The parent company of Bally Sports Southwest, which owns the broadcast rights to Dallas Mavericks, Dallas Stars, Texas Rangers, and Dallas Wings games, is expected to miss a major debt payment this week, and file for bankruptcy within the next month.
In the short term, experts predict that fans will still be able to watch their teams’ games on the channels they are familiar with. But for a long time, the expected bankruptcy filing of a prominent regional sports network has called into question the viability of the current broadcast rights model.
Outside of the NFL, most major pro sports are broadcast on regional networks that pay top dollar for the rights to air the games. For example, under the current contract Bally Sports Southwest pays the Texas Rangers $100 million per season for broadcast rights.
The cable companies that pay to air the games generate most of their revenue from subscriber fees. But tens of millions of people have ‘cut the cord’ in the last decade, in favor of a la carte streaming options that, individually, cost less than cable.
“I think one of the bigger questions is, ‘Has the whole model changed?’ said Maury Brown, who covers sports business for Forbes. “For most people, if they have a cable provider, they get their sports mixed in with other things. It’s called a bundle. That might be gone.”
“[The regional sports network model] sustainable only as long as there is a strong customer base. If you look at what linear television is, traditional television, subscribers are peeling away from it a lot of people. So, if you don’t have the subscriber money coming in, of course the ability to keep the rights payments back to the teams is going to be more difficult,” Brown said.
Diamond Sports, which is a subsidiary of Sinclair Broadcast Group, is expected to lose a 140 million interest payment on Wednesday. The company is struggling under the weight of $8.4 billion in debt, according to Bloomberg.
Once that payment is gone, it begins a 30-day grace period that could eventually lead to a bankruptcy filing, according to the Dallas Morning News.
