By: Michael Rudd | Follow me on Twitter @Bosmike808.
This story starts in 2019 when the Sinclair Broadcast Group negotiated with Fox Regional Sports Networks to acquire 21 regional sports networks. The deal was part of Disney’s acquisition of 21st Century Fox. Because Disney also owns ESPN, the Fox Regional Sports Networks needed to be sold to another company. The result was the creation of Bally Sports Regional Sports Networks.
Bally Sports now finds itself potentially on the verge of declaring bankruptcy. Bally’s parent company Diamond Sports Group, is considering declaring chapter 11 bankruptcy to restructure $8.6 billion in debt. Bally has been trying to recoup revenues, even starting their streaming service Bally Sports+ back in September. However, continued cord-cutting and the explosion of streaming services leaves the future of regional sports networks in a cloud of uncertainty. Could this news and the uncertainty it creates for the league be the real reason early salary cap projections have been scaled back?
Salary Cap Projections
Before this story started, the NHL had a pretty rosy view of the salary cap for next season. An article on NHL.com from this October covers commissioner Gary Bettman saying the cap could increase by at least $4 million following the board of governors meetings. The article even quotes Bettman saying there is a good probability that the escrow will be paid off this season. Fast forward just a few months to December, and this NBCSports article covers Bettman saying the cap will only increase by $1 million next season. The article also included this tweet from NHL insider Frank Seravali.
In those October board of governors meetings Bettman said the league made about $5.4 billion in revenue last season. At his media availability during the All-Star weekend, Bettman said the league was approaching $6 billion in revenues by early projections. So the league, by early conservative projections, will make half of a billion dollars more this year, but a significant cap increase is being held up by $70 million.
All-Star Weekend Comments
During All-Star weekend both Bettman and Bill Daly held a press conference. Here is a look at some of their comments. When asked about escrow, Daly said there were no changes in the salary cap projections. Daly even said they hadn’t spoken to the NHLPA since December. On the impact of Bally Sports’ pending bankruptcy, Bettman said the impact in terms of the regional network and rights fees was not very large relative to league-wide revenues, which are approaching $6 billion. Bettman, however, said the impact on individual teams involved would be significant.
Bettman would go on to say, Sinclair, in their talks, said there wasn’t an imminent financial crisis. Bettman also said they were monitoring the situation very closely and exploring theoretical options if the worst were to happen. The commissioner and deputy commissioner closed by saying the solution for Bally Sports might not even involve bankruptcy. Finally, in the era of cord-cutting, there will be an evolution of how games are distributed, which is a primary focus of the league. Here is a video of the entire press conference.
With league revenues again higher than ever this season, why would the salary cap only increase by $1 million? Shouldn’t the conservative projection of half a billion more in revenue cover the $70 million still owed in escrow by the players? Cap projections dropped in December after Sinclair disclosed their third-quarter losses in November. That seems like too much of a coincidence for this not to be the real reason the salary cap projections have been scaled back. An increase of only $1 million vs. $4 million or more is enormous for a cap team like the Bruins. With David Pastrnak still to be re-signed and a multitude of expiring deals, management needs to know how much they can spend.
The Bruins will be back in action Saturday the 11th vs. the Washington Capitals. Keep checking back for all the latest on this story and everything Bruins going forward. Until next time stay safe out there and let’s go Bruins.