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Dodgers file for bankruptcy
Missing payroll was a possibility
LOS ANGELES — The Los Angeles Dodgers filed for bankruptcy protection in a Delaware court Monday, blaming Major League Baseball for refusing to approve a multibillion-dollar TV deal that owner Frank McCourt was counting on to keep the troubled team afloat.
The Chapter 11 financing permits the Dodgers to use $150 million for daily operations and buys time for the team to seek a media deal and ensure the team’s long-term financial stability, the Dodgers said in a news release. A judge would need to approve use of the money and a hearing is set for Tuesday.
“There will be no disruption to the Dodgers day-to-day business, the baseball team, or to the Dodger fans,” the statement said.
If approved by a judge, the financing would come in two chunks from a New York investment management company - $60 million up front with the remainder being paid at a later date. A phone message left with Highbridge Principal Strategies was not immediately returned.
Baseball commissioner Bud Selig announced last week that he wouldn’t approve a Dodgers television deal with Fox Sports that reportedly was worth up to $3 billion. That left McCourt cash-starved and facing the prospect of missing the team payroll this Thursday, leading to an MLB takeover.
Among the 40 largest unsecured claims, totaling about $75 million, listed in the bankruptcy filing are former Dodgers slugger Manny Ramirez at nearly $21 million; Andruw Jones at $11 million; pitcher Hiroki Kuroda at $4.4 million; and the Chicago White Sox at $3.5 million. Longtime Dodger announcer Vin Scully is owed more than $150,000 as part of his contract, court documents show.
According to the bankruptcy filing, the Dodgers began experiencing “cash flow difficulties” last year due to declining attendance, paying about $22 million in deferred compensation and revenue sharing.
McCourt has taken out loans to stay afloat but his mounting financial problems were expected to balloon June 30, when he owed roughly $30 million to meet payroll. The bankruptcy filing also showed a $67 million loan taken out against the parking lots at Dodger Stadium was set to mature Thursday.
The team’s vice chairman, Jeffrey Ingram, said in court documents that the Dodgers are “on the verge of running out of cash, the result of a perfect storm of events.”
“He’s clearly running very low on options right now,” said David Carter, executive director of USC Sports Business Institute. “What seems to be the case is a high-stakes chess game between Frank McCourt and MLB, and he’s running out of pieces. This is one of the uglier weeks in Dodger history.”
By John R. Bolton
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