Diamond Sports Group, owner of...

Diamond Sports Group, a Sinclair company that holds the broadcasting rights to 14 MLB clubs as well as many NBA, NHL, and WNBA franchises, filed for Chapter 11 bankruptcy on Tuesday.

The corporation, which is in debt to the tune of more than $8 billion, stated that its Bally Sports regional sports networks "would continue to function in the regular course during the Chapter 11 proceedings," and that it has $425 million in cash on hand to finance the business.

Diamond will apparently be split out from Sinclair as a separate company under a deal with its creditors. CEO David Preschlack expressed hope that the changes will enable the firm to reorganize for the future while continuing to operate:  

"We are employing this process to reset our capital structure and improve our balance sheet through the reduction of about $8 billion of debt. DSG will be able to expand our company while continuing to produce excellent live sports productions for our customers thanks to the financial freedom gained via this reorganization."

The development is nevertheless concerning for almost half of MLB's teams, who rely on RSN payments for a significant amount of their revenue.

What will MLB do if Bally networks stop paying?

DSG's bankruptcy has been widely expected since the company announced last month that it would miss a $140 million interest payment. While DSG said it will continue broadcasting games, MLB commissioner Rob Manfred has already outlined what the league intends to do should the company start missing payments.

The plan, as Manfred explained it, would see the league try to get the games aired on local cable like usual while creating a new option for fans to stream local games, which has long been forbidden under the usual RSN structure:

Basically, the league would terminate every agreement in which Bally misses payments and produce its own broadcasts, then approach cable distributors to get those games on television while also overhauling its streaming arm by offering in-market games to fans.

Given that MLB fans have long criticized the practice of RSNs blacking out in-market streaming for MLB.tv subscribers, Diamond's bankruptcy could be the first step toward a new system of streaming.

MLB responds to Diamond Sports Group bankruptcy

Three hours after Diamond announced its bankruptcy, MLB released a statement affirming its ability to air games for fans should the RSNs cease production.

Which MLB teams are affected by Diamond Sports Group's bankruptcy?

It was reported Tuesday by the New York Post that MLB would offer free streaming for four teams whose contracts Diamond is expected to dump in the coming days: the Cincinnati Reds, Cleveland Guardians, San Diego Padres and Arizona Diamondbacks.

In addition to those four, the following teams' local broadcast rights are currently owned by Bally Sports networks: the Atlanta Braves, Detroit Tigers, Kansas City Royals, Los Angeles Angels, Miami Marlins, Milwaukee Brewers, Minnesota Twins, St. Louis Cardinals, Texas Rangers and Tampa Bay Rays.

MLB's RSN problem goes beyond that group, though, as the parent company of AT&T SportsNet, the string of RSNs that own the rights of the Colorado Rockies, Houston Astros, Pittsburgh Pirates and Seattle Mariners, said last month that it plans to discontinue the networks.

This problem isn't contained to MLB, as Bally has the rights of 16 NBA teams, 12 NHL teams and four WNBA teams. The timing just means baseball will be the first sport to experience the financial repercussions.