Dodgers file for bankruptcy
By SPORTS NETWORK
|The Dodgers filed for bankruptcy protection on June 27, 2011, blaming MLB for refusing to approve a TV deal with the Fox Network. (REUTERS/Lucy Nicholson/Files)
LOS ANGELES -- The Los Angeles Dodgers have filed for Chapter 11 bankruptcy protection.
According to a release issued by the team on Monday morning, the Dodgers made the decision "in order to protect the franchise financially and provide a path that will enable the club to consummate a media transaction and capitalize the team."
Last week, Major League Baseball commissioner Bud Selig rejected a proposed deal with Fox that would have paved the way for owner Frank McCourt to resolve numerous financial issues, including the divorce from his wife Jamie. It was a reported $3 billion transaction that would have given Frank McCourt $385 million up front, which he would need to help fulfill the team's payroll obligations come Thursday.
"The Dodgers have delivered time and again since I became owner, and that's been good for baseball," Frank McCourt stated Monday. "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."
Monday's release states that while operating under Chapter 11, the Dodgers have received a commitment for $150 million in Debtor-in-Possession (DIP) financing. This will enable the club to fully meet its obligations going forward and will not disrupt the team's day-to-day business.
In rejecting the Fox deal last week, Selig cited the transaction as being "structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt. Given the magnitude of the transaction, such a diversion of assets would have the effect of mortgaging the future of the franchise to the long-term detriment of the club and its fans."
A few days before last week's decision by Selig, the contentious divorce case between the McCourts was settled in court. The agreement, however, hinged on baseball's acceptance of the Fox deal and is currently void.
Frank McCourt has stated that the divorce agreement, including his wife's consent to the proposed Fox deal and an order from the presiding judge to go ahead with the transaction was the criteria set forth by Major League Baseball to get approval of the Fox contract.
In April, Major League Baseball began investigating the financial situation of the Dodgers and appointed former Texas Rangers president Tom Schieffer as a "monitor" of the club's operations.