Dodgers’ Bankruptcy Moves Ahead With Loan
Los Angeles Dodgers owner Frank McCourt can move ahead with a $150 million loan to meet payroll and cover bills, but a hearing will be held next month on an alternate financial proposal by Major League Baseball, attorneys involved in the team’s bankruptcy case agreed today.
During a hearing before a bankruptcy judge in Delaware — where the team filed for Chapter 11 bankruptcy protection Monday — lawyers for McCourt and MLB agreed to allow the $150 million debtor-in-possession financing plan move forward for now.
According to legal documents, the financing deal McCourt arranged through a New York investment firm carries a 10 percent interest rate and a $4.5 million fee. Major League Baseball claims in court papers that it is proposing to provide financing for 7 percent interest, with no fee.
Under the agreement reached today, the $4.5 million fee would be dropped to $250,000 if the MLB financing offer is approved during a July 20 hearing, the Los Angeles Times reported from Delaware. The deal also eliminates language calling for an auction of the team’s television rights, The Times reported.
Since he will have the money in place to meet the team’s payroll, McCourt avoided the possibility of Major League Baseball seizing control of the Dodgers later this week.
McCourt has been involved in a war of words with MLB Commissioner Bud Selig, who earlier this year appointed a monitor to oversee the team’s operations. Attorneys for McCourt allege Selig is pushing for a sale of the franchise — most notably by rejecting a proposed media-rights deal with Fox, a deal McCourt has valued at about $3 billion.
Selig said the deal was “structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt.”
McCourt responded with Monday’s bankruptcy petition, which he said was filed “to protect the franchise financially and provide a path that will enable the club to consummate a media transaction and capitalize the team.”
“I simply cannot allow the commissioner to knowingly and intentionally be in a position to expose the Dodgers to financial risk any longer,” he said. “It is my hope that the Chapter 11 process will create a fair and constructive environment to get done what we couldn’t achieve with the commissioner directly.”
In court papers filed today, attorneys for Major League Baseball accused McCourt of “having siphoned off well over $100 million of club revenues and obviously unable to properly distinguish between his personal interests and those of the club.”
“In pursuing his own financial interests at the expense of the club, over-leveraging it and draining millions of dollars it needed for capital investment and operations, Mr. McCourt has placed the debtors in their current, incredible position of not being able to make payroll less than halfway through the regular season,” according to the league’s court papers. “In the process, he has alienated fans, sponsors and business partners and has eroded public confidence in the club.”
