Categorized | Mark Timmons

Get Ready For Round Two

Although it ultimately may not mean a lot, Frank McCourt won Round One yesterday.  Some fans have had difficulty is accepting that Frank McCourt had won anything, so I will print what ESPN.com had this to say about that heavyweight

Photo from TMZ

round, with RED highlights about the win:

The owner of the Los Angeles Dodgers won a reprieve in bankruptcy court Tuesday to maintain day-to-day operations, while Major League Baseball considered seizing control of the cash-strapped ballclub.

A person familiar with the league’s plans told The Associated Press that MLB “probably” will file a motion to seize the Dodgers, which has been operating under the oversight of a monitor appointed by league commissioner Bud Selig in April. The person spoke on condition of anonymity because of the sensitive nature of the situation.

Baseball’s constitution allows Selig to take control of a team that seeks Chapter 11 protection, but the league first must file a motion seeking termination of the franchise.

It’s unclear when that motion would be filed, but Judge Kevin Gross asked attorneys representing Selig for a copy of the league’s constitution, noting that it “has an impact here.”

Dodgers owner Frank McCourt is squaring off in bankruptcy court against the league in a contentious battle over one of the most storied — and lucrative — franchises in baseball. The ownership fight is linked in part to McCourt’s divorce from his wife and former team CEO Jamie McCourt, who is also claiming half his assets.

The Dodgers have blamed their bankruptcy filing on Selig’s refusal to approve a multibillion-dollar TV deal with Fox that McCourt was counting on to keep the franchise afloat.

On Tuesday, McCourt gained approval from Gross to enter into a $150 million bankruptcy financing arrangement to keep the team running.

Gross granted the Dodgers’ request for debtor-in-possession financing after attorneys for both sides huddled behind closed doors for more than an hour, emerging with an agreement to make two modifications to the proposed agreement with hedge fund Highbridge Capital.

One of the modifications reduces the exit fee that would be due to Highbridge from $4.5 million to $250,000. The other removes certain milestones in the financing agreement regarding the sale of the team’s broadcast rights. Those milestones included weekly updates on the team’s effort to license its broadcast rights, and a July 29 deadline to agree on a process calling for bankruptcy court approval of a sale within six months of Monday’s bankruptcy filing, and a closing within 45 days of the court order.

Earlier Tuesday, the league filed an objection to the financing proposal, accusing McCourt of siphoning off more than $100 million in club revenue and driving the Dodgers into a liquidity crisis, also citing his lavish lifestyle with his ex-wife.

The league argued that its own financing offer was superior because it eliminated the $4.5 million exit fee, reduced the interest rate by 3 percent, did not require the team to encumber assets, and did not impose an artificial timeline for disposing of the broadcast rights.

The MLB attorneys argued that McCourt’s financing proposal should be rejected because it compels the team to sell the future broadcast rights to meet current expenses and to provide money for his personal use.

In court papers, the Dodgers argued that the league’s objection to the team’s financing proposal revealed Selig’s “overarching desire” to exert a “stranglehold” on the team.

Attorneys for the Dodgers said the league’s proposal would have given Selig sole discretion over the team’s budget, required the team to pay all the league’s legal fees and expenses not just as a lender, but as an adversary in the bankruptcy case, and allowed for a loan default for any violation of MLB rules and regulations.

“The commissioner’s financing proposal is nothing other than a thinly veiled effort to take total control over the debtors and these cases,” team attorneys wrote, adding that it is no secret that Selig wants a change of ownership.

“The commissioner’s efforts seem to be driven by a personal animosity towards Mr. McCourt that unbiased observers have recognized as being ‘unprecedented,’ ” they added, citing media reports. “The debtors have no obligation to accept financing from such a determined adversary.”

While agreeing to the interim financing, both sides reserved their rights to argue all issues surrounding the bankruptcy filing, including the possibility that the league might seek to have the case dismissed, and whether former Texas Rangers president Thomas Schieffer should remain as monitor of the Dodgers. Schieffer was appointed to monitor the team on Selig’s behalf after the commissioner took the extraordinary step in April of assuming control of the troubled franchise, saying he was concerned about the team’s finances and how the Dodgers are being run.

“I recognize that there is a lot ahead of us,” Gross said before adjourning.

In addition to issuing the interim financing order, Gross granted several routine motions that will allow the team to continue operations, authorized the Dodgers to continue paying vendors, utility providers and employees, and to keep up with tax and insurance obligations.

