When we talk about a mid-season collapse in baseball, it usually refers to a sudden drought in hitting or a streak of bad pitching. We haven’t seen a team’s finances collapse since the Cleveland Spiders in 1899, when the team stunk so badly that locals wouldn’t buy tickets and other teams wouldn’t play them at home because of the lack of revenue, forcing the Spiders to play almost all of their games on the road. In Los Angeles, the Dodgers have never had those kinds of problems, but they still declared bankruptcy today:
The Los Angeles Dodgers on Monday filed for bankruptcy protection, blaming Major League Baseball for refusing to approve a television deal with News Corp’s Fox Network to give the financially strapped baseball team a quick injection of cash.
Dodgers owner Frank McCourt has been struggling to meet payroll and other financial commitments, having been heavily in debt and locked in a bitter divorce battle with his former wife Jamie tied to the team’s ownership.
On June 20, the league rejected a proposed $3 billion, 17-year transaction with Fox, saying it would not be in the best interests of the Dodgers, the game and fans. Baseball has been monitoring the Dodgers’ day-to-day operations.
The fiscal crisis at the storied franchise began when owner Frank McCourt’s wife filed for divorce and claimed the Dodgers as community property. The dispute weakened the club’s finances and created an appearance of managerial drift, which prompted MLB Commissioner Bud Selig to take control of the team in April when McCourt applied for a short-term loan to meet payroll.
The television deal would have solved McCourt’s problems in more ways than one. It formed the crux of a settlement with his estranged wife, which would have put his ownership of the team in the clear. The contract front-loaded payment to the Dodgers — likely the criterion that Selig found objectionable — in order to pay off Jamie McCourt and infuse cash back into the team’s coffers. Now with the Fox deal scotched, the settlement will collapse:
Bankruptcy protection will provide the Dodgers with a process to address its immediate financing requirements and obtain the capital necessary to ensure the baseball franchise’s long-term financial stability, the team said.
McCourt said the Dodgers have tried for almost a year to get Selig to approve the Fox transaction. The deal would have provided him with $385 million up front and was vital to a binding settlement reached between him and his ex-wife and former Dodger CEO Jamie McCourt last week. McCourt now faces the potential of missing a June 30 team payroll without the TV funds and that could lead to a MLB takeover. …
The divorce settlement, now voided because of Selig’s decision, called for a one-day “characterization” trial Aug. 4 to determine if title to the Dodgers is in Frank McCourt’s name or if the team should be considered community property and sold. Sacks said the trial may be shelved and Superior Court Judge Scott Gordon could decide how to handle the former couple’s assets at a later date.
The rejection of the deal by Selig raises questions about MLB’s motives. Did they really fear that reduced TV revenues in later years would be so damaging to the Dodgers that they had no choice but to reject the deal? Or does Selig just want the McCourts out so badly that he doesn’t mind sabotaging their settlement in order to force a sale through the courts to more stable ownership? Honestly, either way, it’s hard to blame Selig and MLB, given the embarrassment of the battling McCourts and the slow decline of the league’s premiere teams.
Just remember — if it hadn’t been for tax issues and Richard Riordan’s screwing of Peter O’Malley on a potential NFL franchise, the Dodgers might still have had stable and intelligent ownership, and might have been in a World Series sometime in the last 23 years.