Dodgers File Bankruptcy

  • If the JP Morgan Chase DIP financing is approved, then the Dodgers should have the resources to meet their upcoming June 30 payroll. I think all expect that this financing will be quickly approved.
  • Under baseball’s Constitution, Commissioner Selig has the right to seize control of any team that files for bankruptcy. However, Selig’s power here will be trumped (at least for the moment) by the “automatic stay” that is a part of any business bankruptcy. The bankruptcy filing will insure that McCourt gets to run the Dodgers, for a while longer at least. To seize control of the Dodgers, MLB and the other creditors of the Dodgers will have to show fraud or gross mismanagement on the part of McCourt, and making this case will require a substantial amount of legal work (motions, filings, arguments) that would take some time to accomplish.
  • Circled in blue on the chart below are the five Dodger companies that have filed for bankruptcy. These companies own the Dodgers team, and Dodger Stadium. These companies also own the company that controls the Dodgers ticket revenues (circled in green). They do not own the company that owns the Dodgers’ parking lots and the undeveloped land that surrounds Dodger Stadium (circled in red).

From the above chart, we can see one possible McCourt strategy: he may allow the Dodgers team and the Stadium to be sold out of bankruptcy, while holding on to the Dodgers’ parking lots and land for future development.

9 thoughts on “Dodgers File Bankruptcy

  1. In today's world where big business twists and manipulates the tax code as well as the legal system to it's advantage on a daily basis there is no surprise here…not for me.

    Now it is up to Bud Selig to attempt to stand up and do what is best for baseball and the second most storied franchise. He can save "dem Bums" and create a legacy where we can all forget previous errors and cement one which will endear him to not only Dodger fans but all true fans of the game.

    • Given Bud's track record, he will do something, but I doubt it will endear him to many.

  2. Nice article as usual Larry. Love the chapter 11 jersey. Is it true that Mark Cuban wants to buy the dodgers? not a bad idea, look where he has got the mavs franchise to.

    • If Cuban bought, LA would erect a statue of him in front of the Hollywood sign. But he's called the Dodgers' situation a "mess". Besides, Selig confidante Jerry Reinsdorf hates Cuban. He's probably not getting into the MLB owners' "club".

      • Cuban can be kept out only so long as there's another offer just as good as his. After this situation, I don't really think the rest of baseball's owners would be too thrilled if Selig wanted to take an inferior deal just to keep Cuban out of the club. Plus, everyone but Selig thinks Reisndorf is a pain.

  3. Hey, Larry. This is a different topic, but still one dear to your heart: did you see that Nationals erstwhile manager Jim Riggleman explained his strange decision to quit his job last week by saying he felt he was on a "short leash" with upper management? Oh no, not the short leash again! Having illuminated so brilliantly, as you did several months ago, what it means for a pitcher to be on a short leash, you are just the man to delve into the horrors of what it must mean for a manager. Whatever it is, it must be very unpleasant to have led him to pick staying at home in his bathrobe and earning nothing versus a job as a major league manager. Please, Larry, can you shed some light on the darkness???

    • Oh, Jim. "Short leashes" at a time like this? That's not just arranging deck chairs on the Titanic, that's stopping to rest on the deck chairs for a game of backgammon.

  4. One thing I heard on the Baseball Today podcast, which I don't know if this has been covered anywhere, is there any information about how McCourt was vetted? How did he pass the Selig interview?

    • I discuss this question a bit in my latest Q&A. Please read, then comment!