The granting of such motions is routine in first-day hearings in bankruptcy court, but Gross noted that the baseball club’s case is unique in some aspects.

“I haven’t seen a wage motion quite like this one,” the judge said, referring to the team’s 44-page motion to continue paying hundreds of full-time and part-time employees, including about 250 players, most of whom are in the minor league ranks.

Gross also granted the team’s request to honor payments it is required to make under collective bargaining agreements.

“The seamless, uninterrupted operation of the team is vital,” said Richard Seltzer, an attorney for the Major League Baseball Players Association.

Thomas Lauria, an attorney representing Selig’s office, disagreed with Dodgers attorney Bruce Bennett that the league and the team were adversaries, saying the league views the Dodgers as one of its “cherished crown jewels” and an “essential component.”

Lauria did suggest, however, that the league was at loggerheads with McCourt, whom he blamed for “today’s sorry mess.”

In addition to battling the league for control of the team, the Dodgers face a challenge from Jamie McCourt over half of her former husband’s ownership assets.

“Jamie McCourt is a presumptive owner of 50 percent of assets,” said Laura Davis Jones, an attorney representing her in the bankruptcy case.

Filings in the McCourts’ divorce case revealed a lifestyle of excess, extreme even by the standards of LA’s super-rich: multiple lavish homes, private security, country club memberships, even a six-figure hair stylist for the couple.

The Dodgers’ bankruptcy filing lists assets of up to $1 billion and debts up to $500 million.

Among the 40 largest unsecured claims, totaling about $75 million, 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, which share a spring training facility with the Dodgers in Arizona, at $3.5 million.

The win could be short-lived as Jamie McCourt will almost certainly try to “stick it to Frank” again and MLB will undoubtedly try and take over the team as well as again try and block the financing.

We are in Round Two.

Who will win this round?

I hope this fight ends with a knockout.

Someone needs to throw a haymaker and end it – NOW!

Now back to your regularly scheduled programming…

 

About Mark Timmons

When you see the invisible, you can do the impossible!

10 Responses to “Get Ready For Round Two”

  1. Badger says:

    Well, the red highlights are a nice touch Mark.

    From AP:

    Los Angeles Dodgers owner Frank McCourt may have won the first round in a bankruptcy court fight with Major League Baseball, however the two sides are gearing up for what could be a protracted battle for control of one of the most storied teams in baseball.

    A Delaware judge on Tuesday gave interim approval to a $150 million bankruptcy financing arrangement sought by McCourt to keep the cash-strapped ballclub operating, but not before the league squeezed concessions on the loan terms and questioned whether McCourt should retain control during the Chapter 11 case.

    While the Dodgers’ blame their liquidity crisis on Commissioner Bud Selig’s refusal to approve a broadcast rights agreement with Fox Sports, the league says the problems meeting payroll stem from McCourt’s financial mismanagement, his use of team assets for his personal benefit, and “the resulting decline in attendance caused by the community’s extraordinary unhappiness with the club’s owner.”

    “For now, however, the two sides are content to keep the lights on, the players paid and the fans in the seats, pending a July 20 hearing on the financing.”

    http://hosted2.ap.org/APDEFAULT/*/Article_2011-06-29-BBN-Dodgers-Bankruptcy/id-9525dcca2fda46399247a526e024f962

    OK, MLB hasn’t moved to seize the team yet. It is because they don’t know yet who owns the team. Jamie is still looming in the weeds and she has California Community Property Law on her side. MLB knows that. So, for the time being, enough money, in the form of more debt, was granted to McBusted. I don’t view going further in the hole, with dwindling attendance and increasing demands for change of ownership as a victory for anybody. It is testimony to what a sad chapter of MLB history the McCourt era has become, and will continue to be.

    Yes, McLitigate is proving to be a handful in court. We all knew this about him. But, this case involves much more than just legal maneuverings. This is about the integrity of our National Pastime.

    McCourt will eventually lose. Everyone must believe this. If this roach is allowed to stay, the Los Angeles Dodgers brand is ruined and MLB will have a black eye for years. It can’t happen. It WON’T happen.

  2. Badger says:

    Oh, one more thing…….

    read the 9:22 post on this site:

    http://www.dodgerdivorce.com/2011/06/first-days-motions.html#comments

    This comes from a guy who obviously knows a bit about law.

    Both sides won something yesterday.

  3. garduno says:

    A few things to consider….

    1. Why would Kemp, Eithier, Kershaw stay?
    2. What agent would advise them to do so?
    3. What hot draft pick would sign with the Dodgers when they could play college ball and re-enter the draft next year?
    4. What veteran would waive a no trade clause to go to the Dodgers
    5. What good baseball people would work in scouting, front office for the Dodgers
    6. Which ones are currently with the team???
    7. Who would purchase the team from MLB knowing that McCourt will file savage litigation
    8. The team was valued by Forbes at $721mil last year. Thanks to yesterday’s loan approval we are at $775 mil on debt. Who is going to buy us for that kind of dough??
    9. If you thought attendance was down last weekend (before we filed BK and took on a $150mil subprime loan), wait until the next homestand! Revenues are down and debt just went up.

    I think yesterdays loan approval has just gauranteed a decade of irrelavance….perhaps a generation.

    I can’t beleive MLB did not mention the 2006 foreclosure by Fox on McCourts PURCHASE loan! Clearly, this would prove McCourts financial situation has been a house of cards from the beginning and would render his argument than Seligs refusal of a TV contract this spring has anything to do with the current financial status of the team.

    MLB should have seized the team upon foreclosure of the Purchase loan back in 2006!

    • Mark_Timmons says:

      Garduno,

      The foreclosure was an \”agreed upon foreclosure\” and FOX actually sold the property for more than was owed on it. While technically a foreclosure, it really wasn\’t that.

      • garduno says:

        Mark-

        The fact that the foreclosre was agreed upon does nothing to discount the fact that McCourt was not liquid back in 2006. It is entirely relevant to counter the implication that Selig’s blockade on the TV contract this spring is anyway related to Mccourts liquidity issues.

        • Mark Timmons says:

          But Bug knew that, which is why he got the franchise. Same as Ricketts. Bug doesn’t want another Yankees Franchise. He wants someone whose pockets aren’t deep, especially not Cuban.

          • garduno says:

            Mark, I agree with you on Bud’s initial reasoning for allowing Mccourt in and kicking the can down the road. However, at this point I think it is abundantly clear that Bud wants him gone now. The issue of Mccourts longstanding liquidity issues should be raised so as to diminish his defense.

            In my perfect world, Mccourt goes tomorrow, and Selig the following day.

            There is also a fundamental flaw (several in fact) with Bud’s thinking in terms of how much $$$ is necesary to run a big market club like the Dodgers. This ain’t Omaha, either you have some seriously deep pockets, or the franchise will fall flat on it’s face.

            Again, I am rooting for Bud in every way at this point…. To me, he is Stalin circa 1944….spring of 1944.

  4. Bobbie17 says:

    Are there any prospective ownership groups able/willing to bid for the team?
    The only way out will be a sale, but to whom? May MLB be a purchaser? There
    will be a high price. Post comments.

  5. Badger says:

    As I posted on the other thread, this situation is of Bug’s own making, and the seating of an underfunded owner of a flagship franchise was a calculated move. It backfired.

    So now, the only people qualified to rescue this sinking ship won’t be allowed to do so because of narrow minded owners and a regressive Commissioner.

    Somebody like Mark Cuban IS the answer. He doesn’t care about debt, he cares about winning. He KNOWS that winning solves ALL PROBLEMS! Again, the problem is not finding the right owner, he is right in front of us. The problem is, the right owner would have to be allowed to do it HIS WAY and there will be no independents in the Boy’s Club that is MLB. The right owner would need the autonomy to get this sinking ship back up and operating properly. And you know the idiots that are ML owners will not allow any free thinking rogue billionaires into their club. The small market teams just can’t see the forest for the trees! The Yankees model is the one to look at. That franchise’s wealth floats all the boats in the league.

    garduno is asking all the right questions, and his conclusions are sound.

    This mess may not be solved by Bud Selig. There needs to be a Commissioner in place that does not think like a small market owner – which Bud Selig was before he stepped into the office. This mess needs somebody with vision and the courage to do what’s right. And what is right is a Mark Cuban in the drivers seat.

  6. Badger says:

    More of the same:

    “Fox, myself and MLB made a horrible mistake in not doing the proper due diligence on Frank McCourt,” Bob Daly, the managing partner for the Dodgers under News Corp., told the Los Angeles Times. “I helped get him approved, and for my piece I feel very bad about it. … He has been an embarrassment to this franchise. The sooner he gets the hell out of town, the better off we’ll all be as Dodger fans.”

    http://sports.yahoo.com/mlb/news;_ylt=AhmSubeOtdg59HIu083jrI0RvLYF?slug=jp-passan_mccourt_selig_bankruptcy_062911

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