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Tuesday, May 10, 2011

MLB "Looking Hard" At Bankruptcy? That's The Plan!

I find it amusing when I read things like Bill Shaikin's article today in which MLB is said to be "looking hard" at a possible descent into bankruptcy by the Dodgers as a means for Frank to retain control, however briefly, of the Dodgers. The tell is this graf:
The embattled owner would almost certainly face opposition in bankruptcy court from the league, which could use a "voluntary termination" clause as empowered by the MLB constitution to revoke a franchise upon a bankruptcy filing.

Also, Jamie McCourt would argue that ex-husband Frank has no right to take the team into bankruptcy without her approval, since she claims half-ownership of the team, according to a person familiar with her thinking but not authorized to discuss it publicly.

It has always been my position that the league (okay, in this case, "league" = "MLB") is going to force the Dodgers through bankruptcy proceedings by preventing the Fox money from rescuing Frank. (Such a rescue that would be temporary at best even if it proceeded — he and Jamie can spend a lot, and faster than the Dodgers can earn the revenue to support it.) The trigger will be unmet player salaries, the whole colossal edifice with all its myriad operating entities will get decapitated and dismembered, and Frank will be on a flight to Boston, or in irons to Leavenworth. I am not worried about bankruptcy — I embrace it. The one real hazard, though, is this:
"If I were McCourt, I'd take a shot at getting the court to approve the [Fox TV] contract," said Rob Kampfner, another attorney at White and Case.

However, the large banks that are the Dodgers' primary creditors might not authorize whatever reorganization plan McCourt might put forth, Kampfner said, in the interest of preserving business opportunities with other teams and with the league.

"If the creditors were completely supportive of Mr. McCourt, he would be in a pretty strong position," Kampfner said. "But they're probably inclined to see their portfolio in a much larger sense than people that sell pencils to the Dodgers."

I have to think the banks aren't too happy to see the internal machinations of the McCourt companies, though they might be better aware of them than we know, given the sums involved. Still, I'm optimistic that McCourt will have to kneel before MLB under the "best interests of baseball" clause, and this coming bankruptcy is prelude to a forced sale that includes all assets of the Dodgers.

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Rob, I totally agree. Most people are freaking out that McCourt has split the parking lot and the stadium into a separate business entity from the Dodgers. Given his debt, he wouldn't be able to hold onto those assets if he wanted to. McCourt is gone period. He needs to have a "Fight Club" moment and let go (think of the lye on the hand scene).

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