How the bankrupt Dodgers will pay their bills for the rest of the season will not be known until today at the earliest following a marathon, nearly 10-hour hearing yesterday in Wilmington on rival $150M interim financing proposals from the club and MLB. Judge Kevin Gross for the U.S. Bankruptcy Court for the District of Delaware declined to issue a ruling last night, saying the matter required "a more thoughtful decision than I could make this evening." But at several points in the hearing, he seemed to signal a deference toward MLB's interim financing bid. Gross said the decision is "about dollars and cents. This is not a control issue." And on pure deal terms, MLB itself, FS West, the U.S. Trustee on the case, and Dodgers assistant treasurer Jeffrey Ingram on cross examination from the league all testified to the economic superiority of MLB's bid. "All we're trying to do is save [the Dodgers] a few bucks," said Thomas Lauria, an attorney representing MLB. "We're not here to harm the Dodgers. We're joined at the hip. Our relationship is symbiotic. Their success is our success" (Eric Fisher, SportsBusiness Journal). Gross said that he "hoped to rule" today whether McCourt "could use a loan he arranged to finance the team during the bankruptcy process rather than one offered" by MLB (L.A. TIMES, 7/21). In N.Y., Richard Sandomir notes if Gross "rejects the Highbridge loan, he could not then agree to baseball’s." Gross: "If I deny the motion, there is no financing, unless they come to you. Given the bitterness here, how does that get done?” Lauria said that MLB "would offer it as quickly as possible" (N.Y. TIMES, 7/21).
BENNETT CONTINUES ON THE OFFENSIVE: Dodgers attorney Bruce Bennett, as he has in case filings over the past three weeks, claimed the increasingly hostile relationship between the club and league makes MLB an unfit lender in this matter. And he again suggested the MLB interim financing bid is foremost a stalking horse to ultimately remove owner Frank McCourt from the club. "We don't want to be in business with a lender fundamentally opposed to our business plan," Bennett said. "We don't want to take money from our litigation adversary, even if it's cheaper." The two main figures in the dispute, McCourt and MLB Commissioner Bud Selig, were both absent, and neither were expected. After the hearing, Bennett said a significantly modified MLB loan could be palatable to McCourt and the Dodgers. And throughout the day, Lauria pledged to Gross a flexibility in the league's proposal (Fisher). Selig and other MLB officials "were exempted from giving depositions in the case, and presumably from testifying in court, by Judge Gross." McCourt’s absence "left Ingram to spend hours as his stand-in on the witness stand" (N.Y. TIMES, 7/21).
MORE FROM THE COURT: During the long and often testy day, several new pieces of information in the case emerged. McCourt will still be on the hook for a $5.25M commitment fee to debtor-in-possession lender Highbridge Capital Management, regardless of which financing Gross approves. And earlier this month, MLB Exec VP/Administration & CIO John McHale Jr. testified in a deposition that McCourt asked MLB for $80M just prior to his filing for bankruptcy on June 27. The response from fellow MLB Exec VP/Labor Relations & HR Rob Manfred to the request, according to McHale's deposition, was to "sell the team." Bennett said of MLB, "They don't want a reorganization. They want a forced sale." Ingram additionally testified that the club's relationship with Highbridge emerged after a frenetic and unsuccessful search for money last month from other lenders, including Goldman Sachs, Time Warner Cable, Bank of America, GE Capital and others, before roughly $60M in payroll obligations came due on June 30. Bennett also made reference to his much-discussed filing earlier this week in which he said taking interim financing from MLB would be akin to "doing a deal with the devil," foremost pointing the barb at Selig. Bennett called the line a "literary allusion," adding "we're not ready to decide that yet" as to whether Selig represents the devil. Lauria soon shot back, "They've already done their deal with the devil. They're part of MLB. They're the devil's spawn. …We don't succeed if the Dodgers don't succeed. For better or for worse, we're worse than married." Lauria paused after that latter remark, adding, "That doesn't sound very good on the record" (Fisher).
