Thursday, July 14, 2011
MLB protests Dodgers' bankruptcy plan
DOVER, Del. -- Major League Baseball renewed its objections to the Los Angeles Dodgers' proposed bankruptcy financing, telling a federal court the commissioner's office was offering $150 million in loans at far more favorable terms.
In a filing made Thursday and a sworn statement submitted by MLB executive vice president John McHale Jr., baseball said that unlike the financing offered by the Dodgers with the hedge fund Highbridge Capital, baseball would not require any liens on the Dodgers' assets.
In addition, baseball said its loan would be for 7 percent interest, down from Highbridge's minimum 10 percent, saving the Dodgers $4.5 million over a year. Baseball also would reduce the approximately $9.75 million in fees that are part of the Highbridge deal, and the loan also would run through Nov. 30, 2012, after the end of Fox's exclusive negotiating period for the team's next television contract.
Baseball was highly critical of Dodgers owner Frank McCourt, saying the loan with Highbridge would violate the team's agreements with MLB and asserting he was responsible for "gross mismanagement."
"Mr. McCourt has not allowed these bankruptcy cases to change his practice of using the debtors as his personal piggy-bank," baseball's lawyers wrote, adding that it may be necessary for the court to appoint a trustee or examiner.
A hearing before U.S. Bankruptcy Judge Kevin Gross is scheduled for Wednesday. On June 28, the day after the team filed for bankruptcy protection, Gross approved $60 million in interim financing pending next week's hearing.
The Dodgers "cannot satisfy their burden of proving that the terms of the Highbridge ... facility are fair and reasonable and that no better financing alternatives are available," MLB's lawyers wrote in a 39-page objection. Baseball claimed the team had "explicitly refused to engage in negotiations" and that "Mr. McCourt has significant conflicts of interest." It said his proposed 17-year media deal with Fox "represented yet another attempt by Mr. McCourt to divert the assets of the Dodgers for his own personal benefit."
Baseball also said that since the Dodgers filed for bankruptcy on June 27, the team has taken the position that Tom Schieffer, appointed by commissioner Bud Selig in April to monitor the team's finances, no longer has any authority.
The Dodgers claim that MLB's financing would get Selig and his aides too much control over the franchise. MLB said it had made alterations to its proposal addressing that concern.