SBD/May 10, 2011/Franchises

MLB Preparing For Frank McCourt To Take Dodgers Into Bankruptcy

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McCourt could use bankruptcy filing to keep control of Dodgers in short term
MLB is "preparing for the possibility that Frank McCourt might take the Dodgers into bankruptcy court before the league could strip him of the team," according to Bill Shaikin of the L.A. TIMES. Experts said that bankruptcy "could provide McCourt with the authority and funding to remain in control of the Dodgers, at least in the short term." McCourt would "almost certainly face opposition in bankruptcy court from the league, which could use a 'voluntary termination' clause as empowered by the MLB constitution to revoke a franchise upon a bankruptcy filing." Also, a source indicated that Jamie McCourt would argue that her ex-husband "has no right to take the team into bankruptcy without her approval, since she claims half-ownership of the team." Still, Shaikin notes bankruptcy courts "need not yield to MLB rules." One high-ranking MLB exec "expressed surprise McCourt did not file for protection as soon" as MLB Commissioner Bud Selig announced last month that the league was assuming day-to-day control of the Dodgers. In bankruptcy court, McCourt likely would argue that the team's "financial problems would be resolved with the approval of a long-term broadcast contract with Fox." Ultimately, he would "need the big banks to buck Selig and side with him." Alan Gover, an attorney with the firm that represented the new Rangers' owners through that MLB club's bankruptcy process in '10, said, "He would be rolling the dice that the creditors would support him. If they don't, he's walking into a trusteeship. That would be an endgame and a wasteful use of litigation" (L.A. TIMES, 5/10). The Dodgers reportedly are at risk of not being able to meet payroll later this month, and Selig yesterday said, "I don't know that right now" (ESPNNY.com, 5/9).

IN-AND-OUT: MLB yesterday briefly hired former Padres and Pirates exec Dick Freeman to aid Dodgers monitor Tom Schieffer in his oversight and investigation of the club on the league's behalf. But it rescinded that hire just hours after making it due to what MLB officials termed a potential conflict. League execs were not specific on what the possible tripwire with Freeman working on the Dodgers case might be. It was not deemed to be major, though still significant enough to warrant his not aiding the club. Freeman himself is believed to have identified the issue. MLB might still hire someone to help Schieffer run the beleaguered club (Eric Fisher, SportsBusiness Journal).

WELCOME TO BROADWAY: USA TODAY's Bob Nightengale notes McCourt is expected to attend this week's MLB owners' meetings in N.Y., starting tomorrow, "just as he has for the last seven years -- but this time will be much different." It will be McCourt's "first all-expenses-paid trip to New York since MLB took over day-to-day operations of the financially strapped ballclub and perhaps his final appearance there as owner of the Dodgers." Selig likely "won't be making small talk with McCourt, and McCourt figures to be greeted by pursed lips and murmurs." No other team owner "has publicly sided with McCourt in his feud with Selig and MLB, but even if owners privately felt McCourt is being wronged, they're not about to outwardly reveal their sentiments" (USA TODAY, 5/10).

STANDING HIS GROUND: Selig yesterday again "expressed optimism that the Mets would resolve their financial situation without his office interceding in the club's affairs." During an interview with ESPN Radio 1050 N.Y., Selig said, "I feel very comfortable that we are going to have a very reasoned economic solution." He said there "isn't anything" that would make him take the same action with the Mets as he did with the Dodgers. Selig: "They are approaching it the way I would approach it, quite frankly. They are looking to add equity and I absolutely have not a scintilla of doubt that that's going to work out well and we can move on" (NEWSDAY, 5/10).
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