SBD/October 27, 2011/Franchises

Dodgers, MLB Postpone Evidentiary Hearing In Order To Talk Possible Settlement

Dodgers in legal filings valued club, Dodger Stadium and related land above $1B
The Dodgers and MLB have rekindled settlement negotiations in the club's ongoing bankruptcy case, according to industry sources, prompting yesterday's surprising four-week delay of a key evidentiary hearing that had been slated to begin Monday. Retired U.S. District Court Judge Joseph Farnan has been the mediator for the case since July, but until recently had made little progress, as evidenced in part by the rising vitriol in the briefs filed by each side in the case. It is uncertain whether the renewed talks will actually produce a deal, or how serious the talks currently are. But MLB, which for weeks has been trying to force a sale of the Dodgers, is not likely to sign any settlement deal that does not involve embattled Owner Frank McCourt relinquishing control. It is unknown what McCourt would seek in return for an agreement to sell the team. The Dodgers in legal filings with the bankruptcy court this week said the club, Dodger Stadium and related land are worth "in excess of $1 billion." Even if McCourt fetched such a sum, which would easily be an MLB record for a franchise sale, he may not have much left over after paying off debts, taxes and his divorce settlement to ex-wife Jamie. Dodgers and MLB execs, along with their lawyers, declined to comment yesterday. U.S. Bankruptcy Judge Kevin Gross did not cite a reason in his one-page order yesterday for pushing the evidentiary hearing from Oct. 31 to Nov. 29-Dec. 2. Absent a settlement, the evidentiary hearing will include arguments on competing reorganization plans: a forced sale of the club that is preferred by MLB and a rapid sale of the Dodgers' cable TV rights advanced by McCourt (Eric Fisher, SportsBusiness Journal). In L.A., Bill Shaikin reports McCourt "discussed a potential settlement with league officials Monday and Tuesday." But a source said that the settlement talks "hit a snag when the league declined to guarantee McCourt a specific return for selling the team." The source added that the league, which has "already loaned McCourt $150 million in bankruptcy financing, is not willing to subsidize his exit should the team sell for less than whatever figure he might ask MLB to guarantee." Another source said that MLB is "willing to work with McCourt on conducting an auction" (L.A. TIMES, 10/27).

IF I OWNED THE TEAM ...
ESPN L.A.'s Ramona Shelburne noted former MLBer Steve Garvey, who is leading a group with an interest in purchasing the Dodgers, indicated that if he were successful in his bid, one of the first things he would do to Dodger Stadium "is upgrade and modernize some of what he called its 'embarrassing' amenities." Garvey appeared yesterday on ESPN Radio 710 L.A. and said, "One of the first steps is to make a significant investment into refurbishing the stadium and bringing it up to 21st century style technology in entertainment. We're far behind." Garvey "reiterated his involvement" with ESPN baseball analyst and former MLBer Orel Hershiser "and an investment group interested in buying the team if McCourt is ultimately forced to sell." Garvey said that if he were part of the Dodgers' new ownership group, he would "be 'very aggressive' in retaining the Dodgers existing talent and pursuing free agents who could help the club return to prominence" (ESPNLA.com, 10/26).
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