Barely a week after sending the Los Angeles Dodgers into bankruptcy, Frank McCourt has commenced with his effort to make baseball open its books. In a motion and supporting papers filed today in the United States Bankruptcy Court for the District of Delaware, McCourt's attorneys lodged requests for a wide range and deep volume of information. Among the Dodgers' requests:
- Pretty much everything to do with Major League Baseball's investigation of Dodgers' operations.
- McCourt is especially concerned with the details behind the MLB-appointed monitor, Tom Schieffer, and even asks about Schieffer's potential interest in acquiring a portion of the Dodgers. Frank's filings also indicate a suspicion about Joe Torre's communications with Major League Baseball concerning Dodgers operations.
- Frank McCourt seeks information regarding baseball's rejection of the Fox deal.
- The Dodgers asked baseball for details of other teams' TV deals. Specifically, McCourt wants to openly compare the proposed Fox deal to those entered into by the Mariners, Rangers, Astros, Mets, and one currently being explored by the Padres. McCourt's goal is to show that the Fox deal was favorable to the Dodgers and that Selig's rejection was motivated primarily by a desire to force Frank McCourt out of baseball.
- The Dodgers also want information about steps taken by baseball to squeeze McCourt financially.
- In addition to denying McCourt the Fox deal, the Dodgers' filing also indicates that MLB cut off the Dodgers from the MLB-offered seasonal line of credit. McCourt also claims that in the weeks leading up to the Dodgers' bankruptcy filing, baseball changed its rules for obtaining debt financing, forcing Frank's hand further. Frank also asked baseball to turn over any documents about MLB's plans to remove McCourt as owner or even terminate the franchise altogether.
- Finally, McCourt also wants baseball to reveal its handling of other teams in periods of financial stress.
- Frank wants to know about baseball's approval of the Rangers' prepackaged bankruptcy, how baseball dealt with the Mets during their recent struggles, and baseball's action (or inaction) concerning other teams in violation of the sport's debt service rules.
McCourt's goal in these information requests is two-fold. First, he wants to begin establishing his claim that he has been treated wrongfully by Bud Selig and the Commissioner's office. Second, he would like to make this process as painful as possible for MLB. Forcing baseball to open its books might be painful, indeed.
For its part, attorneys for Major League Baseball have also filed their own extensive requests for document production. Baseball seeks information primarily on the debtor-in-possession (DIP) financing McCourt arranged to get the club through its bankruptcy. MLB, of course, seeks to persuade the court that the financing is on highly unfavorable terms, and that the interest and fees charged are unfair to the team's creditors.
Baseball also seems to cast doubt upon the McCourt camp's assertion that it went to enough effort to secure affordable financing. Additionally, MLB seeks more detailed information on how the Dodgers are budgeting cash over the next few months.
Fans accustomed to the McCourt divorce's slow trek through court might be surprised at how fast the bankruptcy is unfolding. Indeed, both Frank McCourt and MLB's document production requests call for full responses very soon. The scope of discovery is a fight of its own, but the haste with which the sides are proceeding is indicative of the urgency of the situation. Either Frank McCourt gets a TV deal pushed through, and relatively quickly, or he'll have a hard time preparing an approvable plan to emerge from the bankruptcy.
One of the more interesting developments on the horizon is a liquidation analysis of the five McCourt entities currently in bankruptcy. Prior to gaining approval of any plan, the Dodgers must make a showing of what the creditors would receive if the assets of the five companies were sold at auction. The Dodgers' plan will then be judged by the extent to which it is more beneficial to creditors. It is in this liquidation analysis, at the latest, that McCourt and MLB might first square off on the related-company transactions implicating the Dodger Stadium parking lots and the right to sell non-premium Dodgers tickets.
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Josh, what about the 8/4/11 divorce court date? Is it still the case that if Judge Gordon rules in favor of Jamie, the team will be put for sale? Does that ruling mean anything in bankruptcy court?
ReplyDelete@iknownothing
ReplyDeleteThe 8/4/11 divorce court date was part of a settlement agreement that was contingent on Selig/MLB approving the Fox contract. They did not approve the Fox contract, so that settlement is now null and void, meaning that as of now there will be no court date on that matter in August.
If MLB wants to treat one of their franchises unfairly, they should be allowed to. If the owner of that franchise doesn't like it, they should sell.
ReplyDeleteAnd discovering how the Mets were treated by MLB will not get the Dodger creditors repaid any faster. I thought making sure creditors got their money was the number one priority of the BK court.
This just looks like a big fishing expedition for old Franky.
This is a bankruptcy, not a lawsuit. As much Frank McCourt and his legal team will squeeze some blood and information out of MLB and the Commissioner's office, the Bankruptcy judge primary goal is to find out the best estimate of the Dodgers' debt load, if they have the revenue and assets to pay for it.
ReplyDeleteAs much one should give Frank and his legal team some credit by their ways of going on the attack, they still have to answer some really uncomfortable truths in bankruptcy court in front of the Judge... How much money did Frank and Jamie take out of the club? (both sides in the divorce aren't going to give straight answers but rough ambiguous estimates) How much were they charging the Dodgers for their lifestyle?(like the estimated $800k a year in security) How much of the revenue from the Dodgers that Frank has any control over? (ticket sales, season ticket sales, parking fees, were all put up in hock for loans)
The Bankruptcy court is going to demand some nitty gritty of the Dodgers operations, and unlike Bud Selig and the MLB, Frank and his legal team can't ignore the Judge's orders or his demands.
They may get some legal documents that MLB will not like to be given up, but MLB isn't declaring bankruptcy, nor needs a Judge's help to pay its bills, it is the Dodgers that need help. The Judge isn't the white knight to save Frank's hold on the Dodgers. He also isn't going to tolerate some of Frank's antics, much like MLB is all but certain to take away Frank's control of the Dodgers.
Time for Dodger fans to get involved - by boycotting Dodger Stadium. What better evidence could the judge need regarding McCourt hurting the franchise when only 4-5000 fans show up and 30,00 people who purchased tickets stayed away ? Dodger fans will eat a few tickets but get rid of a man who cares only about bleeding the team and the league of every last penny.....Otherwise, you are simply paying for overpriced tickets to keep Jamie in fresh flowers for the 6 houses, and pay Frank's lawyers.....
ReplyDeleteLet the people buy the Dodgers. . . 100,000 people at $10K per person (200,000 people at $5K per person) is $1 Billion. . . The people own the Packers. . . Time for a new business model for MLB. . . . Get rid of Baseball's anti-trust exemption. . . Time for some true 'capitalism' rather than the 'socialist' monopolistic corporate crony system we have now. . . .
ReplyDelete100% equity. . . No debt sounds nice.
Noel Weiss
Noel; great idea! The Board of Directors will consist of:
ReplyDeleteIvan Kruger
Billy Sol Estes
Tony DeAngelo
Bernie Ebbers
Charles Keating
Bernie Madoff
Mark Rich
Maybe with Murdoch's additional business failings Fox will not be able to afford to bail out Frank ever again.
ReplyDeleteAmen to that! And amen to the Garvey-Hersheiser group buying the Dodgers out of bankruptcy court.
ReplyDeleteI thought that Garvey was one inch away from bankruptcy himself everyday for the last 10 years!
ReplyDeleteMaybe he is not the one bringing the money!
ReplyDeleteHe spend money like McCourt
ReplyDeleteNice work. Thanks for post.
ReplyDeletewhat a great post! i really like it and wanted to say thanks for sharing!
ReplyDelete