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Dodgers file for bankruptcy protection
The Los Angeles Dodgers filed for bankruptcy protection in a Delaware court Monday, blaming Major League Baseball for refusing to approve a multibillion-dollar TV deal that owner Frank McCourt was counting on to keep the troubled team afloat.
The Chapter 11 financing permits the Dodgers to use $150 million for daily operations and buys time for the team to seek a media deal and ensure the team's long-term financial stability, the Dodgers said in a news release. A judge would need to approve use of the money and a hearing is set for Tuesday.
"There will be no disruption to the Dodgers' day-to-day business, the baseball team, or to the Dodger fans," the statement said.
If approved by a judge, the financing would come in two chunks from a New York investment management company -- $60 million up front with the remainder being paid at a later date. A phone message left with Highbridge Principal Strategies was not immediately returned.
Dodgers players will be paid on Thursday, a source confirmed to ESPN The Magazine's Tim Kurkjian.
Baseball commissioner Bud Selig announced last week that he wouldn't approve a Dodgers television deal with Fox Sports that reportedly was worth up to $3 billion. That left McCourt cash-starved and facing the prospect of missing the team payroll this Thursday, leading to an MLB takeover.
McCourt defended his running of the team, saying he had made it profitable and successful. He also said the Dodgers have tried for almost a year to get Selig to approve the Fox transaction.
"The Dodgers have delivered time and again since I became owner, and that's been good for baseball," McCourt said. "We turned the team around financially after years of annual losses before I purchased the team. We invested $150 million in the stadium. We've had excellent on-field performance, including playoff appearances four times in seven years.
"And we brought the Commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago, when his leadership team called us a 'model franchise.' Yet he's turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today. I simply cannot allow the Commissioner to knowingly and intentionally be in a position to expose the Dodgers to financial risk any longer. It is my hope that the Chapter 11 process will create a fair and constructive environment to get done what we couldn't achieve with the Commissioner directly."
MLB spokesman Pat Courtney did not immediately respond to an email message. McCourt spokesman Steve Sugerman said Frank McCourt would not be available to comment Monday.
Among the 40 largest unsecured claims listed in the bankruptcy filing are former Dodger slugger Manny Ramirez at nearly $21 million; Andruw Jones at $11 million; pitcher Hiroki Kuroda at $4.4 million; and the Chicago White Sox at $3.5 million.
According to the bankruptcy filing, the Dodgers began experiencing "cash flow difficulties" last year due to declining attendance, paying about $22 million in deferred compensation and revenue sharing.
The team's vice chairman, Jeffrey Ingram, said in court documents that the Dodgers are "on the verge of running out of cash, the result of a perfect storm of events."
"He's clearly running very low on options right now," said David Carter, executive director of USC Sports Business Institute. "What seems to be the case is a high-stakes chess game between Frank McCourt and MLB, and he's running out of pieces. This is one of the uglier weeks in Dodger history."
The team also announced that Chapter 11 filings were made for an affiliated company which owns Dodger Stadium and three other related holding companies.
McCourt had hoped Selig would sign off on the transaction that would have provided him with $385 million up front and was vital to a binding settlement reached between him and his ex-wife and former Dodger CEO Jamie McCourt.
According to court documents filed by McCourt, when Selig rejected the Fox deal on June 20 the first reason he gave was his preference that the Dodgers wait until after the expiration of the Fox's exclusive right of first negotiation with the club in December 2012 so the Dodgers could ostensibly create a bidding war with other cable providers.
The McCourts have been embroiled in a contentious divorce where their lavish spending habits were detailed in court documents. The former couple took out more than $100 million in loans from Dodger-related businesses, records show.
Jamie McCourt released a statement Monday through her representatives.
"Today's bankruptcy filing is disappointing and disturbing. During the years Jamie McCourt was CEO of the Dodgers, the team's financials, although heavily leveraged, were stable and improving," David Boies said in the statement released by Hiltzik Strategies. "In the almost two years since Mr. McCourt fired her and took over management of the Dodgers, Mrs. McCourt has made repeated proposals to resolve her right to 50 percent of the team in a way that would preserve the value and integrity of the Dodgers for Dodger fans, for Los Angeles, and for her family. She has continued to do so despite the many personal attacks against her by Mr. McCourt and his representatives.
"The rule or ruin philosophy that appears to have motivated today's filing is bad for everyone who cares about, or has an interest in, the Dodgers."
