Bally Sports Breaks Bad: With Subs Down 10% and Cash-Flow Half of 2022 Projections, Increasingly Desperate Sinclair Looks to ‘Deleverage’

It’s an increasingly serious economic situation that has grave business implications to roughly a quarter of major league sports franchises in America — regional sports network operator Bally Sports is deeply in debt, bleeding subscribers and making less and less money.

Now Sinclair Broadcast Group, the far-right-oriented station group that owns the 19 Bally Sports channels, which are the exclusive RSN homes to 42 NBA, MLB and NHL teams, is looking to “deleverage” a debt load of around $9 billion tacked on when it purchased the channels from Fox three years ago.

And the pro leagues, which reportedly have no fondness for Sinclair’s management but are reliant on the huge TV money their Bally Sports licensing contracts generate, are looking to step in and perhaps buy into the floundering RSN group.

Certainly, the situation is bad.

Sinclair said during its third-quarter earnings call last week that its linear subscribers are down 10% year over year, and its cash flow is now half of what it was projected to be at the beginning of the year.

Diamond Sports Group, the subsidiary that houses the Bally Sports channels, has only enough financial resources to get through 2023, Sinclair said.

Sinclair CEO Chris Ripley added during the Q3 earnings call that the direct-to-consumer streaming service launched over the summer to amplify the RSN’s revenue flow, Bally Sports Plus, is generating “high engagement,” but he said it’s “too early” to release subscriber metrics for the $20-a-month platform.

One sports media consultant, Lee Berke, told The Athletic that was “hogwash.” If Bally Sports Plus was helping Sinclair in a meaningful way, Ripley and his executive team would certainly want to let investors know about it.

Also on the call, Ripley said that the company has retained advisers LionTree and Moelis & Co. to “talk to parties about deleveraging, strategic partnerships and things of that nature.”

Meanwhile, the leagues that rely on Bally Sports to help cover player salary budgets that now regularly exceed $100 million a season have resigned themselves to the fact that they need to help Sinclair out of its jam.

Rumors started earlier in the fall that Major League Baseball, the National Basketball Association and the National Hockey League were looking to possibly step in with financial support of some kind for Bally Sports.

“The leagues have no way out, they have nowhere to go,” Patrick Crakes, a sports media consultant, also told The Athletic. “I mean, if they lose the (regional sports network) system, right now, they’re completely f***ed.

“The big story continues to be that the leagues don’t like Sinclair, but they now have sobered up. They’re not talking about pivots to DTC all over the place.”

Indeed, there had been hope among top-level pro league executives that DTC streaming might be a solution to the ongoing woes affecting businesses like RSNs tied to eroding pay TV. But like everyone else in the media business, they’re finding that monetization for streaming still isn’t close to replacing what they’d lose from giving up on the pay TV ecosystem.

It was just 13 months ago that MLB Commissioner Rob Manfred publicly declared a preference to go into DTC alone without Sinclair. But The Athletic reported that the mood among the leagues is now more resigned — they need to help fix Bally Sports.

Certainly, if Bally Sports and Diamond were to flounder, it would be a bad omen for every other RSN operator in the market.

“The model is going to have to be rebuilt,” Berke added. “I think there still is a very strong marketplace for regional sports network content. It remains to be seen just who is going to be offering that up.”