Thursday, June 30, 2011

MLB Will Ask Court to Hand Over Control of Dodgers

Sports Business Journal is reporting that MLB will ask the Court to hand over control of the Dodgers to MLB.


The League would be invoking the "voluntary termination" clause found in its constitution, which provides it may strip an owner of its team if that owner files for bankruptcy.

One thing to remember: even though MLB's rules provide it can take a team away under these circumstances, the Court isn't bound by MLB's rules. Bankruptcy court cares primarily about one thing: getting creditors paid. So that will be its focus on now MLB's constitution. However, MLB may argue that McCourt is part of the MLB club and should follow its rules.

Interestingly, only 5 Dodger companies filed for bankruptcy (owner Frank McCourt has more companies). They own the Dodgers team, Dodger Stadium and Dodgers ticket revenues. They don't own the Dodgers parking lots and the undeveloped land that surrounds Dodger Stadium.

So it's possible that one possible strategy for McCourt is to 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.

Whatever the strategy, ultimately, it would be surprising to see McCourt own this team for a substantial period of time. The team has been subsidizing McCourt personal life to the reported tune of $141 million dollars. The team is obviously heavily in debt. MLB wants him gone.

This is all too bad. The Dodgers are an iconic franchise and with significant historical relevance. This is a blemish on the team and brand.

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