MLB for the first time yesterday "put a specific number on the amount it alleges Dodgers owner Frank McCourt took out of the team -- $189.16 million -- and described the distributions as 'looting,'" according to Bill Shaikin of the L.A. TIMES. The league alleged that McCourt "had broken 10 MLB rules -- any of them grounds for termination of his franchise -- including what MLB termed the 'siphoning' of team revenue for non-baseball use." MLB's filing read in part, "The Dodgers are in bankruptcy because McCourt has taken almost $190 million out of the club and has completely alienated the Dodgers' fan base." The league claimed in the filing that McCourt "funneled $73 million in parking revenue through Blue Land Co., a non-team related entity; used $61.16 million in team revenue to pay off personal debts; and took $55 million from team revenue for personal distributions." The Dodgers claim that MLB Commissioner Bud Selig "approved the business structures about which he now complains." In addition, the "slew of court filings" yesterday by both sides indicated that "beating victim Bryan Stow will be central to the arguments and outcome in court." U.S. Bankruptcy Judge Kevin Gross has ruled that Dodger Stadium "security is a valid issue in the bankruptcy proceedings, as he determines the condition of the Dodgers." Both the Dodgers and MLB used the near-death beating of Giants fan Stow outside Dodger Stadium on Opening Day "to make their case" yesterday. The league "claimed the aftermath of the Stow incident revealed how inadequate stadium security was on McCourt's watch; the team claimed that aftermath revealed how low Selig would stoop to drive its owner out of the league" (L.A. TIMES, 10/25).
ON THE DOCKET: The flurry of large legal filings yesterday were highlighted in part by the club asking the U.S. Bankruptcy Court for the District of Delaware for a six-month extension of its exclusive window in which to file a reorganization proposal. The motion, if approved, would keep McCourt in control of the Dodgers until at least April 25. The club is asking for the extension because of alleged problems with MLB and Fox Sports Net building consensus on a reorganization. "The Commissioner will not consent to any plan of reorganization that does not involve a liquidation of the (Dodgers') assets, presumably under the control of the Commissioner," the club's filing reads in part. "Fox Sports has been equally unreceptive and unwilling to engage in any dialogue." The Dodgers in the filing also said they believe the combined asset value of the team, Dodger Stadium and related land is "well in excess of $1 billion." Fox, for its part, also chimed in, once more saying in a separate filing McCourt's TV rights bid would open the club to a "potentially massive damages claim, and that claim would not be too speculative to recover." The Dodgers' unsecured creditors, meanwhile, said yesterday they also oppose McCourt's TV rights sale plan. The opposition places the creditors with MLB and Fox, and further mounts pressure on McCourt as a key evidentiary hearing begins Monday in Wilmington. The creditors told the court that the Dodgers' plan contains numerous potential tripwires, most notably the looming prospect of contentious legal battles with Fox and MLB. "If the (Dodgers) pursue a sale that cannot ultimately be closed ... they will have wasted valuable time and may run out of liquidity entirely while they scramble to devise an alternative exit strategy. That is in no party's best interest," the creditors' brief reads in part. The creditors, however, also asked Gross for a deferment of about 30 days before ruling on the league's franchise rights termination motion in order to allow time for a potentially more consensual exit strategy between McCourt and MLB.
IN REPLY: The Dodgers and MLB each filed reply briefs, again revisiting well-worn arguments from the past several weeks. MLB argues that McCourt is inherently conflicted between his personal liquidity crisis, obligations to his ex-wife Jamie McCourt and the financial needs of the Dodgers. The Dodgers, meanwhile, counter that Selig's refusal to approve a new TV deal with McCourt still in power is starving the team of needed capital. Additionally, the club alleges Selig's appointment of monitor Tom Schieffer has provided a jolt of negative publicity that corroded team business, and that other MLB teams signed lucrative TV deals well ahead of the expiration of their current deals, as McCourt now wants to do. The Dodgers also discounted the threat of a damages claim from Fox, saying a new TV deal could start in '14. Meanwhile, the U.S. Trustee in the case struck a deal with an ad hoc group of season-ticket holders to place two members of the fan group on the official creditors' committee. The season-ticket holders had sought recognition of their own committee, which would have given them a greater voice in the club's reorganization and obligate McCourt to pay their legal fees. The creditors and Trustee had opposed the motion, and the late compromise eliminates a hearing that had been slated on the issue (Eric Fisher, SportsBusiness Journal).
