Dodgers Head to Bankruptcy

Dodgers Head into Bankruptcy Process Behind McCourt | Talk: "The Los Angeles Dodgers saga continues to play out as the team continues to play on as best as it can on the field.  The organization filed for Chapter 11 bankruptcy earlier today and a hearing has been set for Tuesday.  By filing for bankruptcy, the Dodgers are hoping to acquire a Chapter 11 finance plan where the team would be permitted to use $150 million for day-to-day operations, giving them more breathing room to look for another media deal that will provide the team with long-term financial stability.

According to a Dodgers news release earlier this morning, “There will be no disruption to the Dodgers’ day-to-day business, the baseball team, or to the Dodger fans.”
Should the judge approve the team’s petition for Chapter 11 protection, it would receive the $150 million in two installments with $60 million to start.  Bankruptcy is often a last resort when it comes to significant financial strain, but according to Bloomberg, the Dodgers had sought financial relief from about seven separate lenders before deciding to go ahead and file a petition.  If the bankruptcy is approved, a New York investment management firm would provide the aforementioned bailout money, but with a 10 percent interest rate attached.

Frank McCourt has held back very little in revealing his opinion on Commissioner Bud Selig’s decision to deny a $3 billion media deal with Fox that would have given him $385 million right away, which he also needed to finalize a divorce settlement with his wife, Jamie McCourt.  Regarding the latest business of his team, he said,

“The Dodgers have delivered time and again since I became owner, and that’s been good for baseball.  We turned the team around financially after years of annual losses before I purchased the team. We invested $150 million in the stadium. We’ve had excellent on-field performance, including playoff appearances four times in seven years.  And we brought the Commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago, when his leadership team called us a ‘model franchise.’ Yet he’s turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today. I simply cannot allow the Commissioner to knowingly and intentionally be in a position to expose the Dodgers to financial risk any longer. It is my hope that the Chapter 11 process will create a fair and constructive environment to get done what we couldn’t achieve with the Commissioner directly.”

No matter how it is written, discussed, or presented, the fact of the matter is that the Dodgers are close to a cash flow abyss and this may be McCourt’s last stand in an attempt to hold onto ownership of his team.  With stadium attendance only continuing to plummet and the team’s play becoming more and more of a harsh reflection of everything that is going on outside of the clubhouse, it does not appear as though the perfect remedy or solution are in sight anywhere nearby, or coming anytime soon."