LA Dodgers Seek New TV Rights Deal to Salvage Franchise’s Finances after Bankruptcy
June 28, 2011
Major League Baseball’s (MLB) Los Angeles Dodgers, who have been driven into bankruptcy by what the teaam called “a perfect storm,” is to seek court permission to draw on a US$150m loan in a bid to salvage its finances.
According to court documents, the Dodgers have a US$150m financing commitment to support operations while trying to complete a television-rights deal.
MLB Commissioner, Bud Selig, last week rejected a proposed deal with News Corp’s Fox Sports, leaving the Dodgers unable to pay its staff. Frank McCourt, the owner of the franchise, said the 17-year agreement, valued by him at about US$3bn, would have assured the financial stability of the Dodgers.
William Snyder a managing partner at CRG Partners Group LLC and former chief restructuring officer for the American League’s Texas Rangers, said: “He has to get financing in place and according to the financing immediately enter into an arrangement to sell the media rights and get that done in the next six months.”
At the court hearing, the Dodgers are set to ask U.S. Bankruptcy Judge Kevin Gross for permission to borrow US$60m on an interim basis. The financing is provided by JPMorgan Chase & Co.’s Highbridge Capital Management LLC.
The Dodgers said in court papers: “The team is now on the verge of running out of cash, the result of a perfect storm of events.”
McCourt claimed that the bankruptcy was triggered by Selig’s refusal to approve the deal with Fox.
He said: “He’s turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today.”
Selig, in response, said the bankruptcy “does nothing but inflict further harm to this historic franchise.
“We have consistently communicated to Mr McCourt 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.”
The team is the third most valuable baseball team, with its worth stated at about US$800m.
The Dodgers aim to agree a sale of the TV rights while in bankruptcy, the team said in court papers. The Fox Sports agreement included a US$385m loan, of which US$211.5m was to go toward the team’s operations and working capital.
Earlier this year, McCourt obtained a US$30m personal loan from Fox Sports and used US$23.5m of it to fund the Dodgers’ payroll and other expenses.
The team’s bankruptcy attorney, Bruce Bennett, said that the team is “very substantially solvent” given the value of the rejected Fox Sports contract. He added that the aim of the Dodgers’ bankruptcy is to buy time to negotiate a new TV rights contract and use the money to exit court protection.
Snyder, who acted as chief restructuring officer during the Rangers bankruptcy, predicted McCourt will be successful in selling the TV rights.
He concluded: “He is taking a good approach in auctioning the rights so no one can point a finger.”