Former Dodgers manager Joe Torre reacted to the news.
"It's sad. The Dodgers were a very storied franchise in my years in Brooklyn growing up and as a player going out to LA," he said. "I know the decisions that the commissioner made certainly weren't easy for him to make given that he understood that the, he felt that the organization and the city deserved better than that."
In April, MLB took the extraordinary step of assuming control of the troubled franchise. Former Texas Rangers president Tom Schieffer was appointed to monitor the team on behalf of Selig, who said he took the action because he was concerned about the team's finances and how the Dodgers are being run.
Just days ago, Steve Soboroff, the local civic leader and political operative who was hired by Frank McCourt as vice chairman one day before Major League Baseball took over the team, resigned on Saturday, citing that MLB oversight as the reason.
In his resignation letter to McCourt, Soboroff wrote that "an unanticipated action by the commissioner of Major League Baseball resulted (understandably) in elevating the resolution of 'control and ownership' issues to top priority, as it remains to this day. As a consequence, it is not possible for me to effectively work on the very initiatives and contributions that you had hired me to implement."
Soboroff was hired in mid-April primarily to, in the words of a news release issued at the time, "(lead) efforts to improve the fan experience at the stadium."
The Dodgers' filing follows that of the Rangers, who sought Chapter 11 protection in May of last year. The Rangers' filing successfully pushed through Hall of Fame pitcher Nolan Ryan's $590 million bid to buy the team. Creditors had stalled the deal for months, arguing that the team had rejected higher offers.
McCourt has maintained he met the criteria set forth by baseball officials in order for the TV contract to be approved and would amend the conditions if needed. The Dodgers' current TV deal with Fox expires in 2013.
The divorce settlement, now voided because of Selig's decision, called for a one-day "characterization" trial Aug. 4 to determine if title to the Dodgers is in Frank McCourt's name or if the team should be considered community property and sold. Robert Sacks, an attorney retained by Frank McCourt, said the trial may be shelved and Superior Court Judge Scott Gordon could decide how to handle the former couple's assets at a later date.
Gordon ruled in December that a postnuptial marital agreement that gave Frank McCourt sole ownership of the Dodgers was invalid. That cleared the way for Jamie McCourt, who served as the team's CEO and was fired by her ex-husband two years ago, to seek half the team under California's community property law.
Source: AP
The Chapter 11 financing permits the Dodgers to use $150 million for daily operations and buys time for the team to seek a media deal and ensure the team's long-term financial stability, the Dodgers said in a news release. A judge would need to approve use of the money and a hearing is set for Tuesday.
"There will be no disruption to the Dodgers' day-to-day business, the baseball team, or to the Dodger fans," the statement said.
If approved by a judge, the financing would come in two chunks from a New York investment management company -- $60 million up front with the remainder being paid at a later date. A phone message left with Highbridge Principal Strategies was not immediately returned.
Dodgers players will be paid on Thursday, a source confirmed to ESPN The Magazine's Tim Kurkjian.
Baseball commissioner Bud Selig announced last week that he wouldn't approve a Dodgers television deal with Fox Sports that reportedly was worth up to $3 billion. That left McCourt cash-starved and facing the prospect of missing the team payroll this Thursday, leading to an MLB takeover.
McCourt defended his running of the team, saying he had made it profitable and successful. He also said the Dodgers have tried for almost a year to get Selig to approve the Fox transaction.
"The Dodgers have delivered time and again since I became owner, and that's been good for baseball," McCourt said. "We turned the team around financially after years of annual losses before I purchased the team. We invested $150 million in the stadium. We've had excellent on-field performance, including playoff appearances four times in seven years.
"And we brought the Commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago, when his leadership team called us a 'model franchise.' Yet he's turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today. I simply cannot allow the Commissioner to knowingly and intentionally be in a position to expose the Dodgers to financial risk any longer. It is my hope that the Chapter 11 process will create a fair and constructive environment to get done what we couldn't achieve with the Commissioner directly."
MLB spokesman Pat Courtney did not immediately respond to an email message. McCourt spokesman Steve Sugerman said Frank McCourt would not be available to comment Monday.
Among the 40 largest unsecured claims listed in the bankruptcy filing are former Dodger slugger Manny Ramirez at nearly $21 million; Andruw Jones at $11 million; pitcher Hiroki Kuroda at $4.4 million; and the Chicago White Sox at $3.5 million.
