* Team says MLB loan grants league too much control
* League presses case for its cheaper financing
* Ruling may come as soon as Wednesday
By Tom Hals
WILMINGTON, Del., July 20 The Los Angeles
Dodgers fought on Wednesday to keep control of their finances
while in bankruptcy, arguing Major League Baseball's offer to
provide a $150 million loan was a "deal with the devil."
The Dodgers want to borrow the money from a hedge fund and
told a Delaware Bankruptcy Court that the league wants to use
its cheaper loan as a way to strip the team from owner Frank
The league's proposal would give MLB "absurd" rights to
reject deals by the team, even if the transaction led to the
full payment of the loan, Dodgers' lawyer Bruce Bennett said at
the start of the hearing.
"It's inconceivable I could agree to this," he said.
The Dodgers filed for bankruptcy on June 27 in a dramatic
bid to prevent the league from seizing the team. Days earlier
the league had rejected a $3 billion television deal that would
have put it on solid financial footing.
The case is a tug-of-war between which laws to apply -- the
rules of MLB or bankruptcy. In addition, Dodgers' owner McCourt
is waging a simultaneous battle for ownership of the team in
divorce court with ex-wife Jamie.
The team has suffered a drop in attendance and needs to
borrow the money to pay players and staff until it can strike a
cable TV deal that would provide needed cash. It has proposed
borrowing the money from Highbridge Capital Management, a hedge
fund unit of JPMorgan Chase & Co (JPM.N).
MLB has offered up its own proposed loan, and during
hearing the league's lawyer offered to delete or rewrite
portions of its credit agreement that the team opposed.
Judge Kevin Gross characterized the dispute with equine
metaphors. To him, the league saw the team as looking a gift
horse in the mouth, and the Dodgers viewed the league loan as a
Trojan horse tactic to seize control.
Gross may rule Wednesday evening, when the hearing is
expected to finish.
The MLB would not retreat from one central point -- that
the team must abide by all league rules which McCourt agreed to
when he bought the team in 2004.
"The Dodgers don't get four strikes where opponents get
three," said league lawyer Tom Lauria.
Lauria emphasized that decisions over TV rights or other
large transactions required approval of the league's
commissioner, Bud Selig.
The Dodgers, he argued, owe their value and very existence
to their contract with MLB and bankruptcy requires them to
accept or reject that contract, but not rewrite it.
Bennett countered that the league is looking to shred the
rules of bankruptcy and "hobble" the power of the judge.
While bankrupt companies generally pick from competing
financing loans in Chapter 11, it is almost unheard of for a
company to ask a judge to reject a proposal that offers better
The Highbridge loan proposed an interest rate of 9 percent,
which was lowered from 10 percent during the hearing, while
MLB's loan was set at 7 percent.
The league argued that its loan would save the team as much
as $14 million. The team said the league did not account for
the cost of potential disputes that will likely arise from
being forced a loan from an adversary.
The team will soon present its plans to auction its cable
TV rights, which Dodgers attorney Bennett said he expected
would prompt resistance from the league.
Bennett also said the team might sue the league over its
refusal to allow the Dodgers to participate in league-wide
revenues in the months leading up to the bankruptcy.
The bankruptcy case is In re: Los Angeles Dodgers LLC, U.S.
Bankruptcy Court, District of Delaware, No. 11-12010.
(Reporting by Tom Hals; Editing by Ted Kerr)