SBD/September 26, 2011/Franchises

MLB Files Motion To Force Sale Of Dodgers, Indicates It Will Reject Any Deal For TV Rights

MLB believes the Dodgers' proposal for the sale of TV rights violates league bylaws
MLB late Friday made its boldest statement yet in the ongoing Dodgers bankruptcy case, petitioning the court to have the team sold and asserting it would approve no TV deal that involved Owner Frank McCourt keeping the team. The filing arrived in response to a move earlier this month by the Dodgers to establish a quick, two-stage process to sell the cable TV rights. MLB argues that proposal at once violates league bylaws, tramples upon current rights held by FSN, and does not address the larger issues surrounding McCourt, such as his ongoing divorce and mounting Dodgers fan apathy. The Dodgers' proposed path from bankruptcy "is a dead end or worse," the 98-page filing with the U.S. Bankruptcy Court for the District of Delaware reads in part. "The only path to emergence is through a sale of the Dodgers, and Major League Baseball respectfully requests that this Court terminate exclusivity so that such a sale can take place. Mr. McCourt simply refuses to pursue a reorganization strategy that can produce a confirmable plan. ... [He] is attempting to use these Chapter 11 cases improperly as a device to cure his own personal financial woes." MLB, which has already rejected three proposed TV extensions between the Dodgers and FSN, added that any further proposed rights deal involving McCourt is "dead on arrival." A hearing on the matter is scheduled for Oct. 12, the same day Judge Kevin Gross is slated to hear arguments on the club's proposed TV rights sale. The MLB-McCourt dispute threatens to place the authority of the court up against that of MLB Commissioner Bud Selig. But MLB in its filing asserts that its league constitution remains intact. "The bankruptcy code does not displace Major League Baseball's approval rights and power under the Baseball Agreements," the filing reads. "Moreover, a sale of the Dodgers' media rights without Major League Baseball approval would subject [the Dodgers] to potentially severe discipline, including possible termination from the league. Compliance with the Baseball Agreement is the price of membership in Major League Baseball."

THE DODGERS' TAKE: The Dodgers, not surprisingly, took strong issue with MLB's move, and branded it "meritless." "The inaccuracies in the 'facts' recited in the motion and the false characterization of other matters are offensive and too numerous to mention," the club said in a statement. "MLB's motion also ignores the fact that the Commissioner has treated the Dodgers differently from other Major League Baseball Clubs and that the Commissioner's actions starved the Dodgers of cash and caused the bankruptcy filing." The Dodgers, expected to file a response to MLB's motion this week, added, "in U.S. bankruptcy reorganization cases, liquidation is the last resort, not the first option. ... The alternative offered today by Major League Baseball really amounts to an unnecessary and value destroying distressed sale." MLB's filing also yielded several other items related to the Dodgers' financial state. The league said the club's total debt is now approximately $500 million, and a planned $360 million renovation of Dodger Stadium is now on "indefinite hold." The league in a separate filing late Friday also petitioned the court to have the two lead firms representing the club in the bankruptcy case -- Dewey & LeBoeuf LLC and Young Conaway Stargatt & Taylor LLC -- disqualified. MLB asserts they are serving the aims of McCourt personally, and not those of the team or rest of MLB, presenting a conflict of interest (Eric Fisher, SportsBusiness Journal). 

LEGALLY SPEAKING: Thomas Salerno, chief counsel for the Coyotes during the team's bankruptcy proceedings, called the MLB filing "gutsy." But he added that MLB "would not necessarily succeed."  Salerno said that in the Dodgers' case, "by announcing its rejection of any television deal before an auction could take place, and by signaling its veto of a plan that McCourt could use to pay all the Dodgers creditors in full," the league could be seen as "not acting in good faith." Salerno: "I think MLB runs a risk that the judge says that's not reasonable. ... This case is clearly going to make law. The league is going all in" (L.A. TIMES, 9/24). In L.A., Steve Dilbeck reported MLB "cited fan sentiment on Friday in its request that Gross order the sale of the Dodgers" (LATIMES.com, 9/23).

THE GLOVES ARE OFF: ESPN L.A.'s Ramona Shelburne wrote a "very important thing happened Friday." Shelburne: "Baseball said it still cared. Enough to fight this all the way to the end, no matter how bitter or ugly things may get" (ESPNLA.com, 9/24). YAHOO SPORTS' Tim Brown wrote under the header, "McCourt-Selig Battle Is Getting Personal." Brown: "McCourt views Selig as the worst kind of bully: a megalomaniac with a grudge, a geek with a badge and sidearm. Selig has McCourt typecast as well, as a gluttonous, litigious and desperate squatter who'd sell Tommy Lasorda if it meant a new paint job for the pool" (SPORTS.YAHOO.com, 9/24). The L.A. TIMES' Dilbeck wrote MLB Friday "did away with the feints and jabs and the fancy footwork and just delivered a blow from the ankles." Dilbeck: "Pretense is no longer invited" (LATIMES.com, 9/23).

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