According to the bankruptcy filing, the Dodgers began experiencing "cash flow difficulties" last year due to declining attendance, paying about $22 million in deferred compensation and revenue sharing.
The team's vice chairman, Jeffrey Ingram, said in court documents that the Dodgers are "on the verge of running out of cash, the result of a perfect storm of events."
"He's clearly running very low on options right now," said David Carter, executive director of USC Sports Business Institute. "What seems to be the case is a high-stakes chess game between Frank McCourt and MLB, and he's running out of pieces. This is one of the uglier weeks in Dodger history."
The team also announced that Chapter 11 filings were made for an affiliated company which owns Dodger Stadium and three other related holding companies.
McCourt had hoped Selig would sign off on the transaction that would have provided him with $385 million up front and was vital to a binding settlement reached between him and his ex-wife and former Dodger CEO Jamie McCourt.
According to court documents filed by McCourt, when Selig rejected the Fox deal on June 20 the first reason he gave was his preference that the Dodgers wait until after the expiration of the Fox's exclusive right of first negotiation with the club in December 2012 so the Dodgers could ostensibly create a bidding war with other cable providers.
The McCourts have been embroiled in a contentious divorce where their lavish spending habits were detailed in court documents. The former couple took out more than $100 million in loans from Dodger-related businesses, records show.
Jamie McCourt released a statement Monday through her representatives.
"Today's bankruptcy filing is disappointing and disturbing. During the years Jamie McCourt was CEO of the Dodgers, the team's financials, although heavily leveraged, were stable and improving," David Boies said in the statement released by Hiltzik Strategies. "In the almost two years since Mr. McCourt fired her and took over management of the Dodgers, Mrs. McCourt has made repeated proposals to resolve her right to 50 percent of the team in a way that would preserve the value and integrity of the Dodgers for Dodger fans, for Los Angeles, and for her family. She has continued to do so despite the many personal attacks against her by Mr. McCourt and his representatives.
"The rule or ruin philosophy that appears to have motivated today's filing is bad for everyone who cares about, or has an interest in, the Dodgers."
Former Dodgers manager Joe Torre reacted to the news.
"It's sad. The Dodgers were a very storied franchise in my years in Brooklyn growing up and as a player going out to LA," he said. "I know the decisions that the commissioner made certainly weren't easy for him to make given that he understood that the, he felt that the organization and the city deserved better than that."
In April, MLB took the extraordinary step of assuming control of the troubled franchise. Former Texas Rangers president Tom Schieffer was appointed to monitor the team on behalf of Selig, who said he took the action because he was concerned about the team's finances and how the Dodgers are being run.
Just days ago, Steve Soboroff, the local civic leader and political operative who was hired by Frank McCourt as vice chairman one day before Major League Baseball took over the team, resigned on Saturday, citing that MLB oversight as the reason.
In his resignation letter to McCourt, Soboroff wrote that "an unanticipated action by the commissioner of Major League Baseball resulted (understandably) in elevating the resolution of 'control and ownership' issues to top priority, as it remains to this day. As a consequence, it is not possible for me to effectively work on the very initiatives and contributions that you had hired me to implement."
Soboroff was hired in mid-April primarily to, in the words of a news release issued at the time, "(lead) efforts to improve the fan experience at the stadium."
The Dodgers' filing follows that of the Rangers, who sought Chapter 11 protection in May of last year. The Rangers' filing successfully pushed through Hall of Fame pitcher Nolan Ryan's $590 million bid to buy the team. Creditors had stalled the deal for months, arguing that the team had rejected higher offers.
McCourt has maintained he met the criteria set forth by baseball officials in order for the TV contract to be approved and would amend the conditions if needed. The Dodgers' current TV deal with Fox expires in 2013.
The divorce settlement, now voided because of Selig's decision, called for a one-day "characterization" trial Aug. 4 to determine if title to the Dodgers is in Frank McCourt's name or if the team should be considered community property and sold. Robert Sacks, an attorney retained by Frank McCourt, said the trial may be shelved and Superior Court Judge Scott Gordon could decide how to handle the former couple's assets at a later date.
Gordon ruled in December that a postnuptial marital agreement that gave Frank McCourt sole ownership of the Dodgers was invalid. That cleared the way for Jamie McCourt, who served as the team's CEO and was fired by her ex-husband two years ago, to seek half the team under California's community property law.
Source: AP
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