Bankruptcy filing leaves Los Angeles Dodgers in limbo

By Bob Nightengale, USA TODAY

Frank McCourt's quest to hold onto ownership of the Los Angeles Dodgers took another turn Monday when the team filed for bankruptcy protection in Delaware.

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  By Kevork Djansezian, Getty Images

  Frank McCourt filed for bankruptcy protection in a Delaware court on Monday. Frank McCourt filed for bankruptcy protection in a Delaware court on Monday.

By Kevork Djansezian, Getty Images

Frank McCourt filed for bankruptcy protection in a Delaware court on Monday. Frank McCourt filed for bankruptcy protection in a Delaware court on Monday.

McCourt says Major League Baseball's refusal to approve a new television contract with Fox is interfering with the club's operations and its ability to pay the bills.

But, according to three high-ranking officials with direct knowledge of negotiations, the proposed deal ? worth $3 billion according to McCourt and about $2 billion according to MLB? is no longer on the table. Instead Fox, a national broadcast partner of MLB's, does not want to interfere while legal proceedings are pending. The officials request anonymity because they are not authorized to discuss the proposal publicly.

Under the proposed deal, McCourt would have immediately secured $385 million from Fox, and planned to use $173 million of the upfront cash to settle a divorce agreement with his former wife, Jamie, and pay off creditors.

Among the 40 largest unsecured claims facing the Dodgers, worth about $75 million, include: former Dodgers outfielders Manny Ramirez ($20.9 million) and Andruw Jones ($11.07 million), Hall of Fame broadcaster Vin Scully ($152,778) and draft pick Zach Lee ($3.4 million), according to to the bankruptcy filing.

"We have consistently communicated to Mr. McCourt," Commissioner Bud Selig said in a statement, "that any potential solution to his problems that contemplates mortgaging the future of the Dodgers franchise to the long-term detriment of the club, its loyal fans and the game of baseball, would not be acceptable. ?

2002: Frank McCourt's bid to buy his hometown Boston Red Sox is denied. The Red Sox were instead sold to current owner John Henry.
Jan. 29, 2004: Frank McCourt and his wife, Jamie become the fourth owners in Dodgers history.
Oct. 14, 2009: Frank and Jamie McCourt announce their separation after almost 30 years of marriage.
Oct. 22: Jamie McCourt is fired from her position as Dodgers CEO, one day after the team is eliminated from the playoffs.
Oct. 27: Jamie McCourt files for divorce. In her divorce petition, she asks for ownership of half the team.
Aug. 30, 2010: The McCourt divorce trial begins.
Dec. 7: The judge says the post-nuptial marital property agreement that Frank McCourt claimed gave him sole ownership of the Dodgers is invalid.
March 31, 2011: On opening day at Dodger Stadium, Giants fan Bryan Stow is brutally beaten by two Dodger fans in the parking lot.
April 15: Frank McCourt takes a $30 million loan from FOX to meet payroll on April 15.
April 20: Commissioner Bud Selig announces that MLB would oversee day-to-day operations of the Dodgers.
June 17: Frank and Jamie McCourt reach an agreement on their divorce settlement, which is dependent on whether MLB will approve a 17-year TV contract with Fox.
June 20: MLB rejects the TV deal with Fox..
June 27: Frank McCourt files for bankruptcy protection.
- Courtney Lofgren

"The action taken today by Mr. McCourt does nothing but inflict further harm to this historic franchise."

McCourt's legal action comes three days before he was in danger of missing a June 30 payroll and having the franchise taken over by MLB. According to the bankruptcy filing, he has obtained approval for a $150 million loan from a hedge fund but needs approval from the bankruptcy court today to finalize the deal. MLB will argue that the loan should be ruled invalid, according to two of the officials, because it violates their bylaws of ownership receiving loans from a hedge fund.

McCourt, who said in a statement that Selig "turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves today," said the interim financing would enable him to remain in control of the club through bankruptcy proceedings. It also would buy time, perhaps three or four months, to secure additional financing.

"This appears to be quite a desperate act," said sports attorney Chuck Greenberg, whose group bought the Texas Rangers in bankruptcy court last July. "The Rangers bankruptcy was filed to facilitate the sale of the franchise. The Dodgers' bankruptcy was filed in an apparent attempt to thwart the commencement of a sale process.

"If you study the history of sports franchise owners filing for bankruptcy in hopes of retaining their team, they lose every time."

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