So yes, the Dodgers owner Frank McCourt has filed for bankruptcy. What does this mean for the Dodgers and how will MLB react to this?
Franck McCourt will be asking the judge to allow for interim financing to pay immediate bills including the payroll. McCourt has managed to procure a $150 million loan at 10% interest and a hefty fee. Out of this, he will ask the court to approve $60 million. What the MLB can do is to provide alternative financing at terms that are favorable. If the judge feels that the terms proposed by MLB are favorable for the creditors, McCourt will lose control of the team.
Commissioner Bud Selig has the right to revoke the ownership if the owner files for bankruptcy. After the bankruptcy judge’s hearing, Selig may take that step which means that McCourt will lose ownership.
The court will try and ensure that the creditors are paid. The MLB says that it is up to them to decide who should own the teams and approve television contract approvals. The main point that McCourt is likely to raise during the hearing is that the reason why the Dodgers is in a spot now is because Selig had not approved a television contract with Fox.
If McCourt persuades the judge to auction the television rights for Dodgers, Fox will either end up opposing MLB because they had not approved the contract in the first place, or lose the contract to someone else.
Had McCourt not filed for bankruptcy now, Selig could have seized control of the team and also sold it. Let us also not forget Jamie McCourt’s contention that she owns half of Dodgers. Will the divorce court decide in her favor about an asset whose ownership is currently in question?
There are many questions for which the answers will be revealed in the coming days.