SBD/September 27, 2012/Franchises

Report: MLB Gave Dodgers "Secret Deal" Limiting Team's Revenue-Sharing Liability

The Dodgers "may enjoy an annual unshared windfall" of as much as $141M
Confidential “special terms” included in the Dodgers' bankruptcy court settlement last year gives the team’s new owners a “chance to cap income subject to revenue-sharing" from any new RSN deal at about $84M a year, according to sources cited by Helyar, Church & Soshnick of BLOOMBERG NEWS. While a new Dodgers RSN deal “could get as much" as $225M a year, the club "may enjoy an annual unshared windfall" of as much as $141M. Former MLB Rangers Minority Owner & President Michael Cramer said, “It’s an incredibly great deal for the new ownership that was obviously a factor in the amount of money they were willing to pay. Any team in the league would say, ‘Can I have that?’ It’s going to create a lot of owners saying, ‘Where’s mine?”’ Sources said that the special terms also set a "4 percent annual escalator, for the life of whatever contract the team signs setting up the network.” However, MLB Exec VP/Economics & League Affairs Rob Manfred said that “it doesn’t work that way.” He said, “The basic treatment is exactly the same as every other team in baseball. Any dollar that’s actually received in rights fees or signing bonus by the Dodgers is subject to revenue-sharing.” Dodgers Owner Guggenheim Partners spokesperson Torie von Alt said that the team “would have no comment.”

PANIC BUTTON
: Phoenix-based bankruptcy attorney Thomas Salerno said that taken altogether, the settlement terms "suggest MLB was so eager" to get former Owner Frank McCourt out and “avert an open-court airing of charges he’d leveled against [MLB Commissioner Bud] Selig in filings that it made significant concessions.” Salerno said, “McCourt had a lot of leverage, because MLB did not want a public hearing on the inconsistencies with which it treats teams.” Manfred said that team owners were “briefed on this provision of the settlement, but language of the 'special terms' remains secret.” Sports consultant Andy Dolich said that “special treatment for the Dodgers bodes ill for baseball.” He said, “If you don’t have a codified set of rules that everybody is playing with then you have a different game. The ongoing divide between top and bottom in all sports creates a dynamic of question marks" (BLOOMBERG NEWS, 9/27).

FAMILY FEUD: In L.A., T.J. Simers notes McCourt’s ex-wife, Jamie, filed a motion in court because she “believes Frank committed fraud by understating his assets.” She has asked for "all documents related to the Dodgers’ sale.” This “includes the very same details Guggenheim has steadfastly refused to publicly divulge” (L.A. TIMES, 9/27).
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