Monday, June 27, 2011

Fox News: Los Angeles Dodgers file for bankruptcy protection

According to Fox News, the Los Angeles Dodgers have filed for bankruptcy protection.

The Dodgers are filing for Chapter 11 bankruptcy protection to keep the team out of the hands of Major League Baseball. Frank McCourt, owner of the Dodgers, will ask the bankruptcy court to approve a media rights deal that he believes will save his team from its liquidity crisis. The team's assets still outweigh their liabilities, but the team doesn't have enough money to meet the June 30 payroll. According to the filing, the Dodgers assets are at $500 million to $1 billion, and lists its estimated liabilities at $0 to $50,000.

The team doesn't have enough money to make payroll on June 30.

If McCourt sued Selig for turning down the Fox deal, the lawsuit would have allowed Selig to seize the team, and that's something McCourt wants to avoid at all costs. Bankruptcy seemed like the team's only real option.

Bankruptcy protection will provide the Dodgers with a process to address its immediate financing requirements and obtain the capital necessary to ensure the baseball franchise's long-term financial stability, the team said.

Some good Wall Street Journal articles to read on the topic: Baseball's Dodger Deal Strikes Out and Dodgers Owner Files for Team Bankruptcy.

Last week, MLB rejected a proposed 17-year, $2.7 billion deal between McCourt and Fox because McCourt planned to use about $150 million from the agreement for personal reasons, namely to settle a divorce from his former wife, Jamie and to pay off outstanding debts. MLB wasn't happy over what it saw as a pattern of doing this on the part of McCourt.

The list of creditors in the filing include former Dodger Manny Ramirez (owed $20,992,086), Andrew Jones (owed $11,075,000), Matt Kemp (owed $216,944) and Vince Scully (owed $152,778).

To read the filing, click here. Here's a snapshot of filing:

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