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Friday, July 22, 2011

McCourt Must Use MLB DIP Financing, But MLB Can't Take Over Dodgers

Steve Dilbeck writes that McCourt lost this round in court (ditto Craig Calcaterra), but it's hard to look at the decision that keeps any MLB loan separate from MLB oversight as a clear win for Bud Selig. Nonetheless, there are a lot of positive signs here, including the devastating finding
McCourt and his attorneys had argued that, as the debtors, the Dodgers were entitled to use their business judgment to pick the loan they preferred. That is a standard under bankruptcy law, but Gross ruled that McCourt forfeited that priority by failing to disclose he would have personally owed his lender $5.25 million by not seeking court approval of the loan.
The full letter from the commissioner to McCourt denying the Fox TV deal is a hammer blow, Bud Selig swinging for the fences, and frequently connecting. It contains some doozies: Lots more in the letter, which is juicy and delightful.

Update: Here's the judge's ruling from today's hearing. Round 2 will be about Bud v. Frank, which will be, in my estimation, the main event.

Update 2: As expected, McCourt's camp is publicly upbeat since they weren't thrown to the curb or laughed out of court, and most importantly, MLB can't reinstall a monitor in Frank's scheming.

Update 3: Josh Fisher at ESPN:

Under the terms of the existing television deal, the Dodgers cannot begin negotiating with anyone other than Fox until late 2012. That has led baseball to express concerns about the desirability of extensions of the Fox deal thus far proposed by McCourt. However, because of the club's bankruptcy, it may have the option to walk away from the Fox contract and sell the Dodgers' television rights competitively.

MLB will likely oppose such treatment of an important strategic partner. While today's ruling signals Gross' willingness to curtail baseball's policies to the extent necessary to achieve bankruptcy's purposes, he may not be as willing to entertain a move with potential negative impact across the game. Make no mistake, the fight over the Dodgers' ability to sell their TV rights will be as bitter and acrimonious as any thus far. The outcome will determine how much longer the Dodgers remain under McCourt ownership.

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I think back to the early days when McCourt took over, those very first days and you suspected this guy more then anyone. I'm not sure if anyone on DT or elsewhere remembers, but you knew it first. (I think)
Certainly, the signs were there for people willing to read what was happening in the Times. And I confess, I was willing to cut Frank a break after he added a few division titles to the team's hardware case. But the divorce undid all of that, revealing how the McCourts were bleeding the Dodgers white to support their extravagant lifestyle.

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