Media watchers and sports fans are watching a bankruptcy court case that could affect how Northeast Ohioans view Guardians games after 2024.
The company, Diamond Sports, which operates regional sports networks under the Bally Sports brand and owns the rights to broadcast Cleveland Guardians games, filed for Chapter 11 bankruptcy protection last year. Diamond Sports Group has not yet reached a contract for 2025 and beyond with its broadcast distributor, Comcast. Their channel Bally Sports Great Lakes currently carries Guardians games.
The outcome of Diamond's restructuring could impact which platforms Cleveland fans watch the games, and it’s spurred, in part, by broader changes in the way people consume media, experts say.
“Now what's really happening is [that] teams end up signing multi-year deals for broadcast rights. And sometimes those deals have been very profitable over the years" for Diamond and MLB teams, said Jonathan Ernest, a Case Western Reserve University professor who teaches the economics of sports.“[But] more recently, they've found that as people are switching their habits [to streaming], they haven't necessarily been as profitable.”
The lack of profit threatens these types of agreements between companies like Diamond and individual teams.
“There's been real questions of how [this will] proceed because it doesn't seem like [Diamond is] going to be able to go through a bankruptcy and come out the other side and continue offering these kind of regional sports network aspects,” Ernest explained.
In February, Diamond won court approval for new deals that allowed them to televise games on Bally Sports’ regional networks for multiple Major League Baseball teams — including the Guardians. But that short-term deal only lasts for the remainder of the 2024 season, which ends in early November.
As of now, no one knows what will happen after that.
On top of the changes in media that are affecting regional broadcast partnerships, Diamond is struggling to find a long-term agreement with Comcast — which broadcasts games on its system.
One possibility is for MLB to establish its own media platform and take over the broadcasts for more of its teams, Ernest said.
“MLB is waiting in the wings to say, ‘We'll just take over this whole thing and air it ourselves as we did with these other teams’,” he said.
The uncertainty between Comcast and Diamond could play into the hands of MLB, he explained. If an agreement is not reached, MLB could intervene by making the case that the dispute between Comcast and Diamond is hurting its overall product.
According to Ernest, that reasoning may pressure Comcast and Diamond to find a solution or hand over the rights to MLB.
This wouldn’t be uncharted territory.
In May of 2023, after filing for bankruptcy protection, Diamond reportedly dropped the San Diego Padres from its regional channel, Bally Sports San Diego. The original deal between the two, which was made public, stated that Diamond agreed to pay the Padres about $60 million per year through 2032 for the rights to broadcast its games.
But the team was expected to receive only $17 million total after being dropped, according to the San Diego Union-Tribune.
After the fallout between the Padres and Diamond, MLB took over San Diego’s broadcast rights. They did the same for the Arizona Diamondbacks later that season.
If Bally Sports is unable to broadcast Guardians games, MLB may once again step in, Ernest said. After Diamond dropped the Padres, the league allowed access to the team’s games through local cable and the MLB.TV streaming app.
But there may be disadvantages if the Guardians were to go this route, Ernest said.
“The question is, how does [the broadcast] get set up? Who's able to retain the dollars from that? Because what the Guardians don't want is for MLB to take over those rights [and] no longer have the ability to negotiate with a regional sports network,” Ernest stated.
The Guardians brought in about $55 million from their broadcast rights deal last season, according to Crain's Cleveland Business.
To complicate things further, Diamond is also in the middle of multiyear deals with DirecTV and Fubo TV. But the Bally Sports networks are currently unavailable on YouTube TV and Hulu + Live TV.
How could this affect the Guardians on the field?
The possible loss of income from broadcast rights could throw a wrench into the Guardians’ front office plans, Ernest said.
The revenue from teams’ television deals plays a sizeable role in its inner operations, including trades and contract negotiations. According to a report from Crain’s, those deals cover between 20 to 30% of a team’s revenue.
But with less revenue at the team's disposal, it could directly impact how much Cleveland’s front office spends on the roster as the July 30 trade deadline approaches.
“It may be a little worse than I would otherwise expect,” Ernest stated. “It's a relatively small market in Cleveland, which means that revenues are relatively low ... without revenue sharing agreements in place in the same level that we have in the NFL [it's] going to tighten the budget for the Guardians even more than it already is.”
The Guardians are heading toward a pivotal July, as they own the top pick in the MLB draft and continue to lead their division with an unexpected 51-27 record. The slotted signing amount for the top pick this year is reportedly more than $10 million and the Guardians will be competing with big-spending teams like the New York Yankees and Philadelphia Phillies to take on salary and add talent before the trade deadline.
The San Diego Padres witnessed a similar financial hurdle entering this current season because of broadcast rights issues. The Padres cut their opening day payroll by $90 million, according to Sports Illustrated.
The team dropped from No. 3 in MLB in total payroll in 2023 to No. 15 this year.
Cleveland is not the only MLB team caught up in the Diamond case.
The Minnesota Twins and Texas Rangers also reached short-term deals with Diamond in February, Crain's reported, but still face an uncertain future of the broadcasts of their games.
But the possible domino effect to this would be monumental if a small-market team like the Guardians, which currently has the best record in the American League Central Division, fail to get fans tuning in at home.
“If people aren't seeing these games [and] bringing on more fans as [the team is] performing well, [we] may see drop-offs with people potentially going to games,” Ernest said. “But [we] also might see, for years to come, kind of a depressed fan base in the sense that some people just aren't tuning into games that aren't an option for them. [They are] therefore not following along as closely and not [be] as willing to spend dollars on merchandise and other things like that.”
What to expect moving forward
In the immediate future, Diamond hopes to rebound from its $8 billion debt.
“Diamond [is] sort of trying to stop the bleeding in a sense where they know that it's fairly unprofitable with what they've taken on. And that's what this bankruptcy process is all about,” Ernest said.
Diamond is due back in court on July 29, court records show.
For a team like the Guardians, the case has the potential to demonstrate the significance of broadcasting rights and their impact on today’s mainstream media.
“[It] could be a really good way to understand exactly how valuable broadcasting these games are,” Ernest said, “not just individually for selling ads for [a] particular game, but for the value of the franchise moving forward.”
