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The last thing any team wants as they make their final preparations for an upcoming season is uncertain economic news, but the Brewers are one of several teams in that position as it relates to their local TV contract.
The story started four years ago when Sinclair Broadcast Group purchased more than a dozen regional Fox Sports networks, acquiring the networks with local broadcasting rights for 42 MLB, NHL and NBA teams. That list includes the Brewers and Bucks. The networks were purchased under a subsidiary named Diamond Sports Group, which has not made enough money to meet its debt obligations nor received enough financial support from its parent company to remain above water. Depending on the source (and Bloomberg, FanGraphs and The Athletic are all among those that have weighed in), one of two dire outcomes is coming this month, if not some combination of the two:
- Diamond Sports Group will file for bankruptcy, or
- Diamond Sports Group will miss a scheduled $140 million interest payment, at which point its creditors will have the opportunity to take ownership.
Either possibility carries some risk for the teams with negotiated agreements with Bally Sports Networks. Bankruptcy carries the most potentially catastrophic risk, as it would give Diamond Sports Group the option to end or renegotiate its existing contracts.
“I’d be most worried about the future of local broadcast rights for teams that recently signed new deals with DSG,” Ben Clemens said in the FanGraphs article linked above. That group includes the Brewers, who signed a new deal in 2021 that included minority ownership in Bally Sports Wisconsin.
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Legal experts cited in The Athletic’s piece downplayed the risk that Diamond Sports Group will look to end relationships with teams, as local sports are the centerpiece of these networks’ business model. Renegotiation is a real possibility, however, and for teams renegotiating long term deals the amount of money on the table is significant.
“To the extent that any of these teams have relied on these income streams, they will probably be challenged in the near future, if not, already,” bankruptcy attorney Zev Shechtman is quoted as saying in The Athletic’s piece.
To be clear, local television revenue is only a portion of the Brewers’ overall income picture. Even if the almost-inconceivable worst case scenario occurred and Bally Sports Wisconsin shut down without leaving any replacement in its wake, the Brewers would still have revenue from their share of MLB’s national television deals, corporate sponsorships, ticket sales and myriad other income sources. The uncertainly is still a concern, however, both for the Brewers’ long-term financial planning and for a possible impact on the fan experience.
While the income uncertainty of a possible renegotiation might have an impact on the Brewers’ plans going forward, the possible impact on the viewer experience is what fans might reasonably be more concerned about. Any restructuring or ownership change for the Bally Sports networks might come with cost cutting initiatives such as a reduction in the number of telecasts, eliminating coverage of things like weekday day games. Bally Sports Wisconsin (and FS Wisconsin before them) has long produced its studio broadcasts out of a facility shared with FS North in Minnesota, but a new owner or a restructured DSG might attempt to cut costs even further by moving those broadcasts into another shared studio with still more teams, or eliminating or reducing pre and post-game coverage altogether.
Of course, it’s also possible that a shift in regional sports network ownership is a net positive for fans. Diamond Sports Group’s contentious negotiations with TV providers have at times left fans in Wisconsin unable to see Brewers games on streaming services. Sinclair attempted to market directly to fans with the BallySports+ app in 2022, but watching Brewers games through that service cost $19.99/month.
In the end only time will tell how all of this plays out. The uncertainty in the short term, however, isn’t a great feeling for the Brewers or their fans.
