Bally Sports Southwest parent company fails to make April rights payment to Rangers

KANSAS CITY, Mo. — In a motion filed in bankruptcy court, the Rangers have told the financially insolvent parent company of regional sports network Bally Sports Southwest that there is no longer a free lunch.
In those exact words.
Diamond Sports, the parent company of Bally Sports Southwest, missed a rights payment due to the team on April 15, triggering the Rangers to file a joinder seeking the court to compel Diamond to pay its rights fees or surrender the broadcast rights. Rangers officials acknowledge they did not receive the April 15 payment, but otherwise declined to comment.
MLB recently filed a similar motion on behalf of Arizona, Minnesota and Cleveland after those teams didn’t receive payments.
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“Here, they are getting lunch — using the right to create content based on the Rangers’ baseball games, and in turn selling that content to distributors — but without paying for it,” the joinder motion states. “There is an arms’ length agreement negotiated between a willing buyer and a willing seller that tells us the price of lunch.”
That price — the rights’ fee — was redacted in the court documents.
In the short term, nothing is likely to change for those who want to watch Rangers’ games on TV. Either they subscribe to one of the few providers to carry BSSW or they are out of luck. The Rangers’ motion, along with the one filed by MLB, set the stage for clubs to potentially enter into or continue discussions and negotiations with potential alternative counterparties to Diamond Sports.
In the longer term, the Rangers have joined other MLB teams in essentially saying: “Pay us or release us.”
And Diamond is asking for renegotiation.
According to the Rangers’ motion: “The Debtors have argued in response to the Motion to Compel that, pending assumption or rejection of their broadcast agreements, they only owe the fair market value of benefits received under those agreements, which they contend is less than the agreed contract rate.”
The Rangers received a quarterly payment as scheduled on Feb. 15, the motion states, and filed a motion to terminate the agreement just before Diamond Sports filed for bankruptcy protection on March 15.
The Rangers and Diamond executed a 30-day “standstill agreement” on March 16 in which the Rangers agreed not to take any further action, according to the motion.
An evidentiary hearing is scheduled in the case for May 31.