Amazon to buy stake in Diamond Sports - but Blue Jays could still find trade partners

With potentially large implications for potential trade deals with teams that were at risk of losing lucrative TV-deal money, the New York Post reported Wednesday that Amazon will stream the games of five MLB teams this upcoming season after investing $100M to buy a minority stake in broadcaster Diamond Sports to help it emerge from bankruptcy.

Diamond, which broadcasts under the Bally’s Sports Network brand, is the largest regional sports network (RSN) in the United States, with broadcast rights to 11 MLB teams, and the streaming rights to all 162 games for five of them, including the Detroit Tigers, Kansas City Royals, Miami Marlins, Milwaukee Brewers and Tampa Bay Rays.

They’d filed for bankruptcy in March 2023 with debts of more than $8.6B, after losing money paying for expensive sports broadcast rights agreements in a world where many sports fans have moved to streaming services and cut the cord on their cable TV packages. Without a bailout, they might have been headed for a liquidation at the end of this year.

To illustrate the dilemma that led to their bankruptcy filing, NBC’s Peacock just set the record for the most-streamed live event in U.S. history with their broadcast of last Saturday’s Kansas City Chiefs’ 26-7 wild-card win over the Miami Dolphins. In a game that featured Taylor Swift cheering on her man Travis Kelce, they reached 27.6M total viewers across the whole broadcast, and peaked at 24.6M viewers in the second quarter according to Nielsen data.

As per the NY Post, “Fans of the five baseball teams would have to get an Amazon Prime membership, which costs US$14.99 a month, to stream their games.” Further, after emerging from a bankruptcy agreement, Diamond would continue to televise the 11 MLB teams for which it has rights on cable TV, including the World Series champion Texas Rangers, but a new partner would be sought to replace the Bally’s brand for 2025 and beyond.

Blue Jays Implications?

However, that is where it might get interesting for the Blue Jays. According to the Post’s sources, Diamond “may dump their broadcast rights to the Rangers and the Cleveland Guardians before it emerges from bankruptcy.” They’d already seen their broadcast contract with the Minnesota Twins expire after last season, and are likely negotiating lower broadcast royalties with these teams.

According to Andrew Goldman, a lawyer for Diamond, “[with the help of federal bankruptcy judge Marvin Isgur] we will broadcast those three teams [including the Twins] for the 2024 season on the terms and conditions that we have”, but that Diamond would not stand in the way if those teams do not want to be broadcast by Diamond in 2024 on those terms.

Which might leave Texas, Cleveland and Minnesota scrambling for additional revenues if Diamond can’t come to an agreement with them and they are dropped. According to Goldman, answers are expected by February 1st.

According to the Akron Beacon Journal, Diamond was paying the Guardians $55M for local broadcast rights to their games, not including streaming rights. For a small market team like Cleveland, with an estimated $132M luxury tax payroll for 2024, that’s a material hit to their bottom line if they get dumped, or if the amount is significantly reduced as part of the agreement.

Texas’ agreement with Bally paid them $111M per season which compares with their projected 2024 luxury tax payroll of $232M. That would also be a material hit to their revenues if they get dumped or have to agree to lower broadcast royalties as part of the deal.

And the Twins, who are out of a contract with Bally Sports for 2024, had a $55M per year TV/streaming agreement with Diamond that expired after last season. That compares with their projected 2024 luxury tax payroll of $156M.

However, as John Bonnes of Twins Daily News notes, “it's reasonable to assume that negotiations for a new deal may have already been part of the discussions during this process. How soon that is all resolved is the biggest remaining question.”

Which means that some of the more expensive players under contract with the Rangers, Guardians and Twins may still be available in potential trades. And that some remaining free agents like Blake Snell and Jordan Montgomery may be waiting to see what potential payroll budget these teams might have after clarifying their broadcast revenue streams for 2024 and beyond.

Certainly there have been rumours that Max Kepler ($10M AAV on a deal that expires after 2024) and Jorge Polanco ($10.5M AAV on a deal that expires this year, with a $12M club option for 2025) might be available from the Twins.

Other names that have been rumoured include Shane Bieber (owed $13.125M for a one-year rental in 2024 before he becomes a free agent) and Emmanuel Clase ($4M AAV through 2026, with $10M club options for 2027 and 2028) of the Guardians.

So we will watch the February 1st deadline for answers. Should these teams be left holding the bag and scrambling to fill a hole in their TV broadcast and streaming revenues for 2024, we could see the trade market heat up again very quickly after an early flurry last fall that saw Juan Soto, Tyler Glasnow, Manual Margot, Eugenio Suárez, Mark Canha, Alex Verdugo, Cal Quantrill, Aaron Bummer, Jarred Kelenic, Canadian Tyler O’Neill and others change teams. Hopefully the Blue Jays are opportunistic, and use their remaining payroll capacity to improve the 2024 lineup.