SBD/November 18, 2011/Franchises

Dodgers Reach Settlement With Merchandiser, Will Bring Operations In-House

The Dodgers plan to bring their merchandise operations in-house following a settlement with Facility Merchandising Inc. to end an eight-year concessions agreement after just two years. The Dodgers and FMI had battled over contract terms on several occasions during the '10 and '11 seasons, particularly as club attendance plummeted. FMI in August unsuccessfully sought to have the U.S. Bankruptcy Court for the District of Delaware force a decision on the contract status in advance of the Dodgers' overall reorganization. The settlement, struck with the aid of a mediator, calls for FMI to vacate Dodger Stadium by Dec. 1 and transfer its current holdings of Dodgers merchandise, valued at about $740,000, back to the team. In addition, the Dodgers will advance $300,000 to "repay obligations of FMI under a separate financing agreement." The club by March 1 will then receive $250,000 of that advance back, plus interest. FMI had been paying the Dodgers a minimum of $4.5M per year in royalties and signing bonus installments. Beyond ending a thorny dispute with a key vendor, the Dodgers' move to bring their merchandising business in-house represents yet another potential tool for outgoing Owner Frank McCourt to elevate team assets in advance of the planned sale. "Potential purchasers will have the opportunity to handle a significant component of the operation of a professional sports team as they see fit, thereby maximizing value," the club said in a filing with the bankruptcy court (Eric Fisher, SportsBusiness Journal).

ON THE DOCKET: In L.A., Bill Shaikin reports Fox Sports "expanded its legal combatants beyond the Dodgers late Thursday, adding team owner Frank McCourt and the umbrella company for most of his business ventures as defendants in a lawsuit alleging breach of contract." Fox also asked the U.S. Bankruptcy Court "for a restraining order to prevent the Dodgers from marketing their television rights and said the team had no need to remain under bankruptcy protection now that McCourt has agreed to sell." The amended suit "names McCourt personally and the McCourt-Broderick Limited Partnership as defendants" (L.A. TIMES, 11/18).

STAYING IN TOWN: McCourt Thursday said that he "has no intention of leaving town after a new owner takes over the Dodgers." McCourt: "I love Los Angeles and plan to stay in L.A. I don't know what my plans are, quite frankly, because I haven't had time to think about that." In L.A., Mike DiGiovanna notes McCourt was in Milwaukee Thursday for owners meetings, though some "thought the right thing for McCourt to do this week was skip these meetings." But McCourt said that he "was not discouraged from attending, and he did speak to" MLB Commissioner Bud Selig Thursday. McCourt: "It was a very brief hello, but nothing of substance" (L.A. TIMES, 11/18).
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Los Angeles Dodgers, Franchises

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