Dodgers just latest team to file for bankruptcy
On April 20, 2011, Major League Baseball commissioner Bud Selig announced that the league was taking the drastic step of taking control of the Los Angeles Dodgers.
“I have taken this action because of my deep concerns regarding the finances and operations of the Dodgers,” he said. However, after Selig rejected a lucrative television deal that stood to infuse the team with much-needed cash, the team filed for Chapter 11 bankruptcy protection on June 27, 2011.
Although relatively uncommon, sports franchises do go bankrupt from time to time. Generally, teams go bankrupt after racking up large amounts of debt, making bad investments or when the owners’ primary business goes bust. Most of the time, a bankruptcy does not lead to the dissolution of the team, but usually results in a shift in ownership. Of the nine teams that have filed for bankruptcy in the past 40 years (the Pittsburgh Penguins filed twice), six are in the NHL.
|Slideshow: Sports franchises gone bankrupt|
So, which major professional teams have gone bankrupt?
Just last year, Texas Rangers owner Tom Hicks – who defaulted on his loans – agreed to sell his team to Nolan Ryan and attorney Chuck Greenberg for $525 million. When creditors didn’t approve that sale, the team filed for bankruptcy.
In an August 2010 auction that lasted for about 12 hours in front of the court, Ryan and Greenberg won the team for a reported $593 million after beating out Dallas Mavericks owner Mark Cuban and Houston magnate James Crane. The team reached the 2010 World Series, becoming the first to do so in the same year that it filed for bankruptcy.
MLB’s Seattle Pilots played for one year in Seattle. In March 1970, Pacific Northwest Sports, the team’s parent company, filed for bankruptcy after a judge granted the state of Washington an injunction to prevent them from moving the team to Milwaukee.
Putting the team into bankruptcy allowed the $10.8 million sale of the team to current MLB commissioner Bud Selig to proceed in time for the 1970 season. The team moved to Milwaukee and was renamed the Brewers.
In the NHL, the Penguins’ first bankruptcy filing came in June of 1975 after when the team’s owners, Tad Potter and Peter Block, couldn’t pay $6.5 million in debt, including $500,000 owed to the government in taxes. The IRS imposed a lien and seized the assets, which led to the bankruptcy filing.
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