknowledged last week there is “risk” in the Padres’ approach and said, “I think we’re in that transitional phase right now of really learning and understanding how much we can grow revenue.”