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Judge rejects Dodgers' $150M financing plan
A Delaware judge has rejected the Los Angeles Dodgers' proposed $150 million bankruptcy financing plan, a decision that likely will force the team to accept a financing offer from Major League Baseball.
The judge issued his eight-page decision Friday, two days after presiding over a hearing on the competing financing plans.
The team had sought approval of its proposed arrangement with hedge fund Highbridge Capital.
But the league, which has been locked in a bitter dispute with Dodgers owner Frank McCourt, countered with a competing plan that carried better financial terms.
The Dodgers rejected MLB's offer, saying it likely would result in legal battles and was an attempt by baseball commissioner Bud Selig to take control of the team and force a sale.
The decision comes after the Los Angeles Times obtained an 11-page letter in which Selig outlines the reasons that he shot down the Dodgers' proposed television deal with Fox and expresses concerns about an Internal Revenue Service investigation.
One big reason Selig cites for shooting down the TV deal is a lack of competition. The team's current deal with Fox expires in 2013 and the Dodgers cannot negotiate with other suitors until Nov. 30, 2012. Selig said that McCourt was willing to give away bargaining leverage because of a "desperate need for immediate cash."
"No other owner has sacrificed so much of his team's future for an immediate payoff," Selig wrote, according to the paper.
With McCourt and ex-wife Jamie embroiled in an ugly divorce, the Fox deal was supposed to infuse $385 million in cash into the financially strapped Dodgers. Selig argued that while that money might help pay down some debts, the franchise could be in another financial meltdown by 2013. According to the letter, Selig was shocked that McCourt reported only $264,000 in liquid assets as of Dec. 31, 2010.
"Despite your pledge to make the Dodgers the 'best franchise in baseball,' you are not selling the club's media rights ... to improve the club's on-field performance, renovate Dodger Stadium or enhance the fan experience," Selig wrote, according to the Times.
According to the letter obtained by the Times, Selig also learned that McCourt is being investigated by the IRS, specifically his tax returns from 2006-08. In a divorce filing, Jamie McCourt claimed that the couple did not pay federal or state income tax from 2004-09.
"What is more worrisome to me, however," Selig wrote, according to the Times, "is the thought of one of our owners engaging in a prolonged public dispute with the IRS."
Selig's letter says that McCourt knew that the Fox deal wasn't a good one. According to the Times, Selig cites the divorce testimony of Jeff Ingram, the Dodgers' assistant treasurer. He quoted McCourt as saying in 2009 that the Fox deal would "hamstring the business in the future."
Source: AP
The judge issued his eight-page decision Friday, two days after presiding over a hearing on the competing financing plans.
The team had sought approval of its proposed arrangement with hedge fund Highbridge Capital.
But the league, which has been locked in a bitter dispute with Dodgers owner Frank McCourt, countered with a competing plan that carried better financial terms.
The Dodgers rejected MLB's offer, saying it likely would result in legal battles and was an attempt by baseball commissioner Bud Selig to take control of the team and force a sale.
The decision comes after the Los Angeles Times obtained an 11-page letter in which Selig outlines the reasons that he shot down the Dodgers' proposed television deal with Fox and expresses concerns about an Internal Revenue Service investigation.
One big reason Selig cites for shooting down the TV deal is a lack of competition. The team's current deal with Fox expires in 2013 and the Dodgers cannot negotiate with other suitors until Nov. 30, 2012. Selig said that McCourt was willing to give away bargaining leverage because of a "desperate need for immediate cash."
"No other owner has sacrificed so much of his team's future for an immediate payoff," Selig wrote, according to the paper.
With McCourt and ex-wife Jamie embroiled in an ugly divorce, the Fox deal was supposed to infuse $385 million in cash into the financially strapped Dodgers. Selig argued that while that money might help pay down some debts, the franchise could be in another financial meltdown by 2013. According to the letter, Selig was shocked that McCourt reported only $264,000 in liquid assets as of Dec. 31, 2010.
"Despite your pledge to make the Dodgers the 'best franchise in baseball,' you are not selling the club's media rights ... to improve the club's on-field performance, renovate Dodger Stadium or enhance the fan experience," Selig wrote, according to the Times.
According to the letter obtained by the Times, Selig also learned that McCourt is being investigated by the IRS, specifically his tax returns from 2006-08. In a divorce filing, Jamie McCourt claimed that the couple did not pay federal or state income tax from 2004-09.
"What is more worrisome to me, however," Selig wrote, according to the Times, "is the thought of one of our owners engaging in a prolonged public dispute with the IRS."
Selig's letter says that McCourt knew that the Fox deal wasn't a good one. According to the Times, Selig cites the divorce testimony of Jeff Ingram, the Dodgers' assistant treasurer. He quoted McCourt as saying in 2009 that the Fox deal would "hamstring the business in the future."
Source: AP