The Dodgers have agreed not to pursue a new cable deal, at least for the moment, as part of a deal yesterday to win MLB and court approval for a $60M interim financing package that will allow the bankrupt club to meet payroll tomorrow. MLB had objected in bankruptcy court filings yesterday morning to the Dodgers’ proposed $150M, high interest rate loan from hedge fund HighBridge Capital. MLB has several objections, and one of them was a key term of the HighBridge deal that the team had to pursue a cable deal. MLB last week shot down a proposed Dodgers deal with Fox Sports, so it saw the financing as an end run in bankruptcy court around MLB approval. The Dodgers, after about 90 minutes of the first hearing yesterday, held about an hour of side talks with MLB. When court resumed around 4:00pm ET, the parties notified the judge that MLB had pulled its offer to supply the financing, while HighBridge had dropped its demand that the Dodgers market the cable rights. That agreement will take the parties through July 20, when the court has scheduled another hearing on whether to extend the HighBridge deal. The Dodgers could also ask the court for permission to market the cable rights. All of that could be moot if MLB moves to seize the franchise, a possibility raised in a report yesterday. MLB contends that the team cannot file for bankruptcy without the league’s permission (Daniel Kaplan, SportsBusiness Journal). In N.Y., Katie Thomas notes MLB initially asked bankruptcy judge Kevin Gross to reject HighBridge’s $150M loan, arguing that Dodgers Owner Frank McCourt “was using the case to circumvent league rules and further his personal interests.” MLB offered “its own loan that it claimed was on better terms, with a 7 percent interest rate compared to” HighBridge’s 10%, a move that “was immediately rejected by McCourt as a ploy to remove him as owner” (N.Y. TIMES, 6/29).
WINNERS & LOSERS: In L.A., Shaikin & Oneal note while the Dodgers’ cable rights “remain a subject for the Bankruptcy Court to consider, the league asserted a major victory in ensuring those rights would not be subject to a time-sensitive auction.” MLB attorney Thomas Lauria after the hearing said, “Major League Baseball 1, McCourt 0.” Lauria said that an auction “on the terms of McCourt’s lenders could limit the options available to resolve the team’s bankruptcy crisis.” Lauria: “We’re here to protect the team. McCourt is hurting the team.” McCourt attorney Bruce Bennett said that his client was “happy to secure the immediate financing and added that the court could authorize an auction of the cable television rights.” Bennett added, “On many issues, for better or for worse, the Dodgers and MLB are at loggerheads.” Lauria in response said, “MLB views the Dodgers as one of its cherished crown jewels. If there is anybody we are at loggerheads with, it is Mr. McCourt” (L.A. TIMES, 6/29). The WALL STREET JOURNAL’s Matthew Futterman writes McCourt “scored a victory in U.S. Bankruptcy Court Tuesday.” Bennett: “We got everything we asked for today” (WALL STREET JOURNAL, 6/29).
WHAT'S NEXT FOR MLB? CBSSPORTS.com’s Scott Miller reported MLB is next expected “to take steps toward seizing the Dodgers, a right available to baseball as part of the game’s constitution.” Procedurally, MLB “must first file a motion seeking termination of the franchise.” A source said such a filing is “probably going to happen” (CBSSPORTS.com, 6/28). YAHOO SPORTS’ Tim Brown noted in the meantime, MLB’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.” Bennett said, “If that’s what they do, the effort will be resisted.” MLB-appointed monitors Tom Schieffer and John Allen on Monday received a letter from the Dodgers “notifying them their presence amounted to improper interference with the bankruptcy process.” MLB complied, and Schieffer and Allen subsequently conducted Dodgers business from MLB’s L.A. law firm (SPORTS.YAHOO.com, 6/28). In N.Y., Mark DeCambre notes, “Yesterday, the level of vitriol between the two camps reached a fever pitch as MLB blasted McCourt’s management of the ball team in a court filing.” MLB wrote in its filing, “Having siphoned off well over $100 million of club revenues and obviously unable to distinguish between his personal interests and those of the club, Frank McCourt has driven the Los Angeles Dodgers to a liquidity crisis” (N.Y. POST, 6/29).
DODGER BLUES: In L.A., Bill Plaschke writes, “Nowhere has McCourt’s abuse of the Dodgers brand been more evident, or costly, than in his neglect for the group whose loyalty and passion he should have valued most. … When times were good, McCourt gouged the season-ticket holders, astronomically raising the costs for his most loyal and lucrative accounts. Now that times have gone bad, he has simply ignored them. The final straw for some occurred early Monday, when season-ticket holders awoke to learn that the Dodgers owner had filed for bankruptcy ... then never heard it from the owner himself” (L.A. TIMES, 6/29). Also in L.A., Tim Rutten writes the McCourts “have accomplished something singular in Los Angeles -- a genuine and principled revolt on the part of the Dodgers’ loyal fans." Neither they nor the city’s civic leaders "have turned on the team, to which they remain devoted despite an abysmal record." They have, however, "utterly rejected the McCourts’ management in what amounts to an informal but highly effective boycott” (L.A. TIMES, 6/29). ESPN's Jim Rome said, "It is time to bounce, my man. Cut your deal, pack your bags, hit the bricks, man up and admit that it was not meant to be. ... I’m no Alan Greenspan, but I’m guessing piling on another high-interest, $150 million loan on top of that crazy debt you already have is not going to solve anything.” Boston Globe columnist Dan Shaughnessy: "This is a laughingstock. It’s chaos. It can’t happen to the brand of the Los Angeles Dodgers” (“Jim Rome Is Burning,” ESPN, 6/28).
