The Dodgers and MLB Friday submitted a $150M loan agreement to the U.S. Bankruptcy Court, under which the league "would loan the Dodgers the money needed to get through the season at 7% interest and would not seize the team in the event of default," according to Bill Shaikin of the L.A. TIMES. By making the loan, the league "did not waive any claims for 'past or future violations of the MLB Rules and Regulations' that the Dodgers might have made." The loan agreement "limits the use of funds to repaying $60 million" to Dodgers Owner Frank McCourt's lender for interim financing, "paying administrative costs associated with the loan and the bankruptcy filing, and 'working capital and for other general corporate purposes of the loan parties,' with all spending 'authorized by orders of the bankruptcy court.'" In the event of default, the league "can refuse any future funding and/or demand immediate repayment of funding already provided." MLB also can "pursue legal remedies." The next phase of the bankruptcy proceedings "is expected to involve McCourt's effort to sell the Dodgers' cable television rights, the revenue from which could be critical to his plan to emerge from bankruptcy as the Dodgers' owner." McCourt's attorneys had said that they "would proceed on that front at an Aug. 16 hearing, but that date has been put off" (LATIMES.com, 8/5). Bruce Bennett, one of the Dodgers' attorneys, said that the team's "current cash needs were not dire and that it did not immediately need to ask for any of the $150 million." Bennett said, "They have more than adequate resources to meet all their payables as they come due. We don't need to borrow the maximum amount of the loan." He added, "The worst that can happen -- in the narrow case of default -- is they can stop funding. It is not a secured loan, so baseball can't foreclose on anything" (N.Y. TIMES, 8/6). The WALL STREET JOURNAL's Matthew Futterman reported MLB's loan has an "interest rate of 5.5% plus a LIBOR base of 1.5%" (WALL STREET JOURNAL, 8/6).
HURTING THE BOTTOM LINE: In L.A., Jim Peltz reports the "sharp drop in attendance at Dodger Stadium this year is likely to cost the Dodgers at least $27 million in reduced ticket sales, concession and parking revenue" for the '11 season. Through Sunday, the Dodgers' "announced paid attendance is down an average of 7,902" per game. Peltz notes that is the "biggest per-game drop this season among the 30 Major League teams." Based on the team's $286M "of total revenue for 2009, the most recent year for which public figures are available, this season's attendance-related declines would amount to at least a 9.4% drop in the Dodgers' total annual revenue." Court documents from the '09 season show that "ticket receipts of $107.2 million were the largest contributor (37.5%) to the Dodgers' $286 million in total revenue that year." The "second-biggest contributor was $42.6 million from MLB funds that the teams divide" (L.A. TIMES, 8/8).
TRYING TO MAINTAIN CONTROL: In L.A., Bill Dwyre wrote the "most stunning aspect of the current Dodgers situation is not the greed of Frank McCourt, but the blind stubbornness." McCourt's "desire to maintain the Dodgers shows a startling lack of realism." Dwyre: "He is not wanted here anymore. Many of his customers won't be if he is the owner. He has lost them. Image is reality, and McCourt's image is irreversible" (L.A. TIMES, 8/6).
