August 30, 2011 / 4:45 PM / 8 years ago

Analysis: McCourt's long-shot odds to hang on to Dodgers

WILMINGTON, Delaware (Reuters) - Frank McCourt’s decision to put the Los Angeles Dodgers baseball team in bankruptcy is a bit like a knuckleball: if conditions are perfect, it could be a wild way to stay in the game.

The parking lot tycoon and Dodgers owner could defy conventional wisdom and hang on to the team when it comes out of bankruptcy, even as Major League Baseball and its commissioner Bud Selig are trying hard to get rid of him.

They accuse McCourt of siphoning $100 million from the team to finance a lavish lifestyle while the team struggled to meet payroll.

Fans have become infuriated with McCourt, whose tabloid divorce battle with Jamie McCourt for control of the team has coincided with a dismal on-field performance.

As the bankruptcy moves to a more contentious phase, McCourt has a few things in his favor, including a potentially rich media deal for Dodgers broadcasts and the arcane procedures of Chapter 11. That has led some bankruptcy experts to predict that McCourt could hang on to his team, though plenty of others say they think it is unlikely.

“People who are saying he’ll lose the team because he’s in bankruptcy — that’s nonsense,” said Thomas Salerno, a Squire Sanders & Dempsey attorney who represented the Phoenix Coyotes in their bankruptcy battle with the National Hockey League.

The Dodgers filed for bankruptcy in June just days after Selig rejected the $3 billion media rights deal that the cash-strapped team had struck with a division of Fox Sports.

The league wanted the team to put off selling the rights until Fox’s exclusive negotiating period had expired after the 2012 season. Thanks to bankruptcy, the Dodgers could meet the league’s demand by soon breaking the current contract with Fox and open the bidding to all comers.

Fox, a unit of News Corp, would likely bid against Time Warner Cable at a time when regional sports networks are driving the value of media rights into the stratosphere.

Time Warner outbid Fox earlier this year for rights to Los Angeles Lakers basketball games, which could pressure Fox to spend big to retain the Dodgers. The competitive bidding should bring piles of money that McCourt can use to resolve disputes with his ex-wife and the league.

Both Fox and Time Warner Cable declined to comment, as did the league. The Dodgers declined to comment beyond saying their goal is to maximize the value of the bankruptcy estate. A McCourt spokesman did not return calls for comment.


In a sport known for notorious owners such as the late George Steinbrenner of the New York Yankees, McCourt quickly has become one of the most unloved owners in history.

After several attempts at buying sports teams, McCourt took over the Dodgers in a debt-financed deal in 2004. His wife, Jamie, became the team’s chief executive.

Things came apart with the couple’s 2009 split. Their messy divorce dominated the sports pages and tarnished a team revered for barrier-breaking stars such as Jackie Robinson and Sandy Koufax.

One of baseball’s most storied franchises, the Dodgers have been around in one form or another since 1884. The team has appeared in 18 World Series over the years and helped pioneer West Coast baseball by moving to Los Angeles from Brooklyn after the 1957 season.

The high-profile McCourt divorce also exposed a lavish lifestyle the league said was funded with redirected team revenues. While rivals threw big contracts at top talent, the McCourts used team money to collect multimillion-dollar California homes.

This year, attendance has tumbled, fans moan about the stadium’s lifeless atmosphere and T-shirts proclaiming “Frankrupt” in the team’s distinctive script are hot-sellers.


Most watchers of the bankruptcy expect Major League Baseball to refuse to approve any media rights deal as a way to get rid of McCourt.

“Selig’s best hope is to stymie (McCourt’s) plans to reorganize and force an auction of the team and get someone in who is acceptable to the closed shop that is the MLB,” said Anthony Sabino, a law professor at St. John’s University.

But in bankruptcy, Selig cannot simply reject the media rights deal, as he did in June. Now, he will have to prove he is acting in a commercially reasonable manner, Salerno said.

He called it McCourt’s “big hammer.”

McCourt’s lawyers already have indicated they plan to demand sensitive documents and potentially embarrassing testimony from other teams to prove the commissioner is discriminating against the Dodgers.

“If the judge were to allow that discovery, then I think it would be a strong bargaining chip in Frank McCourt’s favor,” said Andrew Zimbalist, a sports economist at Smith College.

Of course, there are plenty of risks for McCourt.

It is unclear what role Jamie McCourt, who claims half the team, will play. The bankruptcy judge may reject plans for a media rights auction, or limit the team’s ability to demand information from others.

If McCourt still owns the team after bankruptcy, his troubles will not be over. He will again fall under the iron fist of the league, and courts have upheld baseball rules that prevent owners from suing the commissioner.

Whatever happens, McCourt seems unlikely to walk away quietly. He could throw a classic knuckler, a highly erratic pitch that could upend the game.

“Owning a team is like owning a toy,” said Michael McCann, director of the Sports Law Institute at Vermont Law School. “He doesn’t want to be kicked out. There’s a pride factor. It’s hard to attach a dollar value to it.”

The case is In re: Los Angeles Dodgers LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12010.

Reporting by Tom Hals; additional reporting by Caroline Humer in New York, editing by Matthew Lewis

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