Diamond Sports Group has reached an agreement with the NHL and NBA, according to court documents filed on Friday, as the Sinclair subsidiary seeks to finalize a go-forward plan to operate its business. These agreements will last through at least the 2024-25 seasons depending on the status of the ongoing Ch. 11 bankruptcy entered by Diamond Sports Group in March 2023.
The company has been in the process of negotiating these deals as it looks to finalize and gain approval of its restructuring support agreement, which includes $450 million in debtor-in-possession financing and a deal with Amazon that will provide $115 million in convertible notes following the conclusion of the bankruptcy. Junior creditors are expected to assume operations of the subsidiary if it is able to emerge and continue the operation of Bally Sports-branded regional sports networks televising local games within Major League Baseball, the NBA and NHL.
“We are appreciative of the ongoing collaboration and long-term partnerships with the NBA and NHL,” David Preschlack, chief executive officer of Diamond Sports Group, said in a statement. “These new agreements that cover NBA and NHL linear and DTC rights are another major milestone and continue Diamond’s momentum toward emergence, which will enable us to provide value for our NBA and NHL partners and continue to serve dedicated local NBA, NHL and MLB fans.
“Having completed negotiations with key partners that provide certainty around our content and distribution, Diamond is well positioned for the future. With the support of our creditors, we are focused on finalizing our reorganization plan to support our emergence and presenting that plan to the Court in due course.”
Before the company was able to compile a restructuring support agreement, it had planned to cease operations following the 2024 MLB season. Diamond Sports Group had reached a deal with the NBA that involved a reduction in rights payments in exchange for reverting the rights back to teams upon the end of the season. The Sinclair subsidiary came to a similar agreement with the NHL, but things changed shortly thereafter once Amazon reached a deal with the regional sports network operator.
Comcast had recently agreed to a new carriage deal with Diamond that brought back 15 Bally Sports-branded regional sports networks back to Xfinity subscribers on the more expensive Ultimate TV package. Within the court filing, Diamond Sports Group avers that the NHL agreement contains protections if a going-concern plan is not confirmed and actualized.
“The Plan, and any other going-concern plan that the Debtors may propose, is premised on the successful negotiation of continuing relationships with the Debtors’ various partners, including the NHL and other professional sports leagues and teams, as well as the Debtors’ distribution partners,” the court filing reads. “While the Debtors have had success in these endeavors to date, discussions remain ongoing, and the Debtors require additional time to pursue agreements and file an amended plan that will provide the best possible outcome for all stakeholders.”
Within the NHL Term Sheet, there are modifications to the NHL agreements, some of which involve rights fees, expiration dates and direct-to-consumer rights available to such debtors. The continuation and/or extension of these modified NHL agreements, including within the NBA agreements as well, is premised on if the Debtors confirm a going-concern Ch. 11 bankruptcy plan and comply with the terms and conditions therein.
“We’re pleased with this collaboration that allowed the parties to reach an agreement for these RSNs to continue to operate and bring games to our fans,” the NHL said in a statement.
Diamond Sports Group will assume the agreements, make all payments and keep broadcasting games under its purview through at least the conclusion of the 2024-25 NHL season. The teams listed under the telecast agreements in the filing are the Carolina Hurricanes, Tampa Bay Lightning, Minnesota Wild, Columbus Blue Jackets, Nashville Predators, Anaheim Ducks and Detroit Red Wings. During the offseason, the Dallas Stars and Florida Panthers parted ways with Diamond Sports Group and entered new television deals. The St. Louis Blues and Los Angeles Kings, both of whom were carried locally by Diamond Sports Group RSNs last year, are also included under this agreement as part of joint ventures with the company.
The term sheet also provides protections to the NHL Parties to ensure that Diamond Sports Group and its Debtors will perform the obligations as agreed on. Additionally, the filing outlined a “toggle” mechanism that grants Debtors flexibility as it continues to pursue the best outcome under its Ch. 11 bankruptcy.
“If the Debtors timely confirm a plan (as set forth in the NHL Term Sheet) allowing the business to continue as a going concern, the terms of the Modified NHL Agreements with the Debtor Counterparties continue or are extended beyond the 2024-2025 NHL season on terms beneficial to the Debtors,” the court filing states. “In the event that the Debtors do not confirm a going concern plan as set forth in the NHL Term Sheet, the NHL Term Sheet provides that the NHL Agreements with the Debtor Counterparties will expire automatically at the conclusion of the 2024-2025 NHL season, thus reducing the potential for rejection damages claims by the NHL Parties.”
As it pertains to the National Basketball Association, Diamond Sports Group Debtors filed an emergency motion to authorize the rejection of agreements with the New Orleans Pelicans and the Dallas Mavericks. The 11 NBA teams listed among telecast agreements are the Detroit Pistons, Milwaukee Bucks, Minnesota Timberwolves, Cleveland Cavaliers, Los Angeles Clippers, Atlanta Hawks, Charlotte Hornets, Miami Heat, Oklahoma City Thunder, Memphis Grizzlies and San Antonio Spurs. Diamond states that the Pelicans and Mavericks organizations themselves requested the mutual termination of these agreements, and the Debtors subsequently determined that the deals could not be made profitable and should be rejected, acceding to the request.
“Rejection of the Agreements is well within the Debtors’ business judgment and is in the best interest of their estates,” the court filing states. “As a result of the Debtors’ ongoing analysis of its team rights portfolio, the Debtors have determined that the costs associated with performing under the Agreements for its remaining term, including payment of substantial rights fees, outweigh the revenues the Debtors are able to obtain through broadcasting games pursuant to the Agreements.”
“We have reached a new agreement with Diamond Sports Group for the 2024-25 season in which Diamond RSNs will telecast local games for 13 NBA teams,” an NBA spokesman said in a statement. “The Dallas Mavericks and New Orleans Pelicans declined to continue distributing their games on Diamond RSNs and will share more details soon on how to watch games for the upcoming season in their respective markets. This new agreement is subject to approval by the bankruptcy court.”
