McCourt's proposed media rights auction dashed

Tim Brown

At the end of 36 hours in which Frank McCourt went renegade owner, got his bailout money and the Los Angeles Dodgers scored 15 runs (and won), what we take away is what we probably already knew: Major League Baseball wants McCourt out in the worst way, and McCourt is going to have to be carried out on a slab.

It's what brought lawyers for MLB, McCourt, Fox, Jamie McCourt and the players' union to Wilmington, Del., on Tuesday, and what will maintain those relationships for the foreseeable future.

And it's why baseball officials were elated as they left Judge Kevin Gross' courtroom, having stricken the single element they believed might have ensured McCourt ownership of the Dodgers for at least another generation – an auction of the club's media rights.

Frank McCourt addresses reporters after a June 17 court appearance.

Opposed by everyone in the courtroom wearing shiny shoes and not on McCourt's newly funded payroll, the proposed auction was all but dead by the first recess. McCourt's lead lawyer – Bruce Bennett – said he would attempt to convince the judge a new media rights deal that extended beyond the current deal with Fox would most benefit the Dodgers and their creditors, regardless of Fox's rights prior to the bankruptcy filing. Baseball, ultimately, will argue that what's best for the Dodgers and their creditors is fresh ownership.

As to the written contract with Fox, which does not allow McCourt to negotiate a new deal with another party before the contract's expiration in 2013, Bennett said, "We are now operating in a bankruptcy court."

Fox representatives attended through a conference call.

[Related: Bud Selig responsible for McCourt fiasco]

The rest, baseball could live with, at least until July 20, when the judge will hear more arguments on whose money McCourt will live on for the coming months. Gross approved McCourt's preferred financing, which will provide him with $60 million to cover organizational costs over the next three weeks, and in that regard Bennett viewed baseball's satisfaction as "a strange interpretation."

"We presented a series of motions and got all of them," he said. "At this point, it's hard to tell how things are going to turn out three weeks from now."

Meantime, baseball's lawyers will attempt to reinstall league-appointed monitors of the Dodgers and also request a trustee, who would have broader authority than the monitors. On Monday, monitors Tom Schieffer and John Allen received a letter from the Dodgers notifying them their presence amounted to improper interference with the bankruptcy process. The league complied.

"If that's what they do," Bennett said, "the effort will be resisted."

Then, prior to the July 20 hearing, baseball likely will ask the judge for a permanent solution to what it views as a Frank McCourt problem with the Dodgers. It will remind the judge that a bankruptcy filing by an owner is grounds for termination, and request that the Dodgers be seized by MLB or sold, that the club be granted a fresh start coming out of bankruptcy rather than be burdened by debt.

Said one MLB source: "McCourt is in breach of fundamental covenants of our agreements with him."

[Related: Notable sports bankruptcies]

McCourt would argue that a portion of the debt is league created, due in large part to its unwillingness to approve a standing media rights deal.

The league, of course, believes it is saving baseball, the Dodgers and the people of Los Angeles from McCourt.

In its 20-page filing with the U.S. Bankruptcy Court on Tuesday, baseball began to reveal the findings of its two month-long investigation into McCourt and the Dodgers, and certainly its attitude toward McCourt.

Among them, according to the document, McCourt:

"Siphoned off well over $100 million of club revenues and [was] obviously unable to properly distinguish between his personal interests and those of the club."

Attempted to use the club's financial crisis, "To permit millions more to be misappropriated for his personal use."

"Has alienated fans, sponsors, and business partners, and has eroded public confidence in the club."

In spite of 2004 purchase conditions that he provide an additional $30 million in liquid equity within three years, "failed to satisfy this obligation."

Caused his own financial crisis because of his, "Financial mismanagement, extreme leveraging, personal distributions made for his own benefit at the club's expense, and the resulting decline in attendance caused by the community's extraordinary unhappiness with the club's owner."

Baseball's takeaway is that McCourt is most concerned about McCourt, not the Dodgers. Its end game is to rid itself of McCourt and begin the process of rebuilding the Dodgers through new ownership, the sooner the better.

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