LA Dodgers file for bankruptcy in last-ditch attempt to save team
Tuesday 28 June 2011
The tragicomedy that is the Los Angeles Dodgers intensified yesterday as one of US sport's most famous franchises filed for bankruptcy – a last ploy by its heavily indebted owner to keep the team from being taken over entirely by Major League Baseball.
This has been an especially turbulent summer for professional sports in the US, with the National Football League paralysed by a still unresolved four-month lockout, and the National Basketball Association widely expected to face a similar shutdown soon. But as a soap opera, nothing rivals the ruin of the Dodgers.
Trouble had been predicted almost from the moment Frank McCourt, a car-park magnate, acquired it in 2004. But the situation went critical when he and his wife separated and last year embarked on acrimonious divorce proceedings, focused above all on who owned the team, the McCourts' most valuable asset.
Earlier this month, a solution seemed at hand when the feuding ex-couple reached a settlement, on the condition that Major League Baseball approved a 17-year $3bn contract between the Dodgers and Fox television, including $385m up front that would have allowed the team to meet its immediate financial obligations, including salaries and almost $50m of deferred payments owed to former players.
But Major League Baseball, which is already in charge of day-to-day management of the team, vetoed the Fox deal. Not only did the divorce settlement unravel, but Mr McCourt was left with no alternative but to file for bankruptcy protection if he was to prevent the team being taken over completely by the League, whose commissioner Bud Selig has enormous powers in such matters.
The Dodgers owner's reaction was bitter. "We brought the commissioner a media rights deal that would have solved the cash-flow challenge," Mr McCourt said in a statement accompanying the filing. "Yet he's turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today."
Bankruptcy protection will allow the team to continue to operate with $150m of short-term financing, so that players and other employees will continue to be paid. The inherent value of the franchise, on paper one of the richest in baseball, also means that the underlying finances of Dodgers are less dire than they appear. Liabilities were listed at between $100m and $500m, but assets are at between $500m and $1bn.
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