Bankruptcy filing is McCourt’s last stand
LOS ANGELES – At dawn Monday, hours after they’d sent their fans home from Dodger Stadium with a walkoff win, the Los Angeles Dodgers announced they were bankrupt, forced into it by Major League Baseball and commissioner Bud Selig.
They are The Boys of Chapter 11, a once-glorious franchise and now collateral damage in standoffs between their owner Frank McCourt and the commissioner, between McCourt and his ex-wife Jamie, and, possibly, between a Delaware bankruptcy judge and baseball.
Following months of maneuvering in the wake of his divorce and weeks of bickering over proposed television rights funding with Selig, McCourt chambered and fired his last live round, just days before Selig was poised to seize the Dodgers.
The Dodgers filed for protection under Chapter 11 of the U.S. Bankruptcy Code, which McCourt believes will allow him time to secure funding for his team while protecting his ownership against Major League Baseball’s advances.
McCourt also announced he’d “received a commitment” for another $150 million loan – debtor in possession financing taken outside the authority of baseball – that would allow him to pay his players and employees, run the day-to-day operations of the club and acquire more players.
Creditors listed in the filing include Manny Ramirez (nearly $21 million), who last played for the team in 2010, Andruw Jones ($11 million), the Chicago White Sox ($3.5 million), Continental Airlines ($339,000), the City of Los Angeles ($240,000) and Vin Scully ($153,000).
The filing listed club assets of as much as $1 billion against debt of up to $500 million. Forbes recently estimated the franchise was worth about $800 million.
Monitors forced out
In a court hearing Tuesday at 1:30 ET in Delaware, Dodgers attorneys are expected to cite the club’s need to fulfill its obligations to players, personnel and deferred payments. Major League Baseball attorneys are expected to challenge the Dodgers’ request in the hearing. Attorneys for Jamie McCourt are expected to argue the franchise – a marital asset – would be further devalued as a result of Frank’s bankruptcy filing.
While MLB officials read through the filing and pondered their response, McCourt issued a statement in which he accused Selig of cornering the Dodgers.
“He’s turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves today,” McCourt said. “I simply cannot allow the commissioner to knowingly and intentionally be in a position to expose the Dodgers to financial risk any longer.”
Jamie McCourt’s attorney, David Boies, countered with a statement that Monday’s filing was “disappointing and disturbing.”
“The rule or ruin philosophy that appears to have motivated today’s filing is bad for everyone who cares about, or has an interest in, the Dodgers,” Boies said.
Those close to Selig said McCourt’s strategy was not unexpected, and noted that the statement deftly lacked personal accountability in the fall of the Dodgers. By midafternoon, Selig released a statement that accused McCourt of inflicting “further harm to this historic franchise.”
A spokesperson for the players’ union said Monday that the union would continue to monitor the situation.
“We’re confident all player obligations, current and deferred, will be met,” the spokesperson said.
Meantime, McCourt continued to stump for a 17-year, near-$3 billion deal with Fox, which he has claimed would ease the club’s dramatic cash flow issues. Last week, Selig refused to approve the deal because a portion of it would be used to settle McCourt’s divorce and other past debts.
The Major League constitution allows Selig to terminate McCourt’s ownership because of the bankruptcy filing. The league would have to work within the rules of the court, however, and could be at the mercy of an extended process.
All of which leaves the city, and Dodgers fans, with a team 9½ games out of first place in the National League West and with an owner few seem to trust to do right by the organization. A sort of loose boycott seems to have bled into the L.A. subconscious, leaving Dodger Stadium half-empty on many nights.
“All of us want to see that team perform well,” said David Carter, executive director of USC Sports Business Institute. “But I think it’s going to be a long time before people push through those turnstiles thinking of anything else. They’ll think to themselves, ‘I just paid for a ticket. I wonder which attorney it’s going to.’ You know, you go to the ballpark to get away from this kind of acrimony.”
Even if McCourt’s latest strategy works, and if he is able to milk the Dodgers back to something like respectability, the memory of the past 18 months won’t dim quickly.
“Many fans view this as if Frank McCourt is messing around with something that is near and dear to them,” Carter said. It’s not the kind of thing they are easily going to forget. The Dodgers would all but have to go undefeated.”
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