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SBD/October 3, 2011/Franchises
McCourt's Future With Dodgers Could Be Determined By Early Next Month
Published October 3, 2011
Key questions surrounding the Dodgers, including the ownership status of Frank McCourt and the future of the club's cable TV rights, will be addressed beginning late this month after Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware late Friday scheduled a critical four-day evidentiary hearing. Beginning Oct. 31 in Wilmington, and continuing Nov. 1, 2 and 4, Gross will hear arguments on a proposed sale of the TV rights, MLB's move to strip the franchise from McCourt, and a further league move to disqualify McCourt's current counsel in the case. As a result, McCourt's future with the team could be known by early-to-mid November. Gross ordered McCourt and MLB Commissioner Bud Selig each to testify under oath and in person at the hearing. And in his firmly worded order, the judge made it clear he will not tolerate more of the angry back-and-forth accusations that have dominated the three-month-old case. "The purpose of this order is to schedule an evidentiary hearing which will enable the Court to make its decision based upon facts rather than the harsh allegations and innuendo of the antagonists," Gross wrote. "The Court's direction for the prompt hearing will enable the court to maintain control over parties who's animus toward one another could result in unnecessary, spiraling, and excessive litigiousness which would become increasing challenging to disentangle." The judge acknowledged the huge stakes inherent to the hearing, saying "there is no middle ground" in the case.
SETBACK FOR DODGERS: Gross additionally levied a major blow against the Dodgers when he said he would not allow the club to seek discovery on the financial status of other MLB clubs. McCourt has consistently argued MLB is unfairly singling out the Dodgers, particularly noting the lack of league discipline levied against other financially troubled clubs such as the Mets. "The issue at hand is not whether the commissioner should or should not be taking actions against other owners. It is whether the Commissioner is treating [the Dodgers] and/or Mr. McCourt unfairly," Gross continued. "The Court will not turn [the Dodgers'] ills and whether the commissioner is treating [the club] and Mr. McCourt unreasonably and vindictively into a sideshow of all of MLB. The hearing is not a referendum on the Commissioner or other baseball teams. ... These cases are about the Dodgers." The timing of the hearing itself is a setback for the Dodgers, as the club had wanted these key issues heard no earlier than Dec. 12, allowing the club time to take discovery and prepare arguments. Meanwhile, McCourt's estranged wife Jamie on Friday filed an objection against the Dodgers' recent motion to establish a quick, two-stage process to sell the cable TV rights. The objection puts Jamie into the same camp with FS West and MLB opposing the bid. FS West in particular says its current rights are being trampled upon amid the new rights sale effort. And the Dodgers said Friday in a separate financial statement filed with the court that it has spent $5.79M on bankruptcy-related expenses for the three months ending Aug. 31.
STATING THEIR CASE: The Dodgers quickly followed up Gross' scheduling order this morning with a new motion arguing for a modification to allow discovery into the financial state of other MLB clubs. The motion argues Gross "overlooked facts and precedent ... that warrant modification of the scheduling order so that [the Dodgers] can obtain the discovery needed to present evidence." The motion continues, "By forbidding wholesale any such discovery, the Scheduling order unfairly impairs [the Dodgers'] ability to prove that the Commissioner has not acted in good faith. Without the benefit of appropriate benchmarks against which to measure [the Dodgers'] operations, this Court will be deprived of an important objective basis to make that assessment.” Gross will hold a hearing Wednesday on the Dodgers’ bid to modify the scheduling order and allow discovery into the business operations of other MLB